Total Liquidity Processed by Solana Plummets

DEC 06, 2022 • 4 Min Read

Craig Sweney

🌅 Welcome!

The Alameda investment portfolio has been leaked while Ledger is launching a hardware wallet with an interactive touch-screen. Fun fact: the designer of the product, Tony Fadell also designed the first iPod.

Today, we take a look at Solana following FTX’s implosion while our Research team provides insights into the current state of crypto insurance.

This is the Delphi Daily. Let’s dive in.


🚨 In Case You Missed It

  • The FTX/Alameda portfolio has been revealed with nearly 500 illiquid investments split across 10 holding companies.
  • Ledger launches a hardware wallet with an interactive touch-screen.
  • Consensys updates its data retention policy that aims to delete Metamask private user data after 7 days.
  • Grayscale is being sued by hedge fund Fir Tree to obtain details about the Grayscale Bitcoin Trust.
  • SBF hires Mark Cohen as a defense attorney.

📊 Total Liquidity Processed by Solana Plummets

  • The daily total liquidity processed by Solana is down 96% in the wake of the FTX collapse. Solana averaged $32.9B per day of total liquidity processed from the beginning of October until the FTX collapse. Since then, Solana has averaged $1.4B per day.
  • Liquidity processed measures all bids and asks on Solana-based orderbooks as well as value moved on-chain, such as SOL transfers.
  • Most of the liquidity processed consists of transactions involving SOL, USDC, USDT, ETH, and SRM. While SOL and SRM are down 57% and 69%, respectively, since Oct. 1, they only account for a portion of the liquidity processed on Solana.
  • Notably, the largest daily amount of SRM liquidity processed since the beginning of October occurred on Nov. 13, only two days after the FTX collapse. On this day, $2.4B worth of SRM liquidity was processed, accounting for 73% of the daily liquidity processed on Solana.
  • The number of daily active wallets on Solana is down 29% as well. Solana averaged 565K daily active wallets from the beginning of October until the FTX collapse. Since then, Solana has averaged 398K.

⚡ The Current State of Crypto Insurance

  • Insurance remains a tough product to sell to crypto users for multiple reasons.
  • Crypto investors are accustomed to the high volatility and risks of crypto. Buying insurance to manage risk is not top of mind for most crypto investors.
  • Proven protocols are considered “safer” and “battle-tested” as their code has been running smoothly for a long time. Risks are perceived as lower, and investors see insurance as a waste of money.
  • Purchasing insurance impacts the return on yields by introducing a cost vector. This is even amplified now that DeFi yields have diminished.
  • Mercenary capital rotates from protocol to protocol to maximize yields earned. Users don’t want to purchase insurance for such a short time period.

  • By understanding how a DeFi user operates, there are innovative ways for insurance protocols to improve or create a new way of insuring a tough crowd.
  • Automated insurance can be implemented into various DeFi protocols, allowing users to opt out at their own choice. Users might have to pay a deposit fee, or a small percentage of yields earned to buy insurance coverage.
  • Some traditional insurance providers offer clauses that allow for early termination. Applying the same logic to DeFi insurance, users should be able to get back a portion of premiums paid if coverage is terminated early.

  • Protocol-purchased insurance makes it simple for users by providing coverage for the entire protocol. Users will not experience any difference in UI or UX and will not have to pay for coverage.
  • However, in the case of protocol-purchased insurance, protocols must generate an equal amount of revenue to break even on coverage costs. Therefore, protocols without a lucrative model are unlikely to adopt this model.
  • For more on crypto insurance, Delphi members can read our Delphi Pro report here.

🐣 Notable Tweets

Alameda Investment Portfolio

ApeCoin’s Rocky Launch

Create a FREE account to continue reading

Check Out Delphi Pro

Immediately access the entire catalog of Delphi's research, & private Discord