Following a significant 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 new settlement layer, backed by a proposed funding package of up to $147.5 million from Tether and its partners. The funding 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. The deal involves up to $127.5 million from Tether and $20 million from other partners, with a portion of trading revenue and committed capital directed towards 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, posing as a quantitative trading firm for about six months before executing the exploit on April 1.
Drift's governance token, DRIFT, has since lost around 70% of its value. 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 marks a significant shift in the stablecoin landscape. The move is part of a broader trend of intensifying competition in the stablecoin market, with exchanges, fintechs, and traditional financial institutions vying for control of on-ramps, liquidity, and settlement layers.
While USDT still dominates the market, Circle's USDC has been gaining ground, driven by regulatory alignment and growing institutional use. With the new funding package, Tether plans to support fee reductions and user incentives tied to Drift's transition to USDT, as well as provide liquidity support to designated market makers to bolster trading depth at relaunch.