Following a recent exploit that resulted in the loss of over $270 million in client assets, Drift Protocol has announced plans to relaunch using 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 a revenue-linked credit facility, ecosystem grants, and loans to market makers, aims 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.
A portion of trading revenue will be allocated to a recovery pool to cover roughly $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. The incident led to a 70% decline in the value of Drift's governance token, DRIFT.
Circle faced criticism for its handling of the exploit, with some arguing that the company could have acted faster to freeze funds and prevent the attacker from transferring assets. In contrast, Tether has a history of freezing assets linked to hacks and illicit activities. As the largest decentralized perpetual futures exchange on Solana, Drift boasts over 175,000 users and $150 billion in cumulative trading volume. The platform's transition to USDT is expected to position Tether at the center of its trading infrastructure, providing a pathway to restore user funds and resume operations.
The move is also seen as a strategic play in the intensifying competition among stablecoin issuers, with Circle's USDC gaining ground on Tether's long-standing dominance.