Blast Causes Consternation Among Investors Despite Hauling in Over $600 Million in One Week

There’s a new kid on the (layer-2) block, Blast, that’s rapidly gaining popularity despite obvious risks.

What’s Happening: Roughly $617 million has flooded into Blast over the past 7 days, an amount that immediately ranks the project as the third-largest Ethereum layer-2 network. To put that kind of growth into some perspective, Base, created by Coinbase, has amassed just $582 million since its layer-2 launch a few months ago.

What’s Blast?

Blast is a layer-2 blockchain atop Ethereum that looks something like a yield-farm. Give them your crypto – primarily Ethereum (ETH) or various stablecoins – and get ~4-5% native returns and other rewards.

• Digging Deeper: The project is led in part by Tieshun “Pacman” Roquerre, who co-founded Blur, the largest NFT marketplace. Blur is known for giving traders ample rewards for using and remaining loyal to the marketplace.

There’s only one problem – the network isn’t even live yet. The project isn’t expected to go live until February 2024 and, until then, users won’t even be able to withdrawal their deposits.

These risks, along with the sudden rise of the network, have led to questions about the model across the internet. Does it look like a risky set up? Let’s see:

• So far it's unclear what Blast's yet-to-exist network will even be

• The team is dangling the promise of an airdrop sometime in the future, but only if individuals deposit funds before the actual blockchain launches

• The multisig wallet that users are sending money to is controlled by five undisclosed individuals – with four of them funded by the same initial wallet

Launch Response

Debates are raging on whether or not Blast is a ponzi or not.

• Pacman is vigorously defending himself

• The protocol’s largest investor, Paradigm, has already expressed strong disagreement on Blast’s marketing and launch approach.

Why it Matters 

Regardless if Blast turns into a success story or not, it’s meteoric rise in popularity signals a resurgence of mercenary yield farmers – something we haven’t seen since the heyday of DeFi during 2019-2021.

The good news is that, unlike last bull cycle, many people have been quick to call out the risks.

• Jaded by projects such as Terra (LUNA), Olympus (OHM), and other once-hyped DeFi projects that are now worth virtually nothing, it seems that some people have learned a critical lesson: Don’t trust an undisclosed group of “engineers” to stake your crypto and farm out an attractive yield with no transparent safeguards at all.

Still, that hasn’t stopped a group of degens giving up $600 million of their hard earned money.

Our take: On one hand, it’s nice to see the clapback of Blast almost immediately. It appears that some of us have learned…

On the other hand, right when we thought we were through with buzzy, hype-filled, overpromised projects with potential security holes being pumped by the same VCs who invested in the project, we are shown that crypto still has a ways of growing up to do.