Ethereum Layer 2 Explosion Sparks Heated Debate Among Crypto Enthusiasts

"Blast's Controversial Reward Program Raises Eyebrows as Deposits Soar Despite Withdrawal Freeze"

Blast, a layer-2 blockchain set to launch in March, has received over $225 million in staked ether (ETH) and stablecoins since Monday, despite facing skepticism from the crypto community. Blast aims to be the first layer-2 network that incorporates native staking and plans to generate yield through ETH staking and real-world assets. Layer 2s are built on top of layer-1 blockchains, like Ethereum, to make transactions faster and cheaper. The project is led by the pseudonymous @PacmanBlur, one of the co-founders of the popular NFT marketplace Blur. Prominent crypto fund Paradigm and “eGirl Capital,” a group of crypto-native investors, are among Blast’s backers.

The catch is that staked assets cannot be withdrawn until the Blast bridge goes live in February. In the meantime, users receive “Blast points,” which can be used to redeem an airdrop scheduled for May. Users can also earn additional Blast points by referring new users through unique referral links. As of Thursday, Blast is invite-only, requiring a code from an existing user to gain access.

Most of the $225 million staked on Blast has come from the liquid-staking protocol Lido, making Blast the seventh-largest holder of staked ether, according to Etherscan. However, the practice of restaking on Lido in exchange for Blast points has drawn criticism from the crypto community. Some have compared Blast points to a pyramid scheme, as early users can earn more points based on the number of users they bring in. Technical documents show that users receive an additional 16% points when their invited users bring in more participants, and another 8% if the second level brings in more people.

There is also debate over whether the decentralized finance (DeFi) space needs more layer-2 networks. Currently, there are 232 blockchains in total, according to DeFiLlama, many of which serve similar functions and users. Ethereum is the largest, accounting for 55% of the total value locked, followed by Tron with 17% and BSC with 6%. Recently, crypto exchanges Coinbase and Kraken have launched their own layer-2 networks. It is worth noting that Blast’s $225 million total value locked is rapidly approaching that of Coinbase’s Base, which has $284 million.

Despite the fact that the Blast blockchain will not be live for another four months, investors continue to pour capital into the platform. Mechanism Capital co-founder Andrew Kang stated that Blast has been his “first new L2 investment since Arbitrum.” Additionally, the price of the Blur (BLUR) token, closely related to Blast, has increased by 18% in the past 24 hours, with a weekly gain of nearly 40%. Some investors see Blur as a beta bet on Blast. Blur founder @PacmanBlur explained earlier this week that Blast is an extension of the Blur ecosystem, allowing users to earn yields on idle assets while improving the technical aspects needed to offer sophisticated NFT products.

In conclusion, Blast has attracted significant attention and funding, despite facing skepticism and comparisons to a pyramid scheme. As the launch of the Blast blockchain approaches, it remains to be seen how successful the project will be in achieving its goals of incorporating native staking and generating yield through ETH staking and real-world assets.

Martin Reid

Martin Reid

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