- Drift Protocol unveils $147.5M recovery plan after exploit, backed by Tether and partners.
- The DEX will switch from USDC to USDT as a settlement layer while rebuilding post-attack trust.
- Users will receive recovery tokens linked to payouts as Drift works to recover $296M in stolen assets.
Drift Protocol has confirmed a proposed $147.5 million recovery package after a major exploit disrupted its operations. The decentralized exchange said Tether and its partners will back the funding as it prepares to relaunch following the April 1 attack that caused significant user losses.
As per the announcement, the plan focuses on compensating users while introducing a key strategic shift. Drift will replace USDC with USDT as its settlement layer at relaunch. The move comes as the platform works to address nearly $296 million in stolen assets, marking a broader reset of its infrastructure and liquidity strategy.
Recovery Plan Targets User Losses
Drift has laid out a systematic recovery program to help its clients who have suffered from its recent exploit attack. The program consists of as much as $127.5 million from Tether and $20 million more from some of their partners. This is coupled with a revenue-related $100 million loan program.
The protocol will set up a dedicated recovery pool funded through exchange revenue and partner capital. This pool will gradually absorb losses as platform activity stabilizes. Drift also confirmed it is working with law enforcement agencies to track and recover stolen assets.
To simplify compensation, Drift will issue a recovery token to affected users. Each token will represent a claim on the recovery pool and will remain transferable. As a result, users will be able to access liquidity while waiting for full payouts.
Security Overhaul and Market Shift
Drift is undertaking a complete overhaul of its protocol with enhanced security protocols. The new codebase will be audited by independent parties, Ottersec, and Asymmetric before deployment.
They also intend to enhance their operating procedures, which include key management and restricted access systems.
There will be a community-led multi-signature structure with a more rigorous process for validation. Timelock and live alert mechanisms will be in place to monitor sensitive actions within the platform.
Recovery Deal Boosts Token 14% Rise
Alongside the security overhaul, Drift’s shift to USDT reflects a broader liquidity strategy. Tether will provide market-making support to help stabilize trading conditions at launch.
However, Circle clarified that it did not freeze stolen USDC, stating that such actions can only occur under legal orders.
Drift’s co-founder Cindy Leow emphasized the broader significance, stating, “The willingness of Paolo Ardoino Tether and our partners to commit real capital to Drift’s recovery says something about the strength of what we’ve built.”
Meanwhile, the DRIFT token rose 18% on the news, though it remains far below past highs.
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