In recent weeks, Blast is undoubtedly the most eye-catching project in the Ethereum ecosystem. Along with distribution of Blur's second round of airdrop rewards, the L2 chain Blast developed by the Blur team was also introduced. In just 9 days since the announcement, Blast's TVL has exceeded $617 million, catching up to Solana's entire TVL (662 million).
What's so magical about Blast? This week in CryptoSnap, Dr. Dodo will introduce Blast L2!
Blast Introduction
Blast aims to create the only L2 chain with native yields for both Ethereum and stablecoins. However, the whitepaper and technical details have not yet been released. Users are allowed to deposit funds into its mainnet contract and start earning LSD & RWA yields, while also initiating a points program.
Blast was able to achieve such high TVL in a short period of time thanks to the strong team and investor background. It was created by the Blur founder Pacman and the Blur team, and received investments from renowned VC Paradigm, eGirls Capital, famous CT DegenSpartan, Andrew Kang and more. Its background is impressive.
Blast Airdrop Farming
In addition to the strong team background, the airdrop expectations contributed to the rapid growth in TVL. Blast initiated its points program even before the L2 mainnet launch, reminiscent of the Blur project from the same team which had one of the largest airdrops in Ethereum history via early point rewards.
The Blast airdrop rules relate to the deposited amount, and also incorporate a referral system. The funds deposited by referred users can affect the points of the original referrer. More referred users and larger deposited amounts lead to higher airdrop points. Whether the address previously earned high Blur points is another factor in calculating Blast points, rewarding early supporters of the team. Notably, Blast currently has no exit mechanism. Based on the roadmap, deposited funds have to be locked until mainnet launch on Feb 24, 2024. Airdrop points can only be redeemed starting May 24, meaning a 3-month lockup and airdrop 6 months later.
Blast FUD
The Blast craze swept the entire crypto community. At the same time, some believe that despite calling itself an L2 chain, Blast is essentially just a deposit contract, simply helping users deposit into Lido/MakerDAO. It cannot be considered an actual L2. There are also security concerns over the $600M funds being managed only via multi-sig. The contract allows upgrades and has no timelock mechanism.
The Blast team responded that major L2s like Arbitrum, Optimism and Polygon also use multi-sig models, and their multi-sig holders are experienced engineers with expertise in DeFi, smart contracts and other high risk applications. They also promised to upgrade to a hardware wallet-based multi-sig within a week.
Additionally, Paradigm expressed disagreement with allowing deposits and locking up funds for 3 months before mainnet launch, as well as Blast’s referral marketing activities potentially reducing team efficiency. Paradigm believes Blast sets a bad precedent, but despite ideological differences, they chose not to interfere with founder Pacman’s operations. They will continue supporting Pacman and his team, acknowledging them as world-class developers who can create value for the industry.
Author’s Perspective
@DeFi_Cheetah
I have been reading the optimistic tweets about Blast. While it may work as speculative play, I don’t consider it as conviction bet. Because Blast relies on converting user deposits through MakerDAO and LidoFinance to generate yields, which creates dependency risks. In the short term, this approach seems more capital efficient to spark market speculation. But in the long run, such centralization should not be the mainstream direction for Ethereum, which should incentivize LSD decentralized solutions like fraxfinance’s $frxETH v2 and RocketPool.
Moreover, with the convergence of L2 chains, especially after EIP-4844 reduces costs, economies of scale will become more pronounced. The larger chains will occupy leading positions. Hence, I don’t think native yields alone can attract much traction, considering top L2s like Arbitrum and Optimism can be readily followed. Of course, Blast has released limited information so far. If more details come out, I will research further.
@19971122 DT
In my view, Paradigm has been one of the VCs with the best understanding of crypto. While its projects may not always be the most technologically innovative, its token mechanisms can definitely trigger market reaction. Just a few months ago, its social fi project FriendsTech blew up. Despite initial users being only degen players, Paradigm’s announced investment and points reward system instantly caused a market fomo. Tutorials on earning points flooded everywhere. Blast has a similar vibe. While other chains like Gnosis and Canto are also building native yields, the concept itself is not new. What truly excites the market is the potential for free money via rewards points. Blast explicitly states - give us your TVL and get token rewards in return. I am unsure if Blast will succeed after its token generation, but one thing is certain - it will definitely be very successful before that. Because hardly anyone will give up a chance at free money. Of course, moderation is key. Given the 3 month lockup period, it is important not to overcommit as anything could happen in crypto.