Drift gets up to $127.5M from Tether, shifts to USDT

Drift Protocol has a proposed recovery package worth up to $127.5 million from Tether as it compensates users and prepares to relaunch after an April 1 exploit that drained roughly $280 million. The agreement also includes about $20 million in support from other partners and aims to fund a dedicated recovery pool for affected users.

The package combines a $100 million revenue-linked credit facility with an ecosystem grant and loans to market makers. Those funds will flow into the recovery pool, which Drift intends to use to address about $295 million in outstanding user losses over time. The protocol plans to add exchange revenue and any assets recovered in ongoing investigations to the same pool.

To distribute claims, Drift will issue a separate recovery token to impacted users. The token is distinct from the DRIFT governance asset and will represent a transferable claim on the recovery pool, allowing holders to access liquidity before full repayment is complete.

The relaunch will change the platform’s settlement currency from Circle’s USDC to Tether’s USDT. Tether has agreed to provide a market-making support facility to help ensure liquidity when the platform resumes trading.

The settlement swap follows public criticism of the handling of assets tied to the exploit. A blockchain investigator publicly questioned the pace of freezes on USDC involved in the incident. Circle’s CEO, Jeremy Allaire, described the company’s decision-making as a “moral quandary.”

Drift reported the breach as a sophisticated administrative takeover tied to a months-long social engineering operation. The protocol initially disclosed losses of at least $200 million and later revised the figure to about $280 million. A breakdown in the recovery update shows nearly $296 million in assets were withdrawn across multiple tokens, with the largest portion linked to Drift’s JLP liquidity pool.

Drift outlined a security rebuild ahead of relaunch that will require two independent audits, tighter controls on key management and administrative access, a new multisignature structure, and enforced delays on critical actions. The protocol noted its insurance fund for trading-related losses was not affected by the exploit and remains intact.

The team is working with law enforcement and blockchain forensics firms to trace and potentially recover stolen funds. Any assets recovered through those efforts will be returned to the recovery pool for redistribution to users.

Outside participants will contribute roughly $20 million in additional support and market makers will receive loans intended to restore market depth. Drift characterized the Tether package as a combination of capital and operational support to stabilize trading, compensate users over time, and allow governance and technical safeguards to be strengthened before full repayment is completed.