In a bid to recover from a recent exploit that saw over $270 million in client assets compromised, Drift Protocol has announced a proposed funding package of up to $147.5 million from Tether and its partners. The funding will be used to support user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana, effectively replacing Circle's USDC as its settlement layer. The deal comprises up to $127.5 million from Tether and $20 million from other partners, structured as a revenue-linked credit facility, ecosystem grants, and loans to market makers. A portion of trading revenue will be directed towards a recovery pool aimed at covering roughly $295 million in user losses over time.
The move comes after a North Korea-linked group infiltrated Drift Protocol, resulting in a significant exploit on April 1. The incident led to Circle facing criticism for its handling of the situation, with some arguing that the company could have acted faster to freeze funds and prevent the attacker from transferring assets.
In contrast, Tether has a history of freezing assets linked to hacks or illicit activities. As the largest decentralized perpetual futures exchange on Solana, Drift boasts over 175,000 users and $150 billion in cumulative trading volume.
The platform's transition to USDT is seen as a strategic move, with Tether planning to fund fee reductions and user incentives tied to the transition, while extending liquidity support to designated market makers. The development is also expected to intensify competition in the stablecoin market, with USDT and USDC vying for dominance.