Following a significant exploit that resulted in the loss of over $270 million in client assets, Drift Protocol has announced plans to relaunch with USDT as its new settlement layer, courtesy of a substantial funding package of up to $147.5 million from Tether and its partners. The package, which includes $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, replacing Circle's USDC. The funding 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 massive exploit on April 1. The incident led to a 70% decline in the value of Drift's governance token, DRIFT. The crypto community criticized Circle for its handling of the exploit, particularly its decision not to halt the transfer of funds.
In contrast, USDT has demonstrated its ability to freeze assets linked to hacks or illicit activities promptly. As the largest decentralized perpetual futures exchange on Solana, Drift boasts over 175,000 users and $150 billion in cumulative trading volume.
The platform's transition to USDT is set to intensify competition in the stablecoin market, with USDT seeking to maintain its dominance amidst growing competition from USDC. With the new funding package, Tether plans to fund fee reductions, user incentives, and liquidity support to bolster trading depth at Drift's relaunch, positioning USDT at the core of the trading infrastructure and paving the way for user fund restoration and operational resumption.