Drift Protocol, victim of a recent North Korean exploit, plans to relaunch with Tethers USDT as its settlement layer after securing a proposed funding package of up to $147.5 million from the stablecoin issuer and partners, the companies said on Thursday.
The deal includes up to $127.5 million from Tether and $20 million from the other partners, structured to support user recovery after Drift’s April 1st exploit and relaunch the platform as a USDT-based perpetual futures exchange on Solana. Previously, the platform used Circle’s stablecoin USDC as a settlement layer.
The rescue package combines an income-dependent credit facility, ecosystem grants and loans to market makers. A portion of the trading revenue, along with committed capital, will be directed into a recovery pool aimed at covering about $295 million in user losses over time.
The funding comes after a North Korea-linked group infiltrated Drift Protocol and posed as a quantitative trading firm for about six months before executing an exploit that totaled more than $270 million on April 1. Drift’s governance token, DRIFT, has lost around 70% of its value since exploitation.
Circle came under fire from the crypto community for its apparent unwillingness to stop the money transfer after the exploit. The attacker moved about $232 million in USDC from Solana to Ethereum using Circle’s cross-chain transfer protocol. Some critics, including blockchain investigator ZachXBT, said Circle could have moved faster to blacklist wallets and freeze funds to prevent (or at least slow down) the attacker from moving the assets.
However, Circle’s did not take such actions due to legal risks.
Its CEO, Jeremy Allaire, later said his company freezes USDC wallets only when directed by law enforcement or courts, not in real time during hacks. The move reflects Circle’s broader strategy to align closely with regulators and institutions.
Its rival, USDT, meanwhile, is more nimble in freezing funds. The stablecoin issuer has repeatedly frozen assets linked to hacks or other illegal activities in the past.
Drift is the largest decentralized perpetual futures exchange on Solana with more than 175,000 users and approximately $150 billion in cumulative trading volume. Founded in 2021, it offers perpetuities, spot trading, lending, borrowing and cross margin trading.
Stablecoin war
Competition in stablecoins is intensifying as exchanges, fintechs and traditional financial institutions race to control the on-ramps, liquidity and settlement layers that underpin the digital asset markets.
Circle’s USDC has steadily chipped away at Tether’s long-standing dominance of the stablecoin market, gaining share on the back of regulatory alignment and growing institutional use.
While USDT still leads by a wide margin, according to CoinDesk data, with about $185.5 billion in supply versus about $78.6 billion for USDC, Circle’s transaction volume surpassed Tether’s in recent months as its market share grew.
With the new funding package, Tether also plans to fund fee reductions and user incentives tied to Drift’s transition to USDT, while also extending liquidity support to designated market makers to strengthen trading depth upon relaunch.
Drift said the move places USDT at the center of its trading infrastructure while providing a path to restore user funds and resume operations.
Read more: How a Solana Feature Designed for Convenience Lets Attackers Drain More than $270 Million from Drift
