Blast TVL hits $390 million, with no product

In just a few days, the amount of value sent into the Blast deposit contract on Ethereum has increased by an order of magnitude to $390 million.

A smart contract, advertised as a “bridge” for a yet-to-be-developed optimistic rollup, has received about $340 million in ether and $50 million in stablecoins since launching Monday.

The contract is controlled by a Safe 5-key multisig where 3 keys are required to execute transactions. However, one of the 5 keys has no transaction history, and the other 4 show initial ether deposits from the same Ethereum account.

There is no way for an outside observer to know whether the five keys were generated by five independent entities or people.

A thread on X from Blast claims they are using best practices, and that the signers “are deeply technical engineers who have experience with high stakes applications ranging from financial applications to smart contracts.”

Development of the project, backed by VC firms Paradigm and Standard Crypto, along with a slew of influential crypto personalities and traders, is being spearheaded by Blur co-founder, Tieshun Roquerre who goes by the pseudonym “Pacman.”

The former Thiel Fellow and MIT dropout previously told Blockworks that the project uses “the same security model” as other L2s specifying Optimism, Polygon, and Arbitrum.

However, each of these networks, while not fully trustless, has additional security components besides a multisig. For instance, Arbitrum has a publicly elected “security council” with 12 members, only two of which are on the Offchain Labs development team.

Blockworks contacted Paradigm and Standard Crypto and Pacman for clarification.

Deposited ether cannot be withdrawn until February 2024, when the development team must modify the deposit contract, presumably alongside the launch of an actual rollup.

Ethereum layer-2 tracker L2BEAT lists the project in it’s “Upcoming” section, but were it active today it would rank between zkSync Era, which launched mainnet in October 2022, and dYdX V3 the StarkEx rollup that has been active since April 2021.

Active Ethereum L2s; Source; L2BEAT

One depositor tossed 10,000 ETH, worth $21 million at the time, into the contract in a single transaction.

“Collective brain of Crypto Twitter” weighs in

Many crypto observers have expressed surprise at Blast’s rapid growth in the face of uncertain risks.

Blast has touted on its X account that ether staking represents “risk-free return,” a view which Lido DAO members, including Blast investors, have expressed lacks nuance.

Orlando Cosme, founding attorney of OC Advisory, criticized the project, calling it an “onchain hedge fund” that is “proving regulators’ point.”

A straw poll conducted by Tangent Ventures founder Jason Choi, seeking to tap “the collective brain of CT,” has garnered over 2,500 respondents. The unscientific opinion poll puts the odds of an exploit of the deposited crypto assets between now and February at 64%.

Offchain Labs’ Chief Strategy Officer, A.J. Warner, noted Thursday in an X post that the Arbitrum development firm had considered a similar design but opted not to pursue it.

Very few of the listed investors have publicly addressed criticisms of the project to date, though some claim to have privately communicated concerns.

Dovey Wan, a Blast investor and Founder of Primitive.Ventures, promoted the project’s success attracting capital as having “pre-bull energy,” and “strong pumpanomics,” while hand waving away concerns over the security of funds, by acknowledging “it’s just a multisig managed by 5 [profile pics] online.”

Wan urged crypto users to “bridge for culture bridge for fun bridge for what you can afford to lose it all,” alongside the vacuous caveat that the promotion was “no FA DYOR” — not financial advice, do your own research.

Updated Nov. 24, 2023 at 12:37 pm ET with update from Blast on multisig.