Following a significant exploit, Drift Protocol is set to relaunch with Tether's USDT as its primary settlement layer, thanks to a substantial funding package of up to $147.5 million from Tether and its partners. This package, which includes $127.5 million from Tether and $20 million from other partners, is designed to support the recovery of user funds and reboot the platform as a USDT-based perpetual futures exchange on Solana, replacing Circle's USDC. The deal 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 to cover roughly $295 million in user losses over time. This development comes after a North Korea-linked group infiltrated Drift Protocol, resulting in losses of over $270 million on April 1.
The incident led to Circle facing criticism for not halting the transfer of funds promptly, with the attacker moving approximately $232 million in USDC from Solana to Ethereum. In contrast, USDT has demonstrated its ability to freeze funds linked to illicit activities swiftly.
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 poised to significantly impact the stablecoin market, where competition is intensifying. With USDT still dominating the market, despite USDC gaining ground through regulatory alignment and institutional use, Tether's funding package also includes plans to reduce fees and provide user incentives tied to Drift's transition to USDT, aiming to bolster trading depth at relaunch.