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Welcome!
A DeFi protocol has been hacked for 9 figures, an exchange is fined by the US Treasury, and the SEC is investigating Bored Apes.
Today, we take a look at ETHās recent deflationary streak and our Research team examines chicken bonds on Liquity.
This is theĀ Delphi Daily. Letās dive in.
šØ In Case You Missed It

- Solana-based Mango Markets is exploited for $100M. The hacker is proposing to return a portion of the stolen funds on the DAOās forum.
- Crypto exchange Bittrex to pay $29M in fines to the US Treasury for facilitating trades from sanctioned jurisdictions like Syria or Crimea.
- Greyscale argues the SECās actions of approving ETFs based on BTC futures but not spot BTC are discriminatory. Elsewhere, the SEC rejects WisdomTreeās spot BTC ETF.
- The SEC is investigating Yuga Labs, creator of Bored Ape Yacht Club NFTs, over whether sales of its digital assets violated federal law.
- The BNB Smart Chain plans to perform a hard fork to fix an exploit that drained an estimated $100M from the blockchain last week.
š ETH Turns Deflationary as Users Rush to Mint XEN Tokens

- Over the past 4 days, a total of 11.2K ETH has been burned as users rush to interact with a recently launched project. As a result, ETH has turned deflationary since the protocol has only minted a total of 6.5K ETH over the same period.
- The mysterious new project appears to be the XEN token launched by the āFair Crypto Foundation.ā The projectās website states that it was founded by Jack Levin, an early engineer at Google.
- Users can mint the token for free by paying the gas fee and then stake the token to earn an APY of 20%. The project claims that 582K wallets have minted the token but only 1K wallets have staked the token (representing 3.5% of the supply).
- More importantly, users have spent a total of 4.1K ETH to interact with the XEN token contract. At one point since the tokenās launch, the contract accounted for more than 48% of the gas used on Ethereum.
- Since the Merge, ETH has remained inflationary due to low levels of on-chain activity and gas fees. However, the rush to mint XEN tokens has led to increased on-chain activity, turning ETH deflationary.
- To be sure, ETHās total supply is still up by 7.7K ETH since the Merge, meaning that there is still some way to go before ETH can be called a deflationary asset.
- However, many have pointed to the deflation caused by the XEN token as evidence that a sustained increase in on-chain activity during the next bull market can lead to massive deflation in ETH.
- For more on ETH supply, Delphi members can read our Delphi ProĀ reportĀ here.
ā” Monthly Chartbook ā Falling Out of the Merge

- Chicken bonds were recently launched on the back of Liquity to act as a yield aggregator for LUSD depositors while helping to retain the LUSD peg.
- Holders can bond their LUSD, and receive bLUSD after the bonding time. The acquired bLUSD can be thought of as LUSD (principal) + future yield. The LUSD deposited into chicken bonds is sent to the Liquityās Stability Pool and LUSDās Curve pools to earn yields.
- LUSD bonders can exit the bonding stage at any time to āchicken outā and receive their principal LUSD back at no loss. If they exit early, they also receive no yield.
- LUSD bonders can remain bonded and āchicken inā to earn boosted yields aggregated from the Stability Pool and Curve. There will be a trading market for the bLUSD-LUSD pair to allow users to exit positions even after they āchicken in.ā
- In theory, bLUSD should never trade below 1 LUSD, or itāll be arbitraged through the redemption of 1 LUSD per 1 bLUSD.
- If LUSD is above $1, move LUSD from the Stability Pool to Curve and reduce LUSD price by essentially āsellingā LUSD for the other Curve pool counterparts.
- If LUSD is below $1, move LUSD from Curve to the Stability Pool and increase LUSD price by essentially ābuyingā LUSD using the other Curve pool counterparts.
- Participants will also receive a āchicken outā or āchicken inā dynamic NFT designed by Luchadores with a rising floor price due to bLUSD.
- For more DeFi analysis, Delphi members can read our Delphi Pro report here.
š£Ā Notable Tweets
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Overview of the IST Stablecoin