Following a recent exploit by a North Korean group, Drift Protocol has announced plans to relaunch using Tether's USDT as its settlement layer, after securing a funding package of up to $147.5 million from Tether and its partners. The package, which includes $127.5 million from Tether and $20 million from other partners, is designed to support user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana. Previously, the platform utilized Circle's USDC as its settlement layer.
The funding package combines a revenue-linked credit facility, ecosystem grants, and loans to market makers, with a portion of trading revenue and committed capital directed towards a recovery pool to cover approximately $295 million in user losses over time. The exploit, which occurred on April 1, resulted in the loss of over $270 million and has had a significant impact on Drift's governance token, DRIFT, which has lost around 70% of its value since the incident. Circle, the issuer of USDC, faced criticism for its handling of the exploit, with some arguing that the company could have acted faster to freeze funds and prevent the attacker from transferring assets.
In contrast, Tether has a history of freezing assets linked to hacks and illicit activities. The move to USDT is seen as a strategic shift for Drift, which is the largest decentralized perpetual futures exchange on Solana, with over 175,000 users and $150 billion in cumulative trading volume.
The competition in the stablecoin market is intensifying, with Circle's USDC gaining ground on Tether's USDT in recent months. The new funding package will also enable Tether to fund fee reductions and user incentives tied to Drift's transition to USDT, while providing liquidity support to designated market makers to bolster trading depth at relaunch.