Blast Layer-2 network launch draws both interest and criticism over potential yield model

Blur (BLUR) NFT marketplace founder Pacman has launched a new Ethereum (ETH) layer-2 network, Blast, designed to enable its users to earn “native yields.”

In a Nov. 20 statement, the protocol explained how its novel approach differentiates it from other layer-2 networks. According to the team, Blast is an Ethereum Virtual Machine (EVM)-compatible, optimistic rollup that raises the baseline yield for users and developers without changing the experience crypto-natives expect. The protocol offers users a 4% yield for ETH and 5% for stablecoins like USDC.

“Blast yield comes from Ethereum staking and real-world assets protocols. The yield from these decentralized protocols is passed back to Blast users automatically.”

Though the mainnet launch is scheduled for February 2024, users can earn Blast Points when they invite others to the protocol.

Blast raised $20 million in a funding round led by venture capital firm Paradigm and Standard Crypto.

Data from CryptoSlate shows that the network launch has boosted BLUR’s price by more than 5% during the last 24 hours to $0.35888 as of press time.

Blast’s approach draws criticism.

Meanwhile, Blast’s approach has drawn criticism from several crypto stakeholders for its Ponzi-like structure.

Crypto entrepreneur T3chman described the blockchain network as “simply another pyramid/ponzi scheme orchestrated by Paradigm to drain liquidity from Web3″ and warned the community to avoid it.

Echoing T3chman’s view, Tytan, the co-founder of NFTY Finance, raised concerns about the Blast invite system, highlighting its resemblance to a pyramid scheme.

Adam Cochran, a partner at Cinneamhain Ventures, characterized Blast as a platform with one-way deposits. According to him, Blast operates as a multisig vault depositing assets into Lido and Maker for yield, offering ‘points’ for an unreleased L2, with no current exit strategy.

Crypto developer Sisyphus added that the Blast ‘bridge’ remains a closed contract owned by a 5-person multisig without an existing L2.

Meanwhile, Defi Maestro, a contributor to Mantle Network, noted that the layer-2 “chain will likely be heavily reliant on BLAST padded emissions to retain total value-locked post-launch.” 

“BLAST feels like a L2 reward token to incentivize BLUR holders,” DeFi Maestro added.

However, despite the criticism surrounding the project, its approach has attracted inflows of nearly $50 million, including around $40 million in ETH staked on Lido and approximately $6.5 million on Maker.