🌅 Welcome!
The past 24 hours have been a whirlwind. We are just beginning to see the aftermath of FTX’s downfall. The picture will become clearer as time passes and we see who was exposed and to what degree.
Today, we analyze the drop in TVL on Solana and our Research team examines Gearbox Protocol and its credit accounts.
This is the Delphi Daily. Let’s dive in.
🚨 In Case You Missed It

- Binance is unlikely to complete its proposed takeover of FTX after reviewing the company’s books.
- CZ calls on all crypto exchanges to publish proof of reserves. Elsewhere, Binance tops up its insurance fund balance to $1B.
- Leaders of USDT and USDC claim they have no exposure to FTX or Alameda.
- Singapore’s state-owned investor, Temasek is engaging with FTX as its shareholder following the bailout plan from Binance.
- U.S. CTFC is monitoring Binance’s proposed acquisition of FTX.
📊 Solana TVL Drops Amid Growing Concerns on FTX/Binance Deal

- Over the last three days, the total value locked (TVL) across Solana is down by 45% from almost $1B to $554M. TVL in SOL tokens is down by 24% from 27M to 20M SOL, while SOL price itself is down by 45% during the same period.
- The big announcement that Binance is looking to acquire FTX has prompted growing concerns about the future of the blockchain.
- FTX and Alameda Research had become the biggest patrons of Solana by participating in funding rounds of many Solana-native protocols. If the deal with Binance goes through, new management is likely to favor its own BNB Chain.
- Alameda’s recently leaked balance sheet shows that the firm owns almost $1.1B of locked and unlocked SOL tokens. If the deal with Binance does not materialize, the firm may be forced to sell these holdings.
- Solana validators are also set to unlock more than 50M SOL tokens (13% of total supply) that are worth almost $1B in less than 24 hours. This can compound problems for the network as validators rush to sell tokens and exit the protocol.
⚡ Gearbox Protocol: Shifting DeFi Into the Next GEAR
- When used correctly, leverage can be a powerful tool. It helps amplify one’s exposure to market opportunities and take advantage of small inefficiencies to bring markets closer to equilibrium.
- DeFi is yet to see an efficient model for spot leverage. Over-collateralized money markets are relatively safe venues, but the one thing they lack is capital efficiency.
- The launch of Gearbox v2 on Ethereum could potentially change this. Gearbox introduces a new primitive, called credit accounts, which are essentially smart contract-based wallets with certain built-in features.
- Between credit accounts and its own independent money markets, Gearbox brings a more efficient approach to leverage.
For example, let’s say Alice has 10k USDC she wants to trade with. Alice thinks token XYZ stands to appreciate in the short-term, and she wants to buy XYZ with some leverage.
- She deposits that 10k USDC into her Gearbox credit account. She wants to use her USDC to lever up 5x on Gearbox. She borrows 40k USDC from Gearbox’s money market and buys 35k USDC worth of token XYZ.
- Note that since the collateral is usable, 5x leverage entails borrowing 40k USDC (for a total of 50k including collateral).
- If XYZ goes up, Alice closes her trade and unwinds her leverage — thus paying back the Gearbox money market.
- If the token goes down a bit, Alice decides to cut her losses like a responsible degen, pays the back loan, and walks away with a loss to her principal.
- For more on Gearbox Protocol, Delphi members can read our Delphi Pro report here.
🐣 Notable Tweets
A Summary of the FTX/Binance Drama
Two Lessons From CZ