Following a significant exploit that resulted in the loss of over $270 million in client assets, Drift Protocol has announced plans to relaunch with Tether's USDT as its new settlement layer, thanks to a proposed funding package of up to $147.5 million from Tether and its partners. The deal comprises $127.5 million from Tether and $20 million from other partners, and is structured to facilitate user recovery and reboot 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 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 aimed at covering approximately $295 million in user losses over time. The funding comes after a North Korea-linked group infiltrated Drift Protocol, posing as a quantitative trading firm for about six months before executing an exploit worth over $270 million on April 1.
Drift's governance token, DRIFT, has lost around 70% of its value since the exploit. The incident led to criticism of Circle for its perceived reluctance to halt the money transfer after the exploit, 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, not in real-time during hacks, reflecting Circle's strategy to align closely with regulators and institutions. 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 roughly $150 billion in cumulative trading volume, Drift offers a range of services including perpetuals, spot trading, lending, borrowing, and cross-margin trading. The competition in the stablecoin market is intensifying, with Circle's USDC gaining share on the back of regulatory alignment and growing institutional use, while Tether's USDT still maintains a significant lead.
With the new funding package, Tether plans to fund fee reductions and user incentives tied to Drift's transition to USDT, as well as provide liquidity support to designated market makers to bolster trading depth at relaunch. The move positions USDT at the center of Drift's trading infrastructure, providing a pathway to restore user funds and resume operations.