Drift Protocol, recently compromised in a North Korean-led exploit, has announced plans to relaunch with Tether's USDT as its primary settlement layer after securing $147.5 million in funding. The package, comprising $127.5 million from Tether and $20 million from other partners, aims to support user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana.

Previously, Drift utilized Circle's USDC as its settlement layer. The rescue package includes 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 funding follows a North Korea-linked group's infiltration of Drift, resulting in over $270 million in losses on April 1. Drift's governance token, DRIFT, has since lost around 70% of its value. Circle faced criticism for its handling of the exploit, with some arguing it could have acted faster to freeze funds and prevent the attacker from transferring assets.

However, Circle's CEO, Jeremy Allaire, stated that the company only freezes USDC wallets when directed by law enforcement or courts. In contrast, USDT 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 transition to USDT marks a significant development in the stablecoin market. The competition between USDT and USDC continues to intensify, with Circle's USDC gaining ground through regulatory alignment and institutional adoption.

While USDT maintains a significant lead in terms of supply, USDC has seen its transaction volume surpass that of USDT in recent months. The new funding package will also enable Tether to support fee reductions and user incentives tied to Drift's transition to USDT, as well as provide liquidity support to designated market makers.

This move positions USDT at the center of Drift's trading infrastructure, offering a pathway to restore user funds and resume operations.