Following a significant exploit, Drift Protocol has announced plans to relaunch with Tether's USDT as its settlement layer after securing funding of up to $147.5 million from Tether and partners. The package, which includes $127.5 million from Tether and $20 million from other partners, aims to support user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana. The funding comes after a North Korea-linked group infiltrated Drift, resulting in losses of over $270 million. The rescue package combines revenue-linked credit facilities, ecosystem grants, and loans to market makers, with a portion of trading revenue directed towards a recovery pool to cover user losses over time.
Drift's governance token, DRIFT, has lost approximately 70% of its value since the exploit. The incident led to criticism of Circle for not halting the transfer of funds, with some arguing that Circle could have frozen assets to prevent the attacker from moving them. However, Circle's CEO stated that the company only freezes USDC wallets when directed by law enforcement or courts. In contrast, USDT has been more proactive in freezing funds linked to hacks or illicit activities.
Drift, the largest decentralized perpetual futures exchange on Solana, has over 175,000 users and $150 billion in cumulative trading volume. The move to USDT reflects the intensifying competition in the stablecoin market, with Circle's USDC gaining share due to regulatory alignment and institutional use. Tether plans to fund fee reductions and user incentives tied to Drift's transition to USDT, while providing liquidity support to market makers.
The transition positions USDT at the center of Drift's trading infrastructure, providing a pathway to restore user funds and resume operations.