Following a significant 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 settlement layer, thanks to a proposed funding package of up to $147.5 million from Tether and its partners. The package, which includes up to $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. Previously, the platform utilized Circle's USDC as its settlement layer. The rescue 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 to cover approximately $295 million in user losses over time.
The funding comes after a North Korea-linked group infiltrated Drift Protocol, resulting in a significant exploit on April 1. Drift's governance token, DRIFT, has lost around 70% of its value since the exploit. The incident has sparked controversy, with some critics arguing that Circle could have acted faster to prevent the attacker from transferring funds. However, Circle's CEO has stated that the company only freezes USDC wallets when directed by law enforcement or courts.
In contrast, USDT has a history of freezing assets linked to hacks or illicit activities. As the largest decentralized perpetual futures exchange on Solana, Drift has over 175,000 users and approximately $150 billion in cumulative trading volume. The platform's transition to USDT is seen as a strategic move, with Tether planning to fund fee reductions and user incentives tied to the transition, as well as provide liquidity support to designated market makers.
The move is expected to position USDT at the center of Drift's trading infrastructure, while providing a pathway to restore user funds and resume operations.