The shattering downfall of Terra ecosystem’s tokens—terraUSD (UST) and Luna (LUNA)—has driven key investors to lay bare the magnitude of their financial bruises. Among those stepping forward, two significant backers have peeled back the curtain, revealing the true toll on their balance sheets.
Delphi Digital, a boutique investor and research collective, confessed in a blog that despite harboring doubts about the fragile architecture of UST and LUNA, they pinned hopes on the hefty reserves held by the Luna Foundation Guard (LFG)—a nonprofit committed to propping up Terra—to avert catastrophic outcomes.
Reflections on Risk and Missteps
“Acknowledging that such a collapse was within the realm of possibility, we emphasized potential hazards in our analyses and commentary,” Delphi Digital admitted. “Yet, the fatal misjudgment was underestimating the emergence of a ‘death spiral.’ The criticism that followed over the past week? Absolutely warranted, and we embrace it.”
Back in Q1 2021, the firm’s Delphi Ventures Master Fund dipped a toe in by acquiring a modest stake in LUNA—representing just 0.5% of the fund’s net asset value (NAV) then. As LUNA’s price surged, so did their position, swelling further with a $10 million infusion during the Luna Foundation Guard’s funding round in February. Today, however, that capital is rendered valueless.
The fund left its LUNA holdings untouched, thereby bearing the brunt of a substantial unrealized loss.
The Limits of Collateral and the Bitcoin Slide
Delphi once placed faith in the LFG’s cache of bitcoin, purchased to act as a buffer against the volatile UST-LUNA dynamics. Yet, when bitcoin’s value nosedived earlier in the quarter, those reserves were insufficient to stave off the unraveling.
- Delphi viewed ongoing external collateralization as essential for Terra’s longevity.
- They hoped the LFG’s reserves would scale alongside UST’s expanding supply.
- Bitcoin’s price depreciation, however, left the liability burden too daunting to defend.
“We envisaged a trajectory where external backing would grow steadily, but the lag in its expansion, compounded by BTC’s decline, overwhelmed the system,” the firm lamented.
Hashed’s Heavy Toll
Among Terra’s early advocates, Hashed—a Seoul-based venture capital outfit—stood out. Its involvement included participation in TerraForm Labs’ $25 million venture round in 2021, per Crunchbase’s records.
“From the jump in 2019, we were struck by Terra’s sharp mechanical design paired with rapid implementation,” Hashed reflected. “They nailed product delivery, team building, community engagement, and beyond.”
Despite Hashed’s assertions of financial robustness and claims that its venture arm remained unaffected, on-chain records paint a grimmer picture. The firm staked enormous sums across Terra’s mainnet iterations:
- 27 million LUNA on Columbus 3 mainnet
- 9.7 million LUNA on Columbus 4 mainnet
- 13.2 million LUNA on Columbus 5 mainnet
Putting these figures together, Hashed’s cumulative losses surpass a staggering $3.5 billion, according to early April pricing data.
Wider Ripples in South Korea
Domestic reports highlight that over 200,000 South Korean investors are tangled up in Terra-related tokens, underscoring the widespread reach of the fallout.
Newly elected President Yoon Suk-yeol has embraced a crypto-positive stance and pledged to establish a regulatory framework tailored for digital assets. Industry analysts predict this regulatory evolution will accelerate sharply, propelled by the magnitude of the Terra debacle.
Key Statistics:
| Delphi Digital | $10 million (LFG Funding Round) | Investment now worthless | Large unrealized loss |
| Hashed | ~50 million LUNA staked | Tokens devalued | $3.5 billion+ |
| South Korea Investors | 200,000+ holders of Terra tokens | Widespread exposure | Significant financial impact |
