Following a devastating North Korean-led 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 new settlement layer, thanks to a proposed funding package of up to $147.5 million from Tether and its partners. The deal, which includes up to $127.5 million from Tether and $20 million from other partners, aims to support user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana.
Previously, the platform utilized Circle's stablecoin, USDC, as its settlement layer. The rescue package comprises a revenue-linked credit facility, ecosystem grants, and loans to market makers, with a portion of trading revenue and committed capital allocated to a recovery pool to cover approximately $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 around 70% of its value since the exploit.
The incident led to criticism of Circle for its perceived slow response in halting the money transfer, with some arguing that the company could have moved faster to blacklist wallets and freeze funds to prevent the attacker from moving the assets. However, Circle's CEO, Jeremy Allaire, explained that the company only freezes USDC wallets when directed by law enforcement or courts, citing legal risks. In contrast, USDT has demonstrated a more agile approach to freezing funds linked to hacks or illicit activities. As the largest decentralized perpetual futures exchange on Solana, with over 175,000 users and approximately $150 billion in cumulative trading volume, Drift's transition to USDT is seen as a strategic move to restore user confidence and resume operations.
The stablecoin market is becoming increasingly competitive, with exchanges, fintechs, and traditional financial institutions vying for control of on-ramps, liquidity, and settlement layers. While USDT still dominates the market, Circle's USDC has been gaining ground, driven by regulatory alignment and growing institutional adoption. 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 to enhance trading depth at relaunch.
The move positions USDT at the center of Drift's trading infrastructure, providing a pathway to restore user funds and resume operations.