Following a significant exploit that resulted in the loss of over $270 million in client assets, Drift Protocol has announced plans to relaunch its platform using Tether's USDT as its settlement layer, after securing a funding package of up to $147.5 million from Tether and its partners. The deal, which includes $127.5 million from Tether and $20 million from other partners, aims to support user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana.
The funding package combines a revenue-linked credit facility, ecosystem grants, and loans to market makers, with a portion of trading revenue and committed capital directed towards a recovery pool to cover roughly $295 million in user losses over time. The exploit, which occurred on April 1, was carried out by a North Korea-linked group that had infiltrated Drift Protocol by posing as a quantitative trading firm for about six months. The incident led to Circle, the issuer of the USDC stablecoin, 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 been more proactive in freezing funds linked to hacks or illicit activities in the past. The move to USDT is seen as a significant development in the stablecoin market, where competition is intensifying among players such as Circle and Tether. With the new funding package, Tether plans 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 bolster trading depth at relaunch.