In the aftermath of a recent exploit linked to North Korea, Drift Protocol has announced plans to relaunch with Tether's USDT as its settlement layer, following the securing of a substantial funding package of up to $147.5 million from Tether and its partners. The funding package, which includes $127.5 million from Tether and $20 million from other partners, is designed to facilitate user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana, replacing Circle's 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 aimed at covering approximately $295 million in user losses over time.

This development comes on the heels of a North Korea-linked group infiltrating Drift Protocol, resulting in an exploit that exceeded $270 million on April 1, and subsequently led to Drift's governance token, DRIFT, losing around 70% of its value. The incident also sparked criticism towards Circle for its perceived reluctance to halt the money transfer after the exploit, with the attacker successfully moving about $232 million in USDC from Solana to Ethereum using Circle's cross-chain transfer protocol. In response to the criticism, Circle's CEO, Jeremy Allaire, clarified that the company only freezes USDC wallets when directed by law enforcement or courts, citing legal risks.

Conversely, USDT has demonstrated greater agility in freezing funds linked to hacks or illicit activities. As the largest decentralized perpetual futures exchange on Solana, with over 175,000 users and cumulative trading volume of roughly $150 billion, Drift's transition to USDT is poised to significantly impact the stablecoin landscape. The competition in the stablecoin market is intensifying, with exchanges, fintechs, and traditional financial institutions vying for control of the on-ramps, liquidity, and settlement layers that underpin digital asset markets.

While USDT maintains a significant lead, Circle's USDC has been steadily gaining ground, driven by regulatory alignment and growing institutional adoption. The new funding package will also enable Tether to support fee reductions and user incentives tied to Drift's transition to USDT, as well as provide liquidity support to designated market makers, thereby bolstering trading depth at relaunch.