The Rapid Rise of Blast: A Revenue-generating Ethereum L2 Created by the Founder of Blur

As more and more users seek to earn passive income through staking, an emerging Ethereum Layer 2 solution is making waves in the DeFi space. The L2 project Blast, led by Tieshun Roquerre, the founder of the NFT trading platform Blur, has attracted massive attention since its launch with its unique native earning mechanism. As of November 2023, Blast has locked up over $300 million in TVL and attracted more than 50,000 users to participate, and this number continues to rise.

But the questions arise - is such a high return really credible? From technical architecture to risk assessment, let’s delve into this controversial L2 project.

How Blast's Native Earnings Differ from Other L2s

Blast claims to be the only Ethereum L2 providing native yield for ETH and stablecoins. The key here is the word “native”—users do not need to take any extra actions; the assets deposited will automatically generate yield.

The specific mechanism is as follows: users can stake ETH, stETH, DAI, USDC, or USDT, and these assets will be locked until the mainnet goes live in February 2024. USDT is converted to DAI through Curve Finance's 3pool, while USDC is converted to DAI via MakerDAO. Subsequently, these assets are transformed into yield-bearing assets—ETH is staked on the Lido protocol to obtain staking rewards in the form of stETH (approximately 4% APY), while stablecoins are deposited into on-chain national debt agreements such as MakerDAO's Dai Savings Rate (approximately 5% APY).

User earnings are returned through USDB (Blast's automated rebalancing stablecoin) and can be exchanged for USDC during the Blast rewards distribution in May 2024. This design seems perfect, but its transparency and sustainability are both under scrutiny.

Why has Blast accumulated such a large TVL in a short time?

Radical Incentive Framework

An APY of 4-5% is far higher than the traditional 0% base yield of L2, which is undoubtedly a huge temptation for yield farmers. The fact that leading VCs like Paradigm and Standard Crypto invested $20 million in financing further reinforces the impression of “institutional backing,” triggering typical FOMO emotions.

The Halo Effect of the Blur Brand

The success of Blur in the NFT trading market has accumulated enough trust capital for Roquerre. Users participate based on the simple logic of “this person has done successful things” without conducting adequate risk assessments.

Creating Scarcity of Invitation Codes

Blast adopts an invitation-only early access system, which further enhances the urgency of participation. Users earn Blast points based on the scale of their deposited assets and the number of invitations, creating a clear incentive gradient.

Hidden Red Flags: A Deep Dive into the Structural Risks of Blast

Smart Contract Security Risks

The smart contract of Blast is controlled by a 3-of-5 Safe multi-signature wallet, and the contract signers have financial ties to suspicious NFT trading activities. This discovery was publicly disclosed through on-chain analysis by harls.eth, revealing potential concerns regarding the background of the management. In the context of frequent cybersecurity incidents at the end of 2023, even a single contract vulnerability could trigger large-scale withdrawals amounting to millions of dollars.

One-Way Deposit and Suspended Commitment

Currently, Blast adopts a one-way deposit mechanism—user assets are locked until the mainnet launches, and cannot be withdrawn during this period. More critically, the rewards promised by Blast are “points” rather than real tokens, and the value of these points entirely depends on an L2 project that has not yet been launched. This “validate first, deliver later” model indeed carries a risk of fulfillment.

Pyramid-style recruitment structure

The Blast leaderboard and Spins system encourage users to invite more participants to join the “Squad”. The larger the total amount locked in a user's Squad, the higher the probability of gaining additional lucky values and Blast points. This structure of “early participants benefiting from later arrivals” has been criticized by the community for its Ponzi-like characteristics — the sustainability of the project relies on a continuous influx of new users.

Market Reality: Can Blast Maintain Its Current Popularity

There is no official roadmap to support the medium and long-term development prospects of Blast. Although Roquerre stated that Blast will complement the Blur ecosystem, reduce NFT trading costs, and launch NFT perpetual contracts, these are all promises rather than realized functions.

From a practical perspective, Blast faces two key issues:

1. Can TVL be maintained after the rewards end? Without continuous incentives, user attrition is inevitable.
2. Where is the boundary for recruiting new users? The ceiling of the pyramid structure is self-evident.

Reference Data

According to the latest market data, the current price of the Blur (BLUR) token is $0.03. For users considering participating in Blast, this may reflect the market's current valuation of its ecological token.

Final Thoughts

Blast indeed provides a native yield mechanism lacking in traditional L2, which is technically innovative. However, in terms of risk-return ratio, whether the 4-5% annual yield is commensurate with risks such as “assets being locked for months”, “rewards being unknown tokens”, and “security concerns about the contract” is something each user needs to assess for themselves.

The success of Blur in the NFT space does not automatically transfer to the L2 track. Blast needs to prove that it is not just a “marketing narrative” but a real infrastructure product, and it still needs to go through several tests such as mainnet launch and actual application deployment. Regardless of how Blast ultimately evolves, its rapid rise has already become a case in the crypto market that cannot be ignored in 2024.