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 primary settlement layer, backed by a substantial funding package of up to $147.5 million from Tether and its partners. The package, which includes a $127.5 million contribution from Tether and $20 million from other partners, aims to facilitate user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana. Previously, Drift relied on Circle's USDC as its settlement layer.
The funding package comprises a revenue-linked credit facility, ecosystem grants, and loans to market makers, with a portion of trading revenue allocated to a recovery pool designed to cover roughly $295 million in user losses over time. The exploit, which was linked to a North Korea-based group, occurred on April 1 and led to a significant decline in the value of Drift's governance token, DRIFT.
In response to the incident, Circle faced criticism for its handling of the situation, with some arguing that the company could have acted more swiftly to freeze funds and prevent the attacker from transferring assets. However, Circle's approach is guided by its commitment to regulatory compliance, and the company only freezes USDC wallets when directed by law enforcement or courts. In contrast, Tether has demonstrated a greater willingness to freeze assets linked to illicit activities. As the largest decentralized perpetual futures exchange on Solana, Drift boasts over 175,000 users and a cumulative trading volume of approximately $150 billion.
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 also reflects the intensifying competition in the stablecoin market, with USDT and USDC vying for dominance. While USDT maintains a significant lead in terms of market supply, USDC has been gaining ground in recent months, driven by its regulatory alignment and growing institutional adoption.