Drift Protocol Secures $147.5 Million Recovery Package After April 1 Exploit

TLDR:

• Tether will contribute up to $127.5M, including a $100M revenue-linked credit line, to fund Drift’s recovery pool.
• Drift Protocol will issue a transferable recovery token to affected users, separate from the DRIFT governance token.
• After relaunch, Drift will settle transactions in USDT instead of USDC, aligning with Tether’s direct involvement.
• The $147.5M recovery package targets full coverage of $295M in outstanding user losses from the April 1 exploit.

Drift Protocol has secured a $147.5 million recovery package following an exploit that occurred on April 1. Tether will contribute up to $127.5 million, while additional partners will provide $20 million.

The funds will go toward covering $295 million in outstanding user losses. A dedicated recovery pool will be established using exchange revenue and committed support funds. The relaunch will also shift settlement from USDC to USDT.

Tether Leads Major Funding Effort to Address User Losses

Tether’s commitment forms the backbone of Drift Protocol’s recovery plan. The stablecoin issuer will provide a $100 million revenue-linked credit line as part of its contribution. Ecosystem grants and loans for market makers are also included in the package.

The recovery pool will draw from most of Drift’s exchange revenue going forward. Combined with the committed funds from Tether and partners, the pool targets full coverage of the $295 million owed to users. This structured approach ensures a steady flow of resources into the recovery effort.

Tether will also provide market-making support through designated market makers after the relaunch. This move ties the stablecoin issuer more closely to Drift’s ongoing operations. It also reflects a broader interest in stabilizing the protocol for long-term use.

Partners beyond Tether have pledged an additional $20 million to strengthen the package. This collective backing shows coordinated support from across the ecosystem. Together, the contributors form a unified front to restore user confidence in the protocol.

Recovery Token and Settlement Shift Mark Structural Changes for Drift

Drift will issue a dedicated recovery token to users affected by the April 1 exploit. This token is separate from the existing DRIFT governance token and carries a distinct function. It represents a direct claim on the recovery pool established through the funding package.

The recovery token is transferable, giving affected users flexibility in how they manage their claims. Users can hold or trade the token depending on their preference. This design allows market participants to price and move recovery claims as needed.

After relaunch, Drift will settle transactions in USDT instead of USDC. The switch aligns with Tether’s involvement and removes reliance on a competing stablecoin. It also streamlines operations by using the currency backed by the primary funder.

The structural shift to USDT settlement, paired with the recovery token issuance, reshapes how Drift will function going forward. These changes reflect decisions made in direct response to the exploit. They also establish a clearer operational framework as the protocol prepares to resume services.

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