Drift Protocol, which recently fell victim to a substantial exploit linked to North Korea, has announced plans to relaunch using Tether's USDT as its primary settlement layer. This decision follows the securing of a proposed funding package worth up to $147.5 million from Tether and its partners.
The package is designed to aid in user recovery efforts and support the platform's transition into a USDT-based perpetual futures exchange on Solana, replacing Circle's USDC as its settlement layer. The deal comprises up to $127.5 million from Tether and an additional $20 million from other partners, structured as a combination of revenue-linked credit facilities, ecosystem grants, and loans to market makers. A portion of the trading revenue, alongside committed capital, will be allocated to a recovery pool aimed at covering approximately $295 million in user losses over time. This development comes after Drift suffered an exploit on April 1, resulting in losses exceeding $270 million, and saw its governance token, DRIFT, decline by about 70% in value.
The incident also drew criticism towards Circle for its handling of the situation, particularly its decision not to halt the transfer of funds immediately after the exploit. In contrast, Tether has demonstrated a more proactive approach to freezing assets 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 shift. The stablecoin market is becoming increasingly competitive, with Circle's USDC gaining ground against Tether's USDT. Despite USDT's dominant market share, USDC has seen its transaction volume surpass that of USDT in recent months.
The new funding package not only supports Drift's recovery but also positions USDT at the heart of its trading infrastructure, providing a pathway for the restoration of user funds and the resumption of operations.