After Terra's LUNA Collapse, Hashed Wallet Loses $3.5B, Delphi Digital Announces Loss

Following the collapse of the Terra ecosystem's tokens, terraUSD (UST) and Luna (LUNA), some major investors have come forward to reveal their losses. Two more Terra backers have revealed how their financial statements have been impacted.

Delphi Digital, a research firm and boutique investor, wrote in a blog post that it had always been concerned about the structure of UST and LUNA, but that the Luna Foundation Guard, a nonprofit that supports the Terra network, had large reserves that would prevent the unthinkable from happening.


"We always knew something like this was possible, and we tried to stress the risks to a system like this in our research and public commentary, but the fact is we miscalculated the risk of a 'death spiral' event coming to fruition. We’ve taken some heat for this over the last week, and we deserve it. The criticism is fair and we accept it ," the firm stated.

Delphi Ventures Master Fund purchased a small amount of LUNA in the first quarter of 2021, worth 0.5 percent of its net asset value (NAV) at the time, according to the firm. The fund's holdings grew as LUNA's value increased, including a $10 million investment in the LFG's funding round in February. That investment has lost its value.


While Delphi claims it did not sell any LUNA, it now has a "a large unrealized loss."


Delphi was once a believer in the LFG's ability to mitigate any risks from the LUNA-UST relationship, but once the price of bitcoin (BTC) began to rapidly decline earlier in the quarter, LFG's holdings were insufficient to serve as an effective backstop. To support LUNA and UST, the foundation purchased a large amount of bitcoin.


"“We believed a high level of external collateralization was a necessity in the long run, and we saw this as a path to get there. Unfortunately, it didn’t grow fast enough compared to UST supply, and, combined with a fall in value of the BTC reserves, the liability overhang was too large to be defended ," Delphi wrote.


Hashed, an early-stage venture fund based in Seoul, South Korea, is another of Terra's notable backers. According to Crunchbase data, the company participated in Terra's 2021 venture round, where it helped raise $25 million.


In 2019, Hashed wrote about Terra, "we were immediately impressed with the sophistication of their mechanical design and execution speed. They’ve done a superb job executing: building product, hiring, facilitating and interacting with the community, and more."


Hashed has stated publicly that it is "financially sound" and that Hashed Ventures is unaffected by the crisis.


Hashed did not respond to a request for comment right away, but on-chain data shows the company had staked over 27 million LUNA on the Columbus 3 mainnet, 9.7 million LUNA on the Columbus 4 mainnet, and 13.2 million LUNA on the current Columbus 5 mainnet.


Using pricing data from early April, Hashed's losses total more than $3.5 billion.


According to local media in South Korea, more than 200,000 investors own Terra-related tokens.


Yoon Suk-yeol, South Korea's newly elected president, is pro-crypto and has promised a regulatory framework for the asset class, which analysts believe will be implemented quickly given the scale of the Terra crisis.

By fLEXI tEAM