Following a significant exploit that resulted in the loss of over $270 million in user assets, Drift Protocol has announced plans 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. This deal includes $127.5 million from Tether and $20 million from other partners, designed to support user recovery and reboot the platform as a USDT-based perpetual futures exchange on Solana, replacing Circle's USDC. 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 allocated to a recovery pool aimed at covering roughly $295 million in user losses over time.
The exploit, linked to a North Korean group, led to a significant loss of user funds and a 70% decline in the value of Drift's governance token, DRIFT. The incident also sparked controversy surrounding Circle's handling of the exploit, with some critics 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 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 seen as a strategic move in the intensifying competition among stablecoin issuers.
With USDT still leading the market, despite USDC's recent gains, Tether's funding package for Drift also includes plans to support fee reductions, user incentives, and liquidity provision to market makers, solidifying USDT's position at the center of Drift's trading infrastructure and paving the way for the platform's recovery and relaunch.