Following a significant exploit linked to North Korea, Drift Protocol is set to relaunch with Tether's USDT as its primary settlement layer, thanks to a substantial 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, replacing its previous use of Circle's USDC.
The funding combines 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. This development comes after a North Korea-linked group infiltrated Drift Protocol, resulting in losses of over $270 million on April 1, which led to a 70% decline in the value of Drift's governance token, DRIFT.
The incident also sparked criticism of Circle for not halting the transfer of funds after the exploit, with some arguing that the company could have acted faster to freeze assets and prevent the attacker from moving them. However, Circle's approach is to only freeze USDC wallets when directed by law enforcement or courts, reflecting its strategy to align closely with regulators and institutions.
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 is significant. The move is part of an intensifying competition in the stablecoin market, where exchanges, fintechs, and traditional financial institutions are vying to control on-ramps, liquidity, and settlement layers.
While USDT still dominates the market, USDC has been gaining ground, driven by regulatory alignment and growing institutional use. With the new funding package, Tether plans to support fee reductions and user incentives tied to Drift's transition to USDT, as well as provide liquidity support to market makers, bolstering trading depth at relaunch. This development positions USDT at the core of Drift's trading infrastructure, providing a pathway to restore user funds and resume operations.