Drift Secures $148 Million in Funding to Recover from Exploit and Transition to USDT

Following a significant exploit that resulted in the loss of over $270 million in client assets, Drift Protocol has announced plans to relaunch with Tether's USDT as its primary settlement layer, backed by a substantial funding package of up to $147.5 million from Tether and its partners. The funding deal, which includes $127.5 million from Tether and $20 million from other partners, is designed to support user recovery and facilitate the platform's transition to a USDT-based perpetual futures exchange on Solana. Previously, Drift utilized Circle's USDC as its settlement layer.

The rescue 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 funding announcement comes after a North Korea-linked group infiltrated Drift Protocol, resulting in a significant exploit on April 1.

The incident led to a loss of about 70% of the value of Drift's governance token, DRIFT. The exploit also sparked criticism of Circle, which was accused of being slow to respond to the incident and freeze affected funds. In contrast, Tether has a history of promptly freezing assets linked to hacks or illicit activities.

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 move is seen as a strategic play by Tether to expand its market share and consolidate its position as a leading stablecoin issuer. With the new funding package, Tether plans to support fee reductions and user incentives tied to Drift's transition to USDT, while providing liquidity support to designated market makers to enhance trading depth at relaunch.

The partnership positions USDT at the center of Drift's trading infrastructure, providing a pathway for the platform to restore user funds and resume operations.