Following a recent exploit that resulted in the loss of over $270 million in client assets, Drift Protocol has announced plans to relaunch with Tether's USDT as its primary settlement layer, thanks to a proposed funding package of up to $147.5 million from Tether and its partners. This deal, which includes $127.5 million from Tether and $20 million from other partners, is designed to support user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana, replacing Circle's USDC. The package combines a revenue-linked credit facility, ecosystem grants, and loans to market makers, with a portion of trading revenue and committed capital directed towards a recovery pool aimed at covering roughly $295 million in user losses over time.
The funding comes after a North Korea-linked group infiltrated Drift Protocol, posing as a quantitative trading firm for about six months before executing the exploit on April 1. Drift's governance token, DRIFT, has lost approximately 70% of its value since the incident. Circle faced criticism from the crypto community for its handling of the exploit, particularly its decision not to halt the transfer of funds or freeze assets due to legal risks. In contrast, Tether has a history of freezing assets linked to hacks or illicit activities.
As the largest decentralized perpetual futures exchange on Solana, with over 175,000 users and $150 billion in cumulative trading volume, Drift's transition to USDT marks a significant shift in the stablecoin landscape. The competition between stablecoins is intensifying, with Circle's USDC gaining ground on Tether's long-standing dominance.
While USDT still leads in terms of supply, USDC has seen its transaction volume outpace Tether's in recent months. With the new funding package, Tether plans to support fee reductions and user incentives tied to Drift's transition to USDT, as well as provide liquidity support to designated market makers. This move positions USDT at the center of Drift's trading infrastructure, providing a pathway to restore user funds and resume operations.