Following a significant 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 is designed to facilitate user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana, replacing its previous use of Circle's USDC.
The funding package, which includes a revenue-linked credit facility, ecosystem grants, and loans to market makers, aims to cover roughly $295 million in user losses over time through a recovery pool supported by a portion of trading revenue and committed capital. The exploit, linked to a North Korea-based group, resulted in losses exceeding $270 million and led to a 70% decline in the value of Drift's governance token, DRIFT. The transition to USDT comes after Circle faced criticism for its handling of the exploit, particularly its decision not to freeze USDC wallets and prevent the attacker from transferring funds. In contrast, Tether has demonstrated a willingness to freeze assets linked to hacks and illicit activities, positioning itself as a more agile and responsive stablecoin issuer.
As the largest decentralized perpetual futures exchange on Solana, with over 175,000 users and $150 billion in cumulative trading volume, Drift's move to USDT reflects the intensifying competition in the stablecoin market. With Tether's support, Drift plans to reduce fees, offer user incentives, and enhance liquidity, solidifying USDT's position at the center of its trading infrastructure and paving the way for the platform's recovery and relaunch.