Tether backs Drift Protocol relaunch with GBP £150m
Tether has agreed to provide up to USD $127.5 million to support Drift Protocol's recovery and relaunch after the platform's exploit, forming the bulk of a broader plan backed by nearly USD $150 million in total.
The arrangement follows a 1 April exploit that caused about USD $285 million in user losses. It is designed to support affected users while allowing the Solana-based trading platform to resume operations.
Rather than relying solely on an upfront capital injection, the plan ties recovery to exchange activity. User balances would be restored as trading resumes, and exchange revenue would be directed towards the recovery effort.
The remaining support would come from Drift and other partners. Under the staged model, capital would be introduced progressively and tied to platform performance.
Settlement shift
As part of the relaunch, Drift plans to switch its settlement asset from USDC to USD₮. The change would bring more than 128,000 users and over 35 ecosystem teams onto USD₮-based trading, including Gauntlet, Neutral and M1.
The shift would give Tether's stablecoin a larger role on Solana, where Drift is one of the largest perpetual trading venues. Stablecoins have become central to trading infrastructure across digital asset markets, particularly for settlement and liquidity management.
The announcement also puts Tether at the centre of another high-profile recovery effort in the sector. It says it works with more than 310 law enforcement agencies across 64 countries and has helped recover over USD $800 million in coordination with authorities.
That record forms part of Tether's broader argument that stablecoin issuers are taking on a larger operational role in the market beyond issuing tokens. Here, its financial support would underpin a relaunch plan for a venue hit by a major security incident.
Drift's model seeks to avoid a simple bailout by linking restitution to future trading activity. That could reduce the need for immediate full funding, but it also means the pace of user recovery will depend on whether trading volumes and revenues return as expected.
The exploit was one of the more significant incidents to hit a decentralised finance platform this year, based on the scale of reported user losses. Security breaches in the sector often leave users facing long delays and uncertain prospects for recovery, especially when the affected platform lacks external financial support.
Tether framed its intervention as part of a wider role during periods of market stress.
"Tether's role in the digital assets ecosystem is to provide a platform for individuals and institutions alike that is ready to step forward to help the industry in the moment of darkness. This collaboration reflects our confidence in Drift and its role in the DeFi ecosystem," said Paolo Ardoino, Chief Executive Officer of Tether.
"The focus is on restoring user confidence and supporting a strong relaunch, with a structure that aligns recovery with real activity and long-term growth," Ardonio added.
For Drift, the decision to switch settlement from USDC to USD₮ is also a strategic shift in market positioning. It suggests the relaunch will be tied not only to a recovery plan, but also to a change in the stablecoin infrastructure used by the platform and related teams.
Whether the model succeeds will depend on Drift's ability to restore trading activity after the exploit and persuade users to return. For now, the scale of Tether's commitment makes it the principal financial backer of the nearly USD $150 million plan.