On November 21, 2023, Blast – a new layer 2 (L2) solution on Ethereum triggered unprecedented hype on social networks. As of the time of writing, over $87 million in liquidity has been injected into this on-chain bridge.
What is Blast?
L2 Blast tries to change the way ETH is staking on-chain. The protocol uses several unique mechanisms designed to deliver higher returns and more seamless staking for ETH holders.
Blast is promoted as an L2 protocol on Ethereum – the largest programmable blockchain.
According to the team’s statement, Blast automatically stakes all cryptocurrencies put into Lido and redistributes staking rewards to these L2 investors.
Additionally, users who connect the stablecoin will automatically receive USDB, Blast’s auto-rebasing stablecoin, to enjoy additional yield from MakerDAO’s on-chain US Treasury bond protocol.
Team Blast will allow withdrawals on February 24, 2024, while Blast Points redemption will begin in May.
The project has attracted over $87 million in ETH and stablecoins in less than 24 hours after launch.
Source: 21 Shares and Dune Analytics
At the time of writing, Blast’s TVL metrics show a daily growth of over 20,000%, making it arguably the fastest growing L2 in Ethereum history.
Blast: L2 Ethereum gets the most hype in Q4 2023
Blast is trying to make ETH staking more profitable through the concept of “base yield”.
L2 Blast: The Basics
Blast is a layer 2 solution on the Ethereum blockchain. According to the official statement, Blast is developed by contributors of the trending NFT marketplace Blur. Additionally, the protocol is funded by heavyweight VCs such as Paradigm, Standard Crypto and Primitive Ventures, with participation from leading angel investors Andrew Kang and Santiago Santos.
Simply put, the protocol strives to provide more comprehensive and profitable staking for ETH and stablecoin holders than its competitors.
With Blast, ETH itself is actually rebasing on this L2. ETH profits from the L1 (originally Lido) staking protocol are automatically transferred to users via rebasing ETH on L2.
Blast attempts to integrate real-world assets into the ETH staking process. All customers who deposit stablecoins receive USDB, Blast’s native asset. USDB yields come from the MakerDAO protocol pegged to 10-year US treasury bills.
L2 Blast: When will the tokens be released?
Blast has laid out a three-step schedule for its operations:
Early Access (already active since November 21): Bridge goes live, starting to distribute Blast Points.
Mainnet launch (expected on February 24, 2024): dApps go live, ETH withdrawal is allowed by the team.
Redeem (expected on May 24, 2024): Activate Blast Points redemption.
Users will only be able to withdraw what they put into Blast 3 months after the start of the early access campaign.
L2 Blast: Risk
Besides the high volatility of cryptocurrencies and other “regular” considerations necessary for investors, there are some of these risks associated with this project so far:
No one can predict the price of ETH and related assets on the day of unlocking. Therefore, stake valuation in USD may spike or drop.
As of the time of writing, there is no certainty that there will be a token airdrop and its rules have not been announced.
Additionally, the interest in building dApps on top of this L2 cannot be predicted.
Therefore, users should be extremely cautious when working with any budding cryptocurrency protocols.