Introduction

Blast is a new project announced by Pacman, the founder of Blur, on November 21, 2022. As a Layer 2 network based on the Optimistic Rollup mechanism, it is designed to solve two primary problems: reducing the high gas fees for NFT transactions on the Ethereum mainnet and achieving passive appreciation of funds in the Blur bid pool.

Blast Homepage (Source: Official Website)

Blast Performance (Source: Twitter)

About Blast

Blast, an emerging Layer 2 solution for Ethereum, stands out for its ability to provide native yields for ETH and stablecoins. The top priority of Blast is to offset asset devaluation by offering an interest rate of 4% on ETH and 5% on stablecoins. This project has attracted $20 million in funding from key investors including Paradigm, Standard Crypto, eGirl Capital, etc.

Official Website (Source: blast.io)

The team of Blast is led by Pacman, who is also the founder of Blur, the leading NFT marketplace on Ethereum. The Blast project provides users with passive income on their ETH or stablecoins through native staking on the Layer 1 network or depositing into DeFi protocols such as Lido and MakerDAO.

To put it simply, the ETH or stablecoins (such as USDC, USDT and DAI) deposited in Blast are used for native staking on the Layer 1 network or deposited into DeFi protocols such as MakerDAO to provide users with auto-compounding interest. For example, if a user holds 1 ETH in his account on Blast, the amount of the asset may automatically rise to 1.04, 1.08, or 1.12 ETH over time.

Blast is not only designed to serve Blur, but to support various types of Dapps, including DEX, lending, derivatives trading, NFTFi and even SocialFi. As a Layer 2 network of Optimistic Rollup, Blast retains the operating habits of EVM users while providing users with new income streams.

Blast achieved significant milestones including obtaining over $230 million in total value locked (TVL) shortly after the project’s launch and the plan to launch mainnet in February 2024. Although Blast is not yet fully launched, it already allows users to deposit ETH and other stablecoins through multi-signature wallets, and plans to release a crypto airdrop in May.

Roadmap (Source: Twitter) \

Project Whitepaper (Source: blast.io)

The Development of Blast

Blast is a new Layer 2 project launched by the founders of Blur. It has quickly gained attention in the cryptocurrency space. Within days of the project’s launch, it had attracted more than $320 million in deposits. The project plans to go online on the mainnet in February 2024 and release airdrops in May of the same year. A unique feature of Blast is its “pyramid” incentive mechanism, in which users earn points (which can be redeemed and swapped for airdrops in the future) by introducing new users, which has caused some controversy.

Leaderboard (Source: blast.io)

Blast supports auto-compounding, allowing users to automatically earn returns on their ETH and stablecoins held on its L2 network without the need for additional staking activities. To do this, they work directly with Lido, the ETH staking provider, and use MakerDAO’s on-chain T-Bill protocol to provide high yields on the stablecoin. In addition, different from the current practice of L2 networks which retain the gas fee revenue, Blast intends to distribute its all gas fee revenue directly to developers. This approach provides developers with powerful incentives that may attract more users to participate in the Blast network.

Blast will also be EVM compatible, meaning all the infrastructure (code, tools, documentation) familiar to Ethereum developers will be available out of the box. This suggests that migrating existing dApps to this new chain won’t be a difficult job.

In general, Blast, as an extension of the Blur ecosystem, is designed to allow Blur users to earn income on idle assets while improving the technical level required in providing complex NFT products. By virtue of its unique design and market strategy, Blast is expected to attract liquidity and talented developers from existing Layer 2 networks. Although some aspects of the project, such as its airdrop incentives, have been criticized, Blast’s proposal has still aroused people’s great interest, with users placing their trust in the reputation of the project’s founders and the project’s prominent backers, including Paradigm and Standard Crypto.

Official Twitter Post (Source: Twitter)

Background

Paradigm: This is an investment firm focused on cryptocurrency and blockchain technology. Paradigm usually makes investments in innovative projects and startups in the blockchain technology space, supporting the growth and expansion of these companies.

Standard Crypto: Similar to Paradigm, Standard Crypto is also an investment firm that focuses on investments in the cryptocurrency and blockchain space. It facilitates the growth of blockchain projects and enterprises by providing financial support and professional guidance.

These institutions play a crucial role in the cryptocurrency and blockchain industry, as their investments not only provide financial support to them but may also help them gain wider market attention and enhance their credibility. When such an institution invests in a project, it is often seen as an endorsement of the project’s potential and viability.

Market Competitiveness and Prospects of Blast

As an Ethereum Layer 2 blockchain project launched by Blur founder Pacman, Blast has drawn wide concern for its unique technology principles and market strategies. Its core feature is to provide native returns on ETH and stablecoins, aiming to offset the asset depreciation. By virtue of the Optimistic Rollup mechanism, Blast achieves passive growth in assets by using the ETH locked by users on the Layer 1 network for native staking and automatically returning the staking proceeds to the user. In addition, Blast also supports passive interest-bearing of stablecoins. For example, after bridging USDC, USDT, and DAI to Blast, they can be deposited into DeFi protocols like MakerDAO to earn income.

The Blast project attracted over $611 million in deposits within a week of its launch, surpassing the total value locked (TVL) of the Coinbase-backed Base project. However, major investors including Paradigm have criticized the project’s marketing strategy and execution. Paradigm is dissatisfied with Blast’s method of accepting deposits into the token bridge, as well as its compelling marketing strategies. Although Blast employs a unique marketing strategy in which users deposit funds into an Ethereum wallet associated with the yet-to-be-launched Blast chain, thereby earning “Blast points” and the promise of future token airdrops, the practice has been criticized as a replica of the radical and hype-driven projects in the past, which could expose depositors to unnecessary risk.

Although Blast has faced controversy, its journey in the Layer 2 blockchain space has demonstrated early disputes and huge market interest. How to cope with these challenges and adapt to industry expectations will be critical to Blast’s long-term positioning and success in a rapidly growing market. After all, the Layer 2 space is increasingly competitive, and many Layer 2 mainnets have been launched by Consensys, Coinbase, BNB Chain, ZkSync, etc. With Blur’s successful “vampire attack” on OpenSea, will Pacman be able to adopt the same strategy on leading Layer 2 platforms Arbitrum and Optimism? This will become apparent in February 2024 when the Layer 2 network is launched.

Overall, Blast, as an innovative Layer 2 solution, displays great potential and challenges in terms of market competitiveness and industry prospects. Although its unique market strategies and marketing methods have drawn wide concern and been facing controversy, its innovative ideas in ETH and stablecoin revenue generation, as well as its rapid response to market dynamics, make it a player worthy of watching in the Layer 2 field.

Advantages, Disadvantages and Risks

There are still many uncertainties in the growth of Blast. Although its team members come from prestigious institutions such as FAANG, Yale, MIT, Nanyang Technological University, etc., and have worked on active web3 and DeFi protocols such as Ethereum and Solana, Blast’s specific future roadmap still remains obscure. Despite these uncertainties, its vision and next-generation chain architecture could still allow it to compete with major players in the crypto industry in the coming years.

Regarding Blast Layer 2 and its 3/5 multi-signature wallets, there are some key security and centralization risks hidden behind its rapid growth in the market:

Security and decentralization: According to Coinpedia reports, developer Jarrod Watts raised concerns about the security and decentralization of the Blast network, specifically pointing out that its 3/5 multi-signature system may lead to security vulnerabilities.

Potential dangers of ⅗ multi-signature systems: Watts pointed out that since the operation of Blast requires the joint consent of three team members, this system presents obvious vulnerabilities at the security level. In theory, if someone controls three key keys, the financial security of the entire system may be in danger.

Questions about Layer 2 qualifications: Watts also questioned whether Blast meets Layer 2 standards, pointing out that it lacks key features of Layer 2, such as testnet and transaction bridging.

Market positioning and actual operation: Despite the above problems, Blast claims to be the only Ethereum Layer 2 network that provides native revenue on ETH and stablecoins. The platform promises that stablecoins deposited by users will be converted into USDB and compounded through MakerDAO’s T-Bill protocol.

Challenges under rapid development: According to CoinWire, although Blast has achieved rapid growth in terms of total value locked (TVL), its security and decentralization issues remain the focus of industry discussion. The Blast team argued that the security strategy it adopted, including cold storage and independent key management, was similar to that of other mature Layer 2 solutions.

Problems in Blast’s centralization and security, especially the potential risks of its 3/5 multi-signature system, are key concerns in its development. Additionally, there are also doubts about Blast’s legality as a Layer 2 solution. While the team has proven its security measures, more details about its inner workings are yet to be revealed to the community.

Developer Jarrod Watts has raised concerns about the security and decentralization of the Blast network (Source: Twitter)

The merits of the Blast project lie in its native revenue generation capabilities and resistance to asset devaluation. It is designed to support various types of Dapps and provide more complex NFT products through its technological innovation. However, it also faces risks in many aspects, such as market acceptance, technical safety, and long-term sustainability. Its crypto airdrop strategy, in particular, may be questioned for its Ponzi-like invitation mechanism. Besides, as a novel project, Blast faces certain investment risks and could also exert huge profit potential.

Analysis of Blast’s Competitors

In the current Layer 2 field, Blast faces challenges from major competitors such as Arbitrum, Optimism, and Base.

Arbitrum: With Optimistic Rollups technology, Arbitrum increases throughput and reduces Gas fees mainly by bundling multiple transactions and submitting them to the Ethereum main network. Arbitrum takes a significant market share in the Layer 2 market, accounting for approximately 50%. Besides, it is compatible with Ethereum smart contracts, indicating that it can be used with existing dApps and DeFi protocols.

Optimism: Also using Optimistic Rollups technology, Optimism provides functions similar to that of Arbitrum. However, it is relatively weak in ecological innovation capabilities. Optimism verifies transactions through fraud proofs. Supporting the Ethereum Virtual Machine (EVM), it is compatible with Ethereum smart contracts. Optimism, backed by strong capital, facilitates the progress of its infrastructure, including OP Stack and OP+ZK hybrid-proof technology.

Base: Built by Coinbase, a crypto giant, Base is an Optimistic Rollup developed on the Ethereum network using OP Stack technology. Base offers multiple native projects, such as Aerodrome and Seamless Protocol developed by Velodrome. Primarily thanks to the promotion of Seamless Protocol, Base’s TVL has risen steadily in recent days.

zkSync: Designed to be compatible with Ethereum smart contracts and support the Ethereum Virtual Machine (EVM), zkSync increases throughput and reduces gas fees by using zero-knowledge proofs. zkSync’s DEX faces fierce competition and has not yet rolled out a prominent lending business. Whereas, it has drawn the attention of many developers and venture investors.

StarkNet: Also designed to be compatible with Ethereum smart contracts, StarkNet uses zk-rollups technology to increase throughput and reduce gas costs. Though its TPS is limited and it has high gas fees, StarkNet internal network has fostered many innovative projects.

Overall, while zkSync and StarkNet demonstrate the growth of zero-knowledge proof technology, Arbitrum and Optimism dominate the market share of Layer 2. Each Layer 2 solution has its unique advantages and challenges. As an emerging player, Blast needs to position itself and display its own advantages in this highly competitive market.

Blast VS other L2s (Source: blast.io)

How to use Blast

Interactive features of Blast

Blast highlights its advantages in the Layer 2 market through the following innovative features, aiming to create more value and benefits for users:

• Native revenue model: Blast provides native revenue for ETH and stablecoins, which is rare in traditional Layer 2 solutions and aims to attract more liquidity.
• Risk-free interest rate (RFR): Based on the RFR concept, Blast introduces the concept of ETH pledge to the Ethereum network, providing a revenue model similar to traditional finance.
• Asset appreciation mechanism: Blast integrates a native revenue mechanism, which not only keeps user assets stable but also increases value over time.
• Automatic compound interest and rewards: Blast supports automatic compound interest, allowing users to hold ETH to grow over time.
• Stablecoin revenue optimization: After stablecoins are bridged to Blast, they will operate in a protocol similar to on-chain T-Bill, with revenue returned through Blast’s USDB stablecoin.
• EVM compatibility: As an optimistic rollback solution compatible with EVM, Blast provides a familiar and easy-to-use user experience.
• Early access and bridging mechanism: Users obtain early access qualifications through invitation codes, and then bridge assets to participate in Blast.
• Airdrop points system: Early users earn income and Blast points by bridging assets to Blast.
• Points application: After the mainnet is launched, points will play an important role in dapps and will provide redemption opportunities in May 2024.

Points Mechanism

Blast is a Layer-2 blockchain platform designed to increase financial inclusion through a community-driven approach. It is the only Ethereum Layer-2 platform that provides native yields on Ethereum and stablecoins.

Blast’s Operation relies on three core mechanics:

• Auto Rebasing: Compatible with ERC-20 tokens, it is easier for token transfer.
• Staking: Backed by the Shanghai update of Ethereum, it allows rebasing ETH assets to its chain, thereby automatically obtaining a layer of income on staking ETH.
• T-Bill Yield: Users who bridge stablecoins to the platform will receive Blast’s automatically rebased stablecoin USDB, with revenue coming from MakerDAO’s on-chain T-Bill protocol.

However, Blast has several risks to cope with:

• Incomplete documentation: The project has no white paper and only provides an overview on its website.
• Short of a robust ecosystem: There is no platform browser to view on-chain transactions, and no compatible wallets, bridges, or oracles.
• Unclear airdrop roadmap: The timeline for airdrop proceeds is unclear.
• Potential pyramid marketing characteristics: The platform rewards users for inviting others and teams to deposit assets, which raises concerns about its sustainability.

Blast also incorporates a points system as its rewards framework, which has been criticized for resembling a pyramid marketing scheme. The system includes a leaderboard and spin mechanism that encourages users to recruit more participants, thereby increasing their chances of earning more Blast Points. The more ETH a user team accumulates, the more invitations and lucky chances they get in the spin mini-game, which allows them to earn extra points. This structure has been criticized for its potential unsustainability and Ponzi-like characteristics.

All in all, while Blast offers innovative mechanisms for revenue generation and financial inclusion, it is imperative to consider its potential risks and the controversial aspects of its points system before making any investments.

How to participate in Blast

Blast Layer 2 is a development of blockchain technology that is particularly focused on innovation in the Ethereum Layer 2 solutions. With its unique native yield on ETH and stablecoins, Blast brings new changes to the Ethereum ecosystem. Based on the principle that markets naturally move towards greater efficiency, the native yield model is unmatched among existing L2 solutions. In the field of decentralized finance (DeFi), this means that liquidity will flow to the platform with the highest yield, thus improving overall liquidity efficiency.

To participate in Blast Layer 2, firstly, you have to get an early access invite which can be obtained by engaging in social media activity, such as quoting relevant tweets and expressing interest in Blast. After receiving an invitation, users can transfer their ETH and stablecoins (such as USDC, USDT, and DAI) to the Blast platform via a bridging process. The process involves connecting the wallet and selecting the assets to be bridged. Then, you can follow the instructions to complete the transfer.

Participate in social media campaigns to get early access invitations (Source: Twitter)

On the Blast platform, users can farm Blast airdrops by bridging assets and earn Blast points by participating in different activities on the platform (such as yield farming, participation in protocols, referral programs). By doing so, users can earn yields (4%on ETH and 5% on stablecoins) and accumulate Blast Points, which can then be used to enjoy various platform benefits and features when the mainnet is launched, or be swapped for rewards at the specific redemption phase.

In general, Blast Layer 2 provides users with a unique blockchain experience that makes the Ethereum ecosystem more attractive by conducting efficient liquidity management and deploying native yield mechanisms. Participants can improve their blockchain investments by bridging assets and actively participating in platform activities, earning stable growth and additional rewards.

Conclusion

On the whole, Blast is an emerging Layer 2 solution powered by Blur. It stands out in the Ethereum scaling space for its unique native revenue generation mechanism. It aims to reduce the high fees and activate the passive dormant funds on the Ethereum network, providing users with the auto-compounding feature by using their stored ETH or stablecoins for native staking on the Layer 1 network or depositing them into DeFi protocols. Although Blast displays potential in technological innovation, it still faces fierce competition from mature Layer 2 solutions such as Arbitrum and Optimism. The future growth of Blast will rely on its ability to remain innovative and meet user needs in this highly competitive market.