L2 Protocol Blast Secures $230M TVL in 48hrs as Yield Concerns Arise

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Jimmy Aki
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Jimmy has nearly 10 years of experience as a journalist and writer in the blockchain industry. He has worked with well-known publications such as Bitcoin Magazine, CCN, and Blockonomi, covering news...

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Blast
Source: Blast

Blast, a new Ethereum Layer 2 network, has achieved an impressive Total Value Locked (TVL) of over $230 million within 48 hours of its unveiling. However, there’s a unique twist – the network does not exist yet.

This noteworthy accomplishment was shared by the protocol in a post on X (formerly Twitter), asserting that a community of 37,131 members has already transferred funds into its network.

According to recent DeBank L2 data, the TVL has surged to over $326 million at press time. This is mainly driven by Blast’s commitment to providing “native yield” on ETH and stablecoin deposits, offering users nearly 4% and 5%, respectively.

Unveiled on November 21, Blast was developed by the co-founder of the popular non-fungible token (NFT) marketplace Blur and is backed by the prominent venture firm Paradigm.

However, its standout feature is its claim to be “the only Ethereum L2 with native yield for ETH and stablecoins.”

The L2 network achieves this by utilizing Ethereum staking yield, bridging all ETH to LIDO, and using DAI stablecoin to tap MakerDAO’s growing US Treasury bill yield through its Dai Savings Rate (DSR), which is currently at 5%.

In addition to offering native yield, the network explicitly promises an airdrop for early participants, with points earned expected to be redeemable in May 2024.

However, Blast’s surging TVL and the one-way bridge structure have sparked divided opinions, as users cannot withdraw bridged assets and earn the promised “native yields” until the L2 goes live through a mainnet launch in February 2024.

Typically, a bridge enables users to deposit and move tokens from one blockchain to another, enabling interoperability and flexibility within the blockchain ecosystem – but Blast deviates from this norm.

Meanwhile, L2Beat, a research and statistics platform, categorized the project as “upcoming” rather than “active” due to its current bridge structure.

Dankrad Feist, a crypto enthusiast, also criticized the L2 staking structure, which joins ETH and stablecoins, as “a very bad idea.”

Additionally, other critics raised concerns about Blast’s referral campaign, likening it to a Ponzi scheme, which provides points of unknown value as rewards for inviting new users.

Pascal Caversaccio, an independent security researcher, exclusively told DL News media that Blast aims to sell a moonshot project that compromises security and the promised economic incentives.

He noted that the fear of missing out (FOMO) will continue to propel people into another L2 chain through a purported risk-free yield while ignoring so many unknowns.

Is There a Need for More L2 Networks in DeFi Space?

The rapid expansion of Blast, coupled with concerns about its one-way bridge, soaring TVL, and Ponzi-like attributes, has prompted discussions about the necessity of more layer 2 solutions in the crowded decentralized finance (DeFi) space.

According to DeFiLlama, there are 232 blockchains, many of which share utilities and users. Ethereum ranks the largest, with 55.66% of TVL locked due to its extensive ecosystem and L2 projects.

Blast differentiates itself by emphasizing the combination of yield and points, a unique offering compared to other intrinsic-driven L2 projects on the Ethereum network.

Despite its delayed activation, investors continue to bridge funds to the platform to accrue interest. This may suggest the platform is squarely focused on DeFi investors who frequently dabble in high-risk crypto ventures for significant rewards.

While controversies continue to loom over Blast’s announcement and overall structure, an expected mainnet launch will provide deeper insights into efficiency and trust.

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