Tether, the issuer of the USDT stablecoin, has spearheaded a proposed $147.5 million funding package to rescue the Solana-based Drift Protocol following a devastating exploit in early April. The deal, announced on Thursday, includes up to $127.5 million from Tether and $20 million from other partners. The capital is structured to support user recovery and relaunch the platform as a USDT-based perpetual futures exchange, marking a significant shift away from its previous settlement layer, Circle's USDC.
The funding comes in response to a sophisticated attack on April 1, where a North Korea-linked group, posing as a quantitative trading firm for about six months, infiltrated Drift and executed an exploit resulting in losses exceeding $270 million. The platform's governance token, DRIFT, has plummeted approximately 70% in value since the incident.
The rescue package combines a revenue-linked credit facility, ecosystem grants, and loans to market makers. A portion of Drift's future trading revenue, alongside the committed capital, will be directed into a recovery pool aimed at covering roughly $295 million in user losses over time. Tether also plans to fund fee reductions and user incentives tied to the transition to USDT, while extending liquidity support to designated market makers to bolster trading depth at relaunch.
The move highlights the intensifying competition in the stablecoin sector. Circle's USDC had been the settlement layer for Drift, but the firm faced significant criticism from the crypto community for its response to the hack. The attacker moved about $232 million in USDC from Solana to Ethereum using Circle’s cross-chain transfer protocol. Critics, including blockchain investigator ZachXBT, argued Circle could have acted faster to blacklist wallets. Circle CEO Jeremy Allaire clarified the company's policy, stating USDC wallets are frozen only when directed by law enforcement or courts, not in real-time during hacks, reflecting a strategy of close regulatory alignment.
In contrast, Tether has a history of being more proactive in freezing assets linked to illicit activities. Drift, the largest decentralized perpetual futures exchange on Solana with over 175,000 users and $150 billion in cumulative volume, now positions USDT at the center of its trading infrastructure. This strategic partnership provides a pathway to restore user funds and resume operations, while also representing a major business win for Tether in its rivalry with Circle.
