Hassan Maishera
TL;DR
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Tether is working with Drift Protocol, aiming to invest up to $127 million to support recovery following the protocol's recent hack.
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To enable the reimbursement for stolen assets, Drift Protocol will issue a recovery token to affected users.
Tether Partners with Drift Protocol
Drift Protocol has formed a strategic alliance with Tether to assist in the recovery of funds stolen during an April 1 exploit, which resulted in the loss of approximately $295.7 million across multiple assets.
In a blog post, Drift Protocol revealed that Tether has committed up to $127.5 million to support the recovery, with additional partners contributing $20 million.
The recovery package includes a $100 million revenue-linked credit facility, ecosystem grants, and liquidity loans for market makers. These funds will be allocated to a dedicated recovery pool, designed to gradually address user losses.
Drift Protocol suffered a $285 million exploit earlier this month, blaming the attack on North Korea-linked hackers.
The exploit led to significant withdrawals, with the largest loss being in JLP, valued at over $159 million, followed by USDC, cbBTC, and SOL. Other affected assets included USDT, USDS, WETH, WBTC, and liquid staking tokens.
Despite the large breach, smaller asset holdings within the protocol remained secure, and the Drift Insurance Fund, reserved for covering trading-related bankruptcies, was unaffected and remains intact.
Drift has outlined a clear recovery plan, which involves issuing a dedicated recovery token to impacted users. This token, separate from the DRIFT governance token, represents a claim on the recovery pool and is transferable, providing liquidity as funds are gradually restored. Any recovered assets from ongoing investigations will also be added to the pool.
Enhanced Security and Future Plans for Platform Relaunch
Drift has also partnered with law enforcement and blockchain intelligence firms, including Arkham and Bybit. The platform is working to trace and recover stolen funds. Additionally, a bounty program will be introduced to encourage external participation in the recovery process.
As part of the strategic partnership with Tether, Drift will shift from USDC to USDT as its primary settlement layer when operations resume. Tether will also provide liquidity support through designated market makers to ensure stable trading conditions.
Alongside these efforts, Drift is implementing stronger security measures while continuing its recovery and platform reconstruction initiatives.
