Following a recent 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 settlement layer, backed by a proposed funding package of up to $147.5 million from Tether and its partners. The package, which includes a revenue-linked credit facility, ecosystem grants, and loans to market makers, aims 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.
A portion of trading revenue will be allocated to a recovery pool to cover roughly $295 million in user losses over time. The funding comes after a North Korea-linked group infiltrated Drift Protocol, posing as a quantitative trading firm for approximately six months before executing the exploit on April 1.
Drift's governance token, DRIFT, has lost around 70% of its value since the incident. The decision to switch to USDT follows criticism of Circle's 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, USDT has a history of swiftly freezing assets linked to hacks or illicit activities.
As the largest decentralized perpetual futures exchange on Solana, with over 175,000 users and approximately $150 billion in cumulative trading volume, Drift's transition to USDT is expected to have significant implications for the stablecoin market. The move is part of a broader trend of intensifying competition among stablecoin issuers, with exchanges, fintechs, and traditional financial institutions vying for control of on-ramps, liquidity, and settlement layers in digital asset markets.