In the wake of a recent exploit that resulted in over $270 million in client asset losses, Drift Protocol has announced a proposed funding package of up to $147.5 million from Tether and its partners. This investment will be used to recover user funds and reboot the platform as a USDT-based perpetual futures exchange on Solana, marking a shift away from its previous settlement layer, Circle's USDC.
The funding package, which includes a revenue-linked credit facility, ecosystem grants, and loans to market makers, aims to support user recovery and provide a pathway for the platform to resume operations. A portion of trading revenue will be allocated to a recovery pool to cover approximately $295 million in user losses over time. The exploit, which was linked to a North Korea-based group, led to the loss of about 70% of the value of Drift's governance token, DRIFT.
The incident also sparked criticism of Circle for its handling of the situation, with some arguing that the company could have taken more decisive action to freeze funds and prevent the attacker from transferring assets. In contrast, Tether has demonstrated a greater willingness to freeze assets linked to illicit activities, highlighting the differing approaches of these two major stablecoin issuers. As the largest decentralized perpetual futures exchange on Solana, with over 175,000 users and $150 billion in cumulative trading volume, Drift's transition to USDT is seen as a strategic move to position the stablecoin at the center of its trading infrastructure.
The funding package will also support fee reductions and user incentives tied to the transition, as well as provide liquidity support to designated market makers. This development is part of a broader trend of intensifying competition in the stablecoin market, with exchanges, fintechs, and traditional financial institutions vying for control of the on-ramps, liquidity, and settlement layers that underpin digital asset markets.