Wannabe L2 Blast bursts onto scene promising excessive ETH yield — in 3 months

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A brand new Ethereum layer-2 rollup, introduced Monday, has already attracted $27 million in complete worth locked (TVL), however there’s a twist: It doesn’t but exist.

The promised community, Blast, would launch as an optimistic rollup in February 2024, however its backers instantly started soliciting deposits into a sensible contract “bridge.”

Within the span of half a day, the contract has amassed sufficient ether (ETH) and dai (DAI) to place it at quantity 16 in L2Beat’s TVL rankings, forward of established names akin to derivatives DEX Aevo and Arbitrum Nova.

The announcement touts Blast as “the one Ethereum L2 with native yield for ETH and stablecoins,” which means it faucets into Ethereum staking yield by directing all ETH to Lido and makes use of DAI to faucet MakerDAO’s rising US Treasury invoice yield by its Dai Savings Rate (DSR), at present at 5%.

Blast’s growth workforce, led by pseudonymous Blur co-founder Pacman, raised $20 million from enterprise capital corporations Paradigm and Commonplace Crypto, joined by a motley crew of angel investors and crypto influencers.

Early response has centered on the one-way nature of the “bridge” — when you cross you’ll be able to’t exit till after Blast truly launches and withdrawals are enabled.

Usually, a bridge permits property to circulate each methods. This contract is apparently controlled by a five-key multi-signature pockets. Nevertheless, of the 5 addresses, one accommodates no ether and has no transaction historical past, and the opposite 4 had been not too long ago funded by a single address.

That calls into query the independence of the signing cohort.

In keeping with Pacman, there’s no want to fret.

“The Blast Early Entry bridge contract does use a multisig, and every signer is a novel contributor to Blast,” he advised Blockworks. “This is identical safety mannequin that different L2s like Optimism, Polygon, and Arbitrum make the most of — these L2s are all upgradeable by way of multisig as nicely.”

Blockworks additionally contacted Paradigm and Commonplace Crypto for remark.

The usage of Lido has drawn the ire of Ethereum group members involved with centralization danger in staking suppliers, together with Dankrad Feist, who called it “a really unhealthy concept” on X.

“ETH and liquid staking derivatives are totally different property with totally different danger profiles (and rewards), and customers ought to have a selection about which one they need to use,” he stated.

It ought to come as no shock, on condition that Paradigm is an investor in each Lido and Blur.

Critics additionally query using a multi-level-marketing type referral marketing campaign, which doles out factors, of unknown worth, to incentivize sending invites to potential new customers.

The positioning explicitly guarantees an airdrop based mostly on early entry participation. Factors earned are expected to be redeemable in Might 2024.

Factors methods have more and more been used as a growth bootstrapping mechanism by protocol builders — together with Pacman’s prior marketing of Blur — and are broadly seen as a precursor to an airdrop or one thing else of worth.

Up to date Nov. 21, 2024 at 12:15 pm ET with remark from Pacman.

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