New Ethereum L2 Protocol Blast Faces Scrutiny as Paradigm Raises Concerns – Here’s What You Need to Know
Source: Adobe / lumerb
Blast, the newly announced Ethereum (ETH) layer-2 scaling network led by the founder of top NFT marketplace Blur, has faced some controversy despite gaining notable traction.
For one, Paradigm, a prominent venture capital firm in the crypto space, has outlined numerous issues with the scaling solution while acknowledging its positive aspects.
In a Friday post on X (formerly Twitter), Paradigm’s Head of Research and General Partner Dan Robinson expressed reservations about Blast’s launch, noting that his comments represented the views of Paradigm.
Robinson highlighted several issues with the announcement and execution of Blast, stating that the decision to launch the bridge before the layer-2 network and the three-month withdrawal restriction set an unfavorable precedent for other projects.
There are a lot of components of Blast that I’m excited about and would be interested in engaging with people on. That said, we at Paradigm think the announcement this week crossed lines in both messaging and execution. For example, we don’t agree with the decision to launch the…
— Dan Robinson (@danrobinson) November 26, 2023
He further criticized what he perceived as marketing that undermined the work of a serious team.
Blast positions itself as an Ethereum layer-2 network that offers native yield for Ethereum and stablecoins, allowing users to stake their funds and earn interest-like returns.
The network also promises rewards similar to those offered by Blur, attracting early adopters who lock up their funds in anticipation of potential airdrops.
Blur has already distributed hundreds of millions of dollars worth of its BLUR token to NFT traders, surpassing former leader OpenSea in the process. This success has likely piqued the interest of crypto users.
While users eagerly lock up their funds ahead of Blast’s network launch in 2024, the network itself is not yet live.
The funds cannot be withdrawn until the mainnet rollout expected in February, raising security concerns given the history of exploits involving network bridges in the crypto industry.
Some traders and industry participants have even labeled Blast as a Ponzi scheme due to its rewards and referral model.
Blast has garnered significant attention and locked over half a billion dollars worth of funds from users eager to earn yield and rewards
Blast Co-Founder Addresses Controversy
Blast and Blur co-founder Tieshun “Pacman” Roquerre responded to the criticisms in a Twitter thread on Friday, addressing what he referred to as misunderstandings surrounding Blast.
Roquerre clarified that Paradigm, one of the investors in Blast’s $20 million seed round, had no role in Blast’s rollout plans.
He further revealed that Paradigm had requested changes to the launch, which Blast was considering, but emphasized that ultimate decisions would be made internally.
1/ There's a meme going around that Blast is a ponzi. The yield that Blast provides users can feel too good to be true, so this meme is understandable. But to put it simply, the yield Blast provides comes (initially) from Lido and MakerDAO.
Lido yield comes from ETH staking…
— Pacman | Blur + Blast (@PacmanBlur) November 24, 2023
Robinson, in his Sunday statement, commended Pacman and his team for the successful launch of Blur, which disrupted the NFT market and provided substantial rewards to users.
However, he acknowledged that Paradigm and Blast disagreed on certain aspects of the rollout.
“We invest in strong, independent founders who we don’t always agree with. But we understand that people may look to us to set an example on best practices in crypto.”
“We don’t endorse these kinds of tactics and take our responsibility in the ecosystem seriously,” Robinson concluded.
