Following a significant exploit by a North Korea-linked group, Drift Protocol has announced plans to relaunch with Tether's USDT as its settlement layer, after receiving 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 user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana. The funding will also cover the costs of transitioning from Circle's USDC to USDT. A portion of the trading revenue will be allocated to a recovery pool to compensate users for their losses, which totaled around $295 million.
The exploit, which occurred on April 1, resulted in the loss of over $270 million and a 70% decline in the value of Drift's governance token, DRIFT. The incident also sparked controversy surrounding Circle's handling of the exploit, with some critics arguing that the company could have acted faster to freeze funds and prevent the attacker from transferring the assets. In contrast, Tether has a history of freezing assets linked to hacks and illicit activities. The partnership between Drift and Tether is expected to enhance the platform's trading infrastructure and provide a pathway for user fund recovery.
The move also marks a significant development in the stablecoin market, where competition is intensifying among players like Circle and Tether.