Solana $285M Hack Boosts USDT, Puts USDC Under Pressure

On April 1, attackers drained $285 million from the Solana-based Drift Protocol. In the days that followed, USDT’s market capitalization increased while USDC’s supply grew more slowly as users shifted holdings to find liquidity after the breach.

Market data showed USDT’s market cap rose roughly 2.1% to nearly $188 billion, while USDC’s supply increased about 1.4% to $78.25 billion. Traders and protocols moved assets quickly after the exploit and a separate DeFi attack earlier in the month.

Analysts at investment bank Compass Point wrote that outflows from decentralized finance could reduce USDC’s on-chain circulation and squeeze interest income tied to the stablecoin’s reserves. The analysts noted users might convert USDC to fiat or keep it on exchanges under yield-sharing arrangements, either of which would lower interest revenue or margins for Circle and Coinbase. As an example of rapid capital flight, they cited about $1.5 billion withdrawn from the lending protocol Aave after funds linked to a restaking project were stolen.

Drift investors filed a class-action lawsuit against Circle on April 14. The complaint alleges Circle failed to freeze stolen funds during an eight-hour window when attackers moved roughly $232 million in USDC across networks. Circle defended its actions; CEO Jeremy Allaire has argued that unilaterally freezing users’ funds would present a “significant moral quandary.” Drift said it will stop supporting USDC after receiving recovery commitments from Tether.

Jake Kennis, senior research analyst at blockchain analytics firm Nansen, noted that Tether’s USDT likely benefited from deeper liquidity on centralized venues, giving traders a quicker route to exit on-chain positions during stress. “USDT’s deeper liquidity across centralized venues provides a more immediate ‘flight to safety’ path during DeFi stress events,” Kennis wrote. He added that broader exchange integration and larger market share can create compounding effects during periods of elevated protocol risk.

Compass Point also pointed to the composition of reserve holdings. USDC reserves are largely invested in short-duration U.S. Treasuries and similar cash equivalents, generating interest income that contributes to Circle’s and Coinbase’s gross profit. If holders move USDC off-chain or into exchange accounts with shared yields, the interest yield and margins tied to those Treasury holdings could fall, the analysts warned.

The incident prompted a market reaction for related equities. Compass Point assigned Circle a Sell rating with a $77 price target. Circle shares traded below $98 on Tuesday, reflecting recent volatility.

Both stablecoins remain collateralized and in circulation. Market participants, protocol operators and regulators are monitoring how large hacks affect stablecoin flows and the revenue models of their issuers.