Following a devastating North Korean-led exploit, Drift Protocol has announced plans to relaunch with Tether's USDT as its primary settlement layer, backed by a substantial funding package of up to $147.5 million from Tether and its partners. This deal comprises $127.5 million from Tether and $20 million from other partners, aimed at supporting user recovery and rebooting the platform as a USDT-based perpetual futures exchange on Solana, replacing Circle's USDC as its settlement layer. The rescue package includes 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 exploit, which occurred on April 1, resulted in losses exceeding $270 million and led to a significant decline in the value of Drift's governance token, DRIFT. The incident also sparked controversy surrounding Circle's handling of the exploit, with critics arguing that the company could have acted more swiftly to freeze funds and prevent the attacker from transferring assets.
In contrast, Tether has demonstrated a more agile approach to freezing funds linked to 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 is expected to bolster the stablecoin's position in the market.
The competition among stablecoins is intensifying, with Circle's USDC gaining ground due to its regulatory alignment and growing institutional adoption, while Tether's USDT still maintains a significant lead. The new funding package will also enable Tether to support fee reductions, user incentives, and liquidity provision for Drift's relaunch, further solidifying USDT's role in the protocol's trading infrastructure.