Following a significant exploit, 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 package, which includes $127.5 million from Tether and $20 million from other partners, is designed to facilitate user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana, replacing Circle's USDC. The funding structure 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, resulted in losses exceeding $270 million and led to a significant decline in the value of Drift's governance token, DRIFT.
The incident also sparked controversy over Circle's response to the exploit, with critics arguing that the company could have acted more swiftly to freeze funds and prevent the attacker from transferring assets. In contrast, Tether has demonstrated its ability to freeze assets 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 this funding, Tether aims to not only support Drift's recovery but also to further establish USDT as a central component of the trading infrastructure, offering fee reductions and user incentives tied to the transition, as well as extending liquidity support to market makers.