Tether has pledged a fund worth $127.5 million for helping users recover from an attack that occurred in the Drift Protocol and caused a loss of about $295 million. The program, whose implementation will be supported by other partners, is designed to help compensate users for their losses.
Drift Exploit Triggers Large-Scale Recovery Effort
This strategy was developed following the April 1 hack, which greatly affected the users of the Drift Protocol. This hack caused losses to many assets, compelling the organization to work with their partners in the industry to come up with a strategy for compensating victims.
It is also being explored how the stolen assets can be traced and retrieved by working together with the law enforcement agencies and blockchain forensics companies.
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Tether Leads $127.5M Funding Commitment
The contribution by Tether, which amounts to up to $127.5 million, is the core of the recovery project. Moreover, partner companies will be required to make contributions amounting to $20 million, thus making the total outside contribution amount to $147.5 million. The funds are intended to offer immediate assistance to the protocol, which will aid in the recovery process.
$100M Credit Facility and Ecosystem Support
An important part of the funding package is the revenue-based financing of up to $100 million. This type of financing enables Drift to benefit from cash flows without incurring much financial pressure. In addition, the funding package contains ecosystem grants and loans for market makers that seek to bring liquidity back into the exchange.
Recovery Pool to Address $295M in User Losses
A special recovery pool will be created using funds from both the exchanges and the capital. The pool aims to repay users affected by the exploit over time. The idea behind the plan is to create a process whereby the repayment increases in line with the recovery of the platform and its income.
Recovery Token to Enable Claims and Liquidity
In order to facilitate the process of compensation, the company, Drift, intends to launch a recovery token that would be issued specifically to those users affected by the hack. The recovery token would be tradable and would symbolize ownership of a part of the recovery fund. Further details on the token’s mechanics and distribution timeline are expected to be announced.
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