Tether partners with Drift Protocol, proposes $127 million investment following April 1 hack

Drift Protocol has entered into a strategic collaboration with Tether to support the reimbursement of funds stolen in an April 1 exploit. According to a statement released Thursday, Tether has proposed contributing up to $127.5 million, while additional partners have committed $20 million toward the effort.

The recovery package includes a $100 million revenue-linked credit facility, an ecosystem grant and liquidity loans for market makers. The funds will be directed into a dedicated recovery pool designed to address the outstanding user losses over time.

Drift outlines structured recovery framework following $295 million breach

The April 1 exploit resulted in withdrawals totaling about $295.7 million across multiple assets. The largest share comprised JLP, valued at over $159 million, followed by significant losses in USDC, cbBTC, and SOL. Additional affected assets included USDT, USDS, WETH, WBTC, and several liquid staking tokens, among others.

Despite the scale of the breach, several smaller asset holdings within the protocol remained untouched. Importantly, Drift's Insurance Fund, which is reserved for covering trading-related bankruptcies, was not impacted and continues to hold all depositor funds intact for future access upon relaunch.

Drift has outlined a structured recovery framework to reimburse affected users. As part of this plan, impacted users will receive a dedicated recovery token, separate from the DRIFT governance token, representing a claim on the recovery pool. 

The token will be transferable, allowing users to access liquidity as funds are gradually restored. Any assets recovered through ongoing investigations will also be added to the pool.

The protocol is also working with law enforcement agencies and blockchain intelligence firms, including Arkham and Bybit, to trace and recover stolen funds. A bounty program is also in development to incentivize assistance from external participants. 

As part of its collaboration with Tether, Drift plans to transition from USDC to USDT as its primary settlement layer upon resuming operations. 

Tether will also support liquidity through designated market makers to help ensure stable trading conditions at relaunch. At the same time, Drift is implementing enhanced security measures while advancing parallel efforts in asset recovery and platform reconstruction.