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 proposed funding package of up to $147.5 million from Tether and its partners. The funding package, which includes a revenue-linked credit facility, ecosystem grants, and loans to market makers, aims to support user recovery and reboot the platform.
A portion of the trading revenue will be allocated to a recovery pool to cover approximately $295 million in user losses over time. The exploit, which occurred on April 1, was carried out by a North Korea-linked group and resulted in the loss of roughly $232 million in USDC, which was transferred from Solana to Ethereum using Circle's cross-chain transfer protocol. The incident has sparked debate about the role of stablecoin issuers in preventing and responding to exploits, with some critics arguing that Circle could have acted faster to freeze funds and prevent the attacker from transferring the assets.
In contrast, Tether has a history of freezing assets linked to hacks and illicit activities. The transition to USDT is seen as a strategic move by Drift to restore user funds and resume operations, while also positioning USDT at the center of its trading infrastructure.
The funding package will also support fee reductions and user incentives tied to Drift's transition to USDT, as well as provide liquidity support to designated market makers to bolster trading depth at relaunch.