In the wake of a devastating North Korean-led exploit, Drift Protocol has announced plans to relaunch with Tether's USDT as its new settlement layer, thanks to a substantial funding package of up to $147.5 million from Tether and its partners. This deal, which includes $127.5 million from Tether and $20 million from other partners, is designed to support user recovery efforts and reboot the platform as a USDT-based perpetual futures exchange on Solana, marking a significant shift away from Circle's USDC. The funding package 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 aimed at covering approximately $295 million in user losses over time.
The exploit, which occurred on April 1, resulted in losses exceeding $270 million and led to a 70% decline in the value of Drift's governance token, DRIFT. Circle 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 swiftly 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 stablecoin market competition. With USDT at the center of its trading infrastructure, Drift aims to restore user funds and resume operations, while Tether plans to fund fee reductions and user incentives tied to the transition, as well as provide liquidity support to designated market makers.