In the aftermath of a substantial exploit linked to North Korea, Drift Protocol has announced plans to relaunch with Tether's USDT as its primary settlement layer, facilitated by a proposed $147.5 million funding package from Tether and other partners. The funding, which includes $127.5 million from Tether and $20 million from additional partners, is structured as a combination of revenue-linked credit facilities, ecosystem grants, and loans to market makers. A portion of trading revenue will be allocated to a recovery pool to compensate users for approximately $295 million in losses over time. This development comes after Drift's governance token, DRIFT, experienced a 70% decline in value subsequent to the exploit.
The platform, previously utilizing Circle's USDC as its settlement layer, will now transition to USDT. The exploit, which resulted in the loss of over $270 million, highlighted the differences in approaches between Circle and Tether regarding the freezing of funds in response to illicit activities. While Circle's policy is to freeze funds only upon direction from law enforcement or courts, Tether has demonstrated a more proactive approach in freezing assets linked to hacks.
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 expected to significantly impact the stablecoin market. The move intensifies the competition between USDT and USDC, with Tether aiming to reinforce its dominance through strategic partnerships and investments.