Following a significant exploit that resulted in the loss of over $270 million in user assets, Drift Protocol has announced a funding package of up to $147.5 million from Tether and its partners. The investment will be used to recover user funds and relaunch the platform as a USDT-based perpetual futures exchange on Solana, replacing Circle's USDC as its settlement layer. The deal comprises a revenue-linked credit facility, ecosystem grants, and loans to market makers, with a portion of trading revenue allocated to a recovery pool to cover user losses over time.
The exploit, linked to a North Korean group, led to a 70% decline in the value of Drift's governance token, DRIFT. Circle, the issuer of USDC, faced criticism for its handling of the exploit, whereas Tether has demonstrated its ability to freeze funds linked to illicit activities. With this funding, Tether aims to support Drift's transition to USDT, reduce fees, and provide user incentives, further intensifying the competition in the stablecoin market.