Following a significant exploit linked to North Korea, Drift Protocol has announced plans to relaunch with Tether's USDT as its primary settlement layer, backed by a substantial funding package of up to $147.5 million from Tether and its partners. This deal aims to support user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana, moving away from its previous use of Circle's USDC. The 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 exploit, which occurred on April 1, resulted in losses of over $270 million and led to a 70% decline in the value of Drift's governance token, DRIFT.
The incident also sparked criticism towards Circle for not halting the transfer of funds quickly enough, with some arguing that the company could have acted faster to freeze assets and prevent further movement of the stolen funds. In contrast, Tether has demonstrated its ability to freeze funds linked to illicit activities promptly.
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 in the intensifying competition among stablecoin issuers. With USDT at its core, Drift aims to restore user funds, resume operations, and enhance its trading infrastructure, while Tether plans to support fee reductions, user incentives, and liquidity provision to designated market makers.