Following a significant exploit linked to North Korea, Drift Protocol is set to relaunch using Tether's USDT as its core settlement layer, thanks to a proposed funding package of up to $147.5 million from Tether and its partners. This package, announced on Thursday, includes $127.5 million from Tether and $20 million from other partners, aiming to support the recovery of user funds and reboot the platform as a USDT-based perpetual futures exchange on Solana.
Prior to the exploit, Drift utilized Circle's USDC as its settlement layer. The rescue package is structured as a combination of revenue-linked credit facilities, 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 Drift suffered an exploit on April 1, resulting in losses exceeding $270 million, which led to a significant decline in the value of its governance token, DRIFT. The incident also sparked controversy surrounding Circle's response to the exploit, with critics arguing that the company could have acted more swiftly to freeze funds and prevent the attacker from transferring assets. In contrast, Tether has demonstrated a more agile approach to freezing funds linked to illicit activities.
As the largest decentralized perpetual futures exchange on Solana, with over 175,000 users and a cumulative trading volume of roughly $150 billion, Drift's transition to USDT marks a significant development in the stablecoin market. The competition among stablecoins is intensifying, with USDC gaining ground against USDT's long-standing dominance.
While USDT still maintains a substantial lead in terms of supply, USDC has been narrowing the gap through regulatory alignment and growing institutional adoption. The new funding package not only supports Drift's recovery but also underscores Tether's commitment to expanding its market share and influence in the digital asset space.