Following a significant exploit that resulted in the loss of over $270 million in client assets, Drift Protocol has announced a planned relaunch using Tether's USDT as its new settlement layer, backed by a proposed $147.5 million funding package from Tether and its partners. The funding package, which includes up to $127.5 million from Tether and $20 million from other partners, is designed to support user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana. The deal comprises 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 aimed at covering roughly $295 million in user losses over time.
This development comes after a North Korea-linked group infiltrated Drift Protocol, resulting in a substantial loss of funds. The incident led to criticism of Circle, the issuer of USDC, for not halting the transfer of exploited funds promptly. In contrast, Tether has demonstrated its ability to freeze assets linked to hacks or illicit activities quickly. As the largest decentralized perpetual futures exchange on Solana, Drift boasts over 175,000 users and approximately $150 billion in cumulative trading volume.
The shift to USDT is part of a broader trend of intensifying competition in the stablecoin market, with Tether and Circle vying for dominance. The new funding package will also enable Tether to support fee reductions, user incentives, and liquidity support for Drift's transition to USDT, further solidifying USDT's position in the market.