Following a significant exploit linked to North Korea, Drift Protocol has announced plans to relaunch with Tether's USDT as its primary settlement layer, backed by a 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, Drift utilized Circle's USDC as its settlement layer. A portion of the 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, resulting in losses exceeding $270 million on April 1. Drift's governance token, DRIFT, has since lost approximately 70% of its value. The incident sparked criticism towards Circle for not halting the money transfer, with some arguing that the company could have moved faster to blacklist wallets and freeze funds.
However, Circle's CEO, Jeremy Allaire, stated that the company only freezes USDC wallets when directed by law enforcement or courts. In contrast, USDT has demonstrated a more agile approach to freezing assets linked to hacks or illicit activities.
As the largest decentralized perpetual futures exchange on Solana, Drift boasts over 175,000 users and a cumulative trading volume of roughly $150 billion. The platform offers a range of services, including perpetuals, spot trading, lending, borrowing, and cross-margin trading. The competition in the stablecoin market is intensifying, with Circle's USDC gaining ground on Tether's long-standing dominance. While USDT still maintains a significant lead, Circle's transaction volume has outpaced Tether's in recent months.
The new funding package will enable Tether to support fee reductions and user incentives tied to Drift's transition to USDT, as well as provide liquidity support to designated market makers. This move positions USDT at the center of Drift's trading infrastructure, providing a pathway to restore user funds and resume operations.