Following an exploit of the Drift Protocol decentralised exchange (DEX) in April, stablecoin issuer Tether, the firm behind USDt (USDT), announced on Thursday that it will support a $150 million recovery effort for the DEX.
According to Tether’s announcement, the recovery plan for the $280 million Drift Protocol exploit includes $127.5 million from Tether. The remaining funds will come from unidentified partners.
Tether informed, “The structure, rather than relying on upfront capital alone, links funding and recovery to ongoing trading activity on the Drift platform, which will allow restoration of user balances as the exchange returns to normal operations.”
As the Drift Protocol platform resumes regular trading, it will “contribute directly” to the ongoing recovery of user cash.
As part of the platform’s relaunch, Drift will also switch its settlement asset from Circle’s USDC (USDC) dollar-pegged stablecoin to Tether’s USDt.
The recovery scheme demonstrates a rising trend of cryptocurrency industry businesses working together to reimburse user cash and assist platforms in returning to regular operations following significant breaches or cybersecurity incidents that result in losses of hundreds of millions of dollars.
Executives in the cryptocurrency sector, cybersecurity experts, and blockchain security companies chastised Circle for failing to freeze the USDC wallets connected to the Drift Protocol exploiter even though they had a few hours to do so.
The exploiter transferred more than $232 million USDC from the Solana network to the Ethereum network using Circle’s Cross-Chain Transfer Protocol (CCTP), a native bridge that permits token transfers to other blockchain networks, according to on-chain sleuth ZachXBT.
Source: X.com
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