Following a significant exploit that resulted in the loss of over $270 million in client assets, Drift Protocol has announced a proposed funding package of up to $147.5 million from Tether and its partners. This investment will facilitate the recovery of user funds and the relaunch of the platform as a USDT-based perpetual futures exchange on Solana, replacing Circle's USDC as its settlement layer. The funding package, which includes a revenue-linked credit facility, ecosystem grants, and loans to market makers, aims to support user recovery and reboot the platform.
A portion of the trading revenue will be allocated to a recovery pool to cover roughly $295 million in user losses over time. The deal marks a significant shift for Drift, which has lost approximately 70% of its governance token's value since the exploit. The incident also sparked controversy surrounding Circle's response to the exploit, with critics arguing that the company could have acted faster to freeze funds and prevent the attacker from transferring assets. In contrast, Tether has demonstrated its ability to freeze assets linked to hacks or illicit activities promptly.
As the largest decentralized perpetual futures exchange on Solana, Drift boasts over 175,000 users and $150 billion in cumulative trading volume. The company's transition to USDT is expected to position the stablecoin at the center of its trading infrastructure, providing a pathway to restore user funds and resume operations.