Following a significant exploit that resulted in the loss of over $270 million in client assets, Drift Protocol has announced plans to relaunch with USDT as its new settlement layer, courtesy of a substantial funding package of up to $147.5 million from Tether and its partners. The funding package, which includes a revenue-linked credit facility, ecosystem grants, and loans to market makers, aims to support user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana. This move marks a shift away from Circle's USDC, which was previously used as the settlement layer.
A portion of Drift's trading revenue will be allocated to a recovery pool to cover approximately $295 million in user losses over time. The exploit, linked to a North Korea-based group, occurred on April 1 and resulted in the loss of over $270 million.
Drift's governance token, DRIFT, has since lost around 70% of its value. The incident sparked controversy surrounding Circle's response to the exploit, with some critics arguing that the company 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, Drift boasts over 175,000 users and a cumulative trading volume of roughly $150 billion. The platform's transition to USDT is seen as a strategic move in the intensifying stablecoin market, where competition is increasing among exchanges, fintechs, and traditional financial institutions vying for control of on-ramps, liquidity, and settlement layers. With USDT at the center of its trading infrastructure, Drift aims to restore user funds and resume operations, while Tether plans to provide fee reductions and user incentives tied to the transition.