Blast L2's Rise Marked by Controversy and Skepticism
The Blast Layer 2 is seeing rapid TVL growth, but its ascent is fueling heated debate, as examined by Pacman. Critics point to its controversial yield model and deposit structure as signs of centralization and potential risk, while proponents highlight its innovative approach to attracting liquidity and developers.
Blast was developed by Tieshun Roquerre, the pseudonymous "Pacman" who also founded the NFT marketplace Blur. The project secured $20 million in funding from prominent venture capital firms, including Paradigm and Standard Crypto, before its controversial launch. The initial controversy ignited in November 2023 when Blast allowed users to deposit funds into a "one-way bridge" contract months before the mainnet went live. This meant users' assets were locked and could not be withdrawn until the official launch on February 29, 2024. Criticism came even from its own investors. Paradigm's Head of Research, Dan Robinson, publicly stated that the decision to launch a bridge before the L2 existed and block withdrawals for three months "sets a bad precedent." Many critics labeled the referral-based points system and locked deposits as having characteristics of a Ponzi scheme. The "native yield" is generated by automatically staking user-deposited ETH in Lido (LDO) and depositing stablecoins into DeFi protocols like MakerDAO's on-chain Treasury Bill system. This mechanism allows Blast to offer baseline interest rates of around 4% for ETH and 5% for stablecoins. Despite the risks and backlash, the strategy proved effective in attracting capital. Blast's Total Value Locked (TVL) skyrocketed, reaching over $500 million in less than a week and surpassing $2 billion by the time the mainnet launched. Since its mainnet debut, the ecosystem's TVL has continued to grow, partly driven by the activity of native decentralized exchanges like Thruster. However, the chain has faced further scrutiny following incidents like the $26 million liquidation event on the lending protocol Pac Finance, which renewed concerns about centralization and the risks of a rapidly developing ecosystem.
