Wannabe L2 Blast bursts onto scene promising high ETH yield — in 3 months
Some 18,000 accounts have already sent $27 million in crypto to a one-way bridge controlled by a Blast multisig
Shutterstock-Pixelsquid and Natalja Petuhova/Shutterstock modified by Blockworks
A new Ethereum layer-2 rollup, announced Monday, has already attracted $27 million in total value locked (TVL), but there’s a twist: It doesn’t yet exist.
The promised network, Blast, would launch as an optimistic rollup in February 2024, but its backers immediately began soliciting deposits into a smart contract “bridge.”
In the span of half a day, the contract has amassed enough ether (ETH) and dai (DAI) to put it at number 16 in rollup tracker L2Beat’s TVL rankings, ahead of established names such as derivatives DEX Aevo and Arbitrum Nova.
The announcement touts Blast as “the only Ethereum L2 with native yield for ETH and stablecoins,” meaning it taps into Ethereum staking yield by directing all ETH to Lido and uses DAI to tap MakerDAO’s growing US Treasury bill yield through its Dai Savings Rate (DSR), currently at 5%.
Blast’s development team, led by pseudonymous Blur co-founder Pacman, raised $20 million from venture capital firms Paradigm and Standard Crypto, joined by a motley crew of angel investors and crypto influencers.
Early reaction has focused on the one-way nature of the “bridge” — once you cross you can’t exit until after Blast actually launches and withdrawals are enabled.
Normally, a bridge allows assets to flow both ways. This contract is apparently controlled by a five-key multi-signature wallet. However, of the five addresses, one contains no ether and has no transaction history, and the other four were recently funded by a single address.
That calls into question the independence of the signing cohort.
According to Pacman, there’s no need to worry.
“The Blast Early Access bridge contract does use a multisig, and each signer is a unique contributor to Blast,” he told Blockworks. “This is the same security model that other L2s like Optimism, Polygon, and Arbitrum utilize — these L2s are all upgradeable via multisig as well.”
Blockworks also contacted Paradigm and Standard Crypto for comment.
L2Beat designated the project “upcoming” rather than “active” as a result of its current implementation.
The use of Lido has drawn the ire of Ethereum community members concerned with centralization risk in staking providers, including Dankrad Feist, who called it “a very bad idea” on X.
“ETH and liquid staking derivatives are different assets with different risk profiles (and rewards), and users should have a choice about which one they want to use,” he said.
It should come as no surprise, given that Paradigm is an investor in both Lido and Blur.
Critics also question the use of a multi-level-marketing style referral campaign, which doles out points, of unknown value, to incentivize sending invitations to prospective new users.
The site explicitly promises an airdrop based on early access participation. Points earned are expected to be redeemable in May 2024.
Points systems have increasingly been used as a growth bootstrapping mechanism by protocol developers — including Pacman’s prior marketing of Blur — and are widely seen as a precursor to an airdrop or something else of value.
Updated Nov. 21, 2024 at 12:15 pm ET with comment from Pacman and Nov. 22 at 5:57 am ET with additional context.
Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.
Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.
The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.
