Drift Secures $148 Million in Funding to Recover from Exploit and Transition to USDT

Drift Protocol, recently victimized by a North Korean-led exploit, is set to relaunch with a new settlement layer, utilizing Tether's USDT, after receiving a substantial funding package of up to $147.5 million from Tether and its partners. This package, designed to support user recovery and platform reboot, includes $127.5 million from Tether and $20 million from other partners. The exploit, which occurred on April 1, resulted in over $270 million in client assets being compromised. Prior to the transition, Drift used Circle's USDC as its settlement layer. The funding is structured as a combination of a revenue-linked credit facility, ecosystem grants, and loans to market makers, with a portion of trading revenue and committed capital allocated to a recovery pool aimed at covering approximately $295 million in user losses over time. Drift's governance token, DRIFT, has seen a significant decline of about 70% in value since the exploit. The incident led to criticism of Circle for not halting the transfer of exploited funds, with the attacker moving roughly $232 million in USDC from Solana to Ethereum. In contrast, Tether has been more proactive in freezing assets linked to hacks. Drift, the largest decentralized perpetual futures exchange on Solana with over 175,000 users and $150 billion in cumulative trading volume, is transitioning to USDT as part of its relaunch. This move comes amidst intensifying competition in the stablecoin market, where Circle's USDC has been gaining ground on Tether's USDT. With this funding, Tether plans to support fee reductions, user incentives, and liquidity support for Drift's transition to USDT, aiming to bolster trading depth and position USDT at the core of Drift's trading infrastructure.