Following a significant exploit linked to North Korea, Drift Protocol has announced plans to relaunch using Tether's USDT as its settlement layer, backed by a 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 the recovery of user funds and the rebooting of the platform as a USDT-based perpetual futures exchange on Solana.

Previously, the platform utilized Circle's USDC as its 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 comes after a North Korea-linked group infiltrated Drift Protocol, resulting in an exploit that exceeded $270 million on April 1. Drift's governance token, DRIFT, has since lost around 70% of its value.

The exploit led to criticism of Circle for not halting the transfer of funds, with the attacker moving approximately $232 million in USDC from Solana to Ethereum using Circle's cross-chain transfer protocol. In response, Circle's CEO, Jeremy Allaire, stated that the company only freezes USDC wallets when directed by law enforcement or courts, citing legal risks.

In contrast, USDT has demonstrated a greater ability to freeze 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 transition to USDT is seen as a strategic move. The competition in the stablecoin market is intensifying, with Circle's USDC gaining ground on Tether's long-standing dominance. While USDT still maintains a significant lead, Circle's transaction volume has outpaced Tether's in recent months.

The new funding package will also enable Tether to provide fee reductions and user incentives tied to Drift's transition to USDT, as well as extend liquidity support to designated market makers. Drift's move positions USDT at the core of its trading infrastructure, providing a pathway to restore user funds and resume operations.