In the wake of a devastating exploit that resulted in the loss of over $270 million in client assets, Drift Protocol has announced a substantial funding package of up to $147.5 million from Tether and its partners. This investment will facilitate the recovery of user funds and enable the platform to relaunch as a USDT-based perpetuals DEX on Solana, marking a significant shift away from its previous use of 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 the platform's revival and provide a pathway for users to recover their losses.
A portion of the trading revenue will be allocated to a recovery pool, which will be used to cover approximately $295 million in user losses over time. The exploit, which was linked to a North Korea-based group, led to a significant decline in the value of Drift's governance token, DRIFT, which has lost around 70% of its value since the incident.
The funding package also includes provisions for fee reductions and user incentives tied to Drift's transition to USDT, as well as liquidity support for designated market makers to enhance trading depth at relaunch. By positioning USDT at the center of its trading infrastructure, Drift aims to restore user funds and resume operations, while also intensifying the competition in the stablecoin market.