In the wake of a devastating North Korean-led exploit, Drift Protocol has announced plans to relaunch with Tether's USDT as its primary settlement layer, backed by a substantial funding package of up to $147.5 million from Tether and its partners. This investment, comprising $127.5 million from Tether and $20 million from other partners, aims to facilitate user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana, transitioning away from Circle's USDC.
The rescue package encompasses 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 exploit, which occurred on April 1, saw a North Korea-linked group infiltrate Drift Protocol, posing as a quantitative trading firm for about six months before executing the attack. This incident led to significant criticism of Circle for not halting the money transfer promptly, with the attacker moving around $232 million in USDC from Solana to Ethereum using Circle's cross-chain transfer protocol. In contrast, Tether has demonstrated a more agile approach to freezing funds linked to hacks or illicit activities.
As the largest decentralized perpetual futures exchange on Solana, with over 175,000 users and $150 billion in cumulative trading volume, Drift's move to USDT reflects the intensifying competition in the stablecoin market, where exchanges, fintechs, and traditional institutions vie for control of on-ramps, liquidity, and settlement layers. With this new funding, Tether plans to support fee reductions, user incentives, and liquidity support for Drift's transition to USDT, bolstering its position in the stablecoin landscape.