Drift Secures $148 Million in Funding from Tether and Partners to Recover from Exploit

Following a recent exploit that resulted in the loss of over $270 million in client assets, Drift Protocol has secured a funding package of up to $147.5 million from Tether and its partners. The investment, which includes $127.5 million from Tether and $20 million from other partners, is intended to support user recovery and facilitate the platform's relaunch as a USDT-based perpetual futures exchange on Solana. This move marks a significant shift for Drift, as it will be replacing Circle's USDC with USDT as its settlement layer.

The funding package comprises 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. The exploit, which was linked to a North Korea-based group, led to a loss of about 70% of the value of Drift's governance token, DRIFT.

The incident also sparked controversy surrounding Circle's response to the exploit, with some critics arguing that the company could have acted more swiftly 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 in the past.

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 expected to have significant implications for the stablecoin market. The competition between USDT and USDC has been intensifying, with USDC gaining ground in recent months due to its regulatory alignment and growing institutional adoption. However, USDT still maintains a substantial lead in terms of market supply, with approximately $185.5 billion in circulation compared to USDC's $78.6 billion. The new funding package is expected to support fee reductions and user incentives tied to Drift's transition to USDT, as well as provide liquidity support to designated market makers to enhance trading depth at relaunch.