Blast: Controversial Ethereum Layer-2 Rollup Garnering $370 Million

In an unexpected turn of events, a new Ethereum layer-2 rollup named Blast has generated substantial interest, accumulating an impressive $370 million in total value locked (TVL), despite being slated for launch in February 2024.

From Concept to Rankings in Hours

The uniqueness of Blast lies in its status as an optimistic rollup, with an intriguing twist: it currently only exists as a concept, with backers actively seeking deposits through a smart contract bridge. Within a mere half-day, this bridge has catapulted Blast to the 16th position in L2Beat's TVL rankings, surpassing established platforms such as Aevo and Arbitrum Nova.

Blast distinguishes itself by claiming to be "the only Ethereum L2 with native yield for ETH and stablecoins." This innovative approach involves tapping into Ethereum staking yield by directing ETH to Lido and utilizing DAI to benefit from MakerDAO’s growing US Treasury bill yield through its Dai Savings Rate (DSR), currently standing at 5%.

The development team, spearheaded by the pseudonymous Blur co-founder known as Pacman, successfully raised $20 million from venture capital firms Paradigm and Standard Crypto, accompanied by a diverse group of angel investors and crypto influencers.

Security Assurance or Red Flag?

The focal point of initial discussions revolves around Blast's one-way "bridge," which allows deposits but prohibits withdrawals until the platform's official launch. The contract, controlled by a five-key multi-signature wallet, has raised eyebrows due to the questionable independence of the signing cohort. Pacman reassures the community, stating that the security model mirrors other successful layer-2 solutions like Optimism, Polygon, and Arbitrum, all of which utilize a multisig approach for upgradability.

L2Beat has classified Blast as "upcoming" rather than "active" based on its current implementation, casting a shadow of uncertainty over its status. Concerns have also emerged about the integration of Lido, drawing criticism from Ethereum community members worried about centralization risks associated with staking providers.

Ethical Concerns

Dankrad Feist, expressing skepticism, labeled the use of Lido in Blast as "a very bad idea," emphasizing the importance of allowing users the freedom to choose between ETH and liquid staking derivatives with distinct risk profiles.

Critics have also raised eyebrows at Blast's multi-level-marketing style referral campaign, questioning the distribution of points of unknown value to incentivize user invitations. The controversial strategy, reminiscent of Pacman's prior marketing tactics for Blur, promises an airdrop based on early access participation, with redeemable points expected in May 2024.

As Blast emerges onto the scene with ambitious promises and unprecedented funding, the Ethereum community watches closely, weighing the potential benefits against concerns surrounding centralization, security, and innovative but unconventional marketing strategies.