Following a significant exploit, Drift Protocol has announced plans to relaunch with Tether's USDT as its settlement layer, after securing a substantial funding package of up to $147.5 million from Tether and its partners. The investment, comprising $127.5 million from Tether and $20 million from other partners, 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. 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 allocated to 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 losses exceeding $270 million on April 1. Drift's governance token, DRIFT, has since lost around 70% of its value.
The incident sparked criticism towards Circle for its perceived reluctance to halt the transfer of funds after the exploit. In response, Circle's CEO, Jeremy Allaire, stated that the company only freezes USDC wallets when directed by law enforcement or courts, citing legal risks. In contrast, USDT has demonstrated a more agile approach to freezing funds linked to hacks or illicit activities.
As the largest decentralized perpetual futures exchange on Solana, Drift boasts over 175,000 users and a cumulative trading volume of roughly $150 billion. The platform offers a range of services, including perpetuals, spot trading, lending, borrowing, and cross-margin trading. The stablecoin market is becoming increasingly competitive, with exchanges, fintechs, and traditional financial institutions vying for control of on-ramps, liquidity, and settlement layers. While USDT still maintains a significant lead, Circle's USDC has been gaining ground, driven by regulatory alignment and growing institutional adoption.
With the new funding package, Tether plans to support fee reductions and user incentives tied to Drift's transition to USDT, 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, enabling the platform to restore user funds and resume operations.