In the aftermath of a devastating North Korean-led 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. The deal comprises $127.5 million from Tether and $20 million from other partners, aimed at supporting user recovery and rebooting the platform as a USDT-based perpetual futures exchange on Solana, replacing Circle's USDC. The rescue package includes 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 approximately $295 million in user losses over time.
This development comes on the heels of a North Korea-linked group infiltrating Drift Protocol, posing as a quantitative trading firm for about six months before executing an exploit that exceeded $270 million on April 1, causing Drift's governance token, DRIFT, to plummet by about 70% in value. The incident sparked criticism towards Circle for its handling of the exploit, particularly its decision not to halt the transfer of funds. In contrast, Tether has demonstrated a more proactive approach to freezing assets linked to 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 marks a significant shift in the stablecoin landscape.
The competition between stablecoins is intensifying, with exchanges, fintechs, and traditional institutions vying for control of on-ramps, liquidity, and settlement layers. While USDT still maintains a significant lead, Circle's USDC has been gaining ground, driven by regulatory alignment and growing institutional adoption.
The new funding package will also enable Tether to support fee reductions, user incentives, and liquidity support for Drift's transition to USDT, further solidifying USDT's position at the core of Drift's trading infrastructure and paving the way for the platform's recovery and relaunch.