Interest in upcoming Ethereum layer-2 network Blast is bringing lots of cash with it. According to DeFi Llama, total value locked (TVL) in the project now stands at over $405 million just days after the project was announced—and it’s growing fast.
Blast is a new Ethereum scaling network announced on Tuesday. In the crowded market of layer-2 networks (like Arbitrum and Optimism), developers come up with ideas to make it quicker, easier, and cheaper for people to do things on Ethereum’s sometimes slow and costly blockchain.
This particular project is led in part by Tieshun “Pacman” Roquerre, who co-founded Blur, the largest NFT marketplace in the space. Blur is known for giving traders ample rewards for using and remaining loyal to the marketplace, and Blast apparently aims to do much the same.
The idea of Blast is that users deposit crypto—mainly staked Ethereum (ETH) and stablecoins—to earn returns. And people are depositing their funds fast. One crypto wallet this week deposited 10,000 ETH to the project. That’s nearly $21 million in crypto.
But there’s a catch: Blast isn’t actually live yet.
Blast said that it will keep users funds until its bridge goes live in February, and the sudden rise of the network and questions about the model have people talking about whether it’s safe to invest or not. Blast itself claims an even higher figure of $443 million total value locked, as of this writing, with nearly 53,000 users so far.
Some traders are concerned it may be a Ponzi scheme, as those who refer other users can receive “Blast points” for a May airdrop. The project is also promising sizable, “risk-free” yields of 4% in ETH and 5% on stablecoins to its users.
Others—including pseudonymous NFT developer Phygital and Polygon Labs engineer Jarrod Watts—have claimed that requiring three out of five anonymous keys to sign and execute transactions is potentially dangerous. Watts in particular said that Blast “is not an L2,” at least not in its current incarnation.
By sending money to the Blast contract, you’re basically trusting 3-5 strangers to stake your funds for you.
You won’t be able to withdraw that money at any point in time unless those 3-5 people decide to do the right thing in the future.
Again, there’s no bridge here.
(14/24)
— Jarrod Watts (@jarrodWattsDev) November 23, 2023
“Investing funds into Blast is like trusting 3-5 strangers to stake your crypto,” Watts wrote on X, formerly Twitter. “And you won’t be able to withdraw it unless 3 signers decide it. To me, it sounds risky.”
Pacman wrote Friday on Twitter that the project promises big rewards because the yield is coming from major decentralized finance projects Lido and MakerDAO.
1/ There’s a meme going around that Blast is a ponzi. The yield that Blast provides users can feel too good to be true, so this meme is understandable. But to put it simply, the yield Blast provides comes (initially) from Lido and MakerDAO.
Lido yield comes from ETH staking…
— Pacman | Blur + Blast (@PacmanBlur) November 24, 2023
“The reason the yield feels too good to be true in Blast is because Blast makes this yield the default for everyone,” he said, adding that the project is “democratizing higher yield.”
Blast has also said that one of the types of yields is the risk-free interest rate ETH staking. But members of Lido, including one who goes by the name of Sacha on X, have pointed out that no form of staking is entirely “risk-free.”
important to clarify that this statement is false.
while i am of the opinion that staking needs to be made as close to risk-free as possible, we are not there today. there are governance, contract, and operator risks involved.
anyone using Blast needs to keep these in mind https://t.co/8z9dVJhr6J
— sacha💧 (@sachayve) November 21, 2023
Decrypt reached out to Blast for additional comment about the concerns, but did not immediately hear back.
Risk-free or not, investors continue plugging large sums of crypto into the project at breakneck speed—and it’s an investment that won’t budge for months. They’ll have to hope Blast lives up to its promises.
Edited by Andrew Hayward
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Source: https://decrypt.co/207489/ethereum-layer-2-blast-has-400-million-locked-in-just-4-days-despite-concerns
