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, backed by a proposed $147.5 million funding package from Tether and its partners. This package, which includes up to $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. Previously, Drift relied on Circle's USDC as its settlement layer. The rescue 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.

This development comes after a North Korea-linked group infiltrated Drift Protocol, posing as a quantitative trading firm for about six months before executing the exploit on April 1. The incident led to a significant loss of value for Drift's governance token, DRIFT, which has plummeted by about 70% since the exploit. Circle faced criticism from the crypto community for its handling of the exploit, particularly its decision not to halt the transfer of funds. In contrast, Tether has demonstrated a more proactive approach to 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 expected to have significant implications for the stablecoin market. The competition between USDT and USDC is intensifying, with each stablecoin issuer vying for control of the on-ramps, liquidity, and settlement layers that underpin digital asset markets. While USDT maintains a dominant position, USDC has been gaining ground, driven by its regulatory alignment and growing institutional adoption.

With the new funding package, Tether plans to support fee reductions and user incentives tied to Drift's transition to USDT, as well as provide liquidity support to designated market makers to enhance trading depth at relaunch. This move is seen as a strategic effort to position USDT at the core of Drift's trading infrastructure, while providing a pathway for the platform to restore user funds and resume operations.