Crypto Research Firm Delphi Digital Admits to “Significant” Losses During Terra Crash

Delphi Digital, a U.S.-based crypto research and investment company, said it lost a “significant” amount of funds to the infamous Terra crash earlier this month. 

The firm shared a detailed report explaining the losses it incurred from its fervent support of the Terra blockchain. Delphi also admitted it was wrong about Terra’s algorithmic stablecoin, while adding that critics were right.

Delphi Digital is a collaborative organization that provides insights and updates to investment firms. The company has three units – Delphi Ventures, Delphi Research, and Delphi Labs. According to the crypto research firm, each of its units interacted with the Terra protocol at different levels, meaning each lost different amounts of funds during the incident. 

Delphi Digital Reports Large Unrealized Losses

Delphi Digital said its fervent support for the Terra blockchain did not play out as expected and that it is currently sitting on a “large unrealized loss.”

According to the report, Delphi Ventures, purchased some LUNA coins in the early part of 2021, which is worth approximately 0.5% of its net asset value (NAV). At its peak price of $116, LUNA and other Terra assets accounted for about 13% of the unit’s NAV.

Delphi’s venture arm also invested $10 million in a $1 billion funding round conducted by the Luna Foundation Guard (LFG), a non-profit organization backing the Terra blockchain. The company said the investment is now worthless. 

Delphi Digital’s software and development unit, Delphi Labs, also faced the same fate. With José Maria Macedo as the head of Delphi Labs and a key member of LFG, the unit was driven deep into investment in the Terra blockchain, which eventually resulted in losses. 

Delphi Labs contributed to establishing the Astroport and Mars protocols on the Terra ecosystem, with funding from equity holders within the company. It also received a grant of 30,000 LUNA and 466,666 UST for its support in establishing the Mars protocol.

Unlike other units, Delphi Research recorded the least financial interaction with the Terra blockchain. Delphi  Digital noted that the research unit received about 20,000 USD in payments for subscription services, which it still holds till date. 

Despite recording a large unrealized loss from the Terra crash, Delphi Digital noted that its losses do not affect its balance sheet. 

“Delphi is fully self-funded, and when we make high-conviction bets like this it’s our own capital at risk. We understood the risks of the algorithmic model upfront and sought to be transparent about them throughout; however, it’s clear we miscalculated the risks,” the company said.

Meanwhile, Delphi Digital is not the only crypto company to record significant losses during the Terra fiasco. While many crypto firms are yet to publicly declare their losses, Avalanche said it lost $60 million through its partnership with Terra.