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 proposed funding package of up to $147.5 million from Tether and its partners. The deal comprises $127.5 million from Tether and $20 million from other partners, aiming to support user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana, replacing Circle's USDC. The funding package includes 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 to cover approximately $295 million in user losses over time.
This development comes after a North Korea-linked group infiltrated Drift Protocol, resulting in losses exceeding $270 million on April 1, causing Drift's governance token, DRIFT, to lose around 70% of its value. The incident sparked criticism towards Circle for not halting the transfer of exploited funds, with some arguing that Circle 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 closely align 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 expected to position USDT at the center of its trading infrastructure, providing a pathway to restore user funds and resume operations.