Following a significant exploit that compromised over $270 million in client assets, Drift Protocol has announced plans to relaunch with Tether's USDT as its primary settlement layer, backed by a funding package of up to $147.5 million from Tether and its partners. The package, which includes a $127.5 million contribution from Tether and $20 million from other partners, is designed to support user recovery efforts and reboot the platform as a USDT-based perpetual futures exchange on Solana. This move marks a shift away from Circle's USDC, which was previously used as the platform's settlement layer.
The rescue package 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 approximately $295 million in user losses over time. The funding announcement comes after a North Korea-linked group infiltrated Drift Protocol, posing as a quantitative trading firm for about six months before executing an exploit that resulted in losses exceeding $270 million on April 1. Since the exploit, Drift's governance token, DRIFT, has lost around 70% of its value. The incident drew criticism from the crypto community, with some arguing that Circle could have acted more swiftly to halt the transfer of funds and prevent the attacker from moving assets.
However, Circle's approach is to freeze USDC wallets only when directed by law enforcement or courts, citing legal risks. In contrast, USDT has demonstrated a greater willingness to freeze assets linked to hacks or illicit activities.
As the largest decentralized perpetual futures exchange on Solana, with over 175,000 users and approximately $150 billion in cumulative trading volume, Drift's transition to USDT is seen as a strategic move to restore user funds and resume operations. The stablecoin market is becoming increasingly competitive, with exchanges, fintechs, and traditional financial institutions vying for control of on-ramps, liquidity, and settlement layers. While USDT still maintains a significant lead, Circle's USDC has been gaining ground, driven by regulatory alignment and growing institutional adoption. With this new funding package, Tether plans to support fee reductions and user incentives tied to Drift's transition to USDT, as well as provide liquidity support to designated market makers to enhance trading depth at relaunch.