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 primary settlement layer, thanks to a substantial funding package of up to $147.5 million from Tether and its partners. This investment, 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 Circle's USDC as its settlement layer. The package comprises 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 exploit, linked to a North Korea-based group, occurred on April 1 and has had a significant impact on Drift's governance token, DRIFT, which has lost around 70% of its value since the incident.
Circle, the issuer of USDC, faced criticism for its response to the exploit, with some arguing that it could have acted faster to freeze funds and prevent the attacker from transferring assets. In contrast, Tether has a history of swiftly freezing assets 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 seen as a strategic move to restore user funds and resume operations. The funding package also includes plans for Tether to support fee reductions and user incentives tied to Drift's transition to USDT, as well as liquidity support for designated market makers to enhance trading depth at relaunch.