Critics have expressed concerns about the inherent risks of Blast’s model, particularly the practice of staking on the liquid-staking protocol Lido in exchange for Blast points
Despite some skepticism from the crypto community, Blast, an Ethereum Layer-2 blockchain set to be live in March, has successfully garnered over $301 million in staked Ethereum (stETH) and stablecoins since its introduction on Monday, according to reports.
Blast, led by the pseudonymous @PacmanBlur, a co-founder of the popular Non-Fungible Token (NFT) marketplace Blur, distinguishes itself by incorporating native staking, a feature not commonly found in other layer-2 networks.
The protocol has garnered attention not only for its unique technical approach but also due to its high-profile backers, including prominent crypto fund Paradigm and “eGirl Capital”, a group of crypto-native investors.
One of Blast’s distinguishing features is its native staking capability, a functionality that sets it apart from other layer-2 networks. The protocol aims to generate yield through Ethereum staking and real-world assets, providing users with a unique avenue for capital growth.
However, a notable caveat is that staked assets cannot be withdrawn until the Blast bridge goes live in February. In the interim, users receive “Blast points,” which serve as a novel incentive mechanism.
Controversies and Criticisms Surrounding Blast Staking Model
Critics have expressed concerns about the inherent risks of Blast’s model, particularly the practice of staking on the liquid-staking protocol Lido in exchange for Blast points. Some argue that the platform is attracting Total Value Locked (TVL) to a chain that does not yet exist, raising questions about the overall security and reliability of the protocol.
Additionally, the Blast Points system has raised eyebrows within the crypto community, with some likening it to a pyramid scheme. Markedly, users are unable to withdraw their staked assets until the Blast bridge goes live, compelling them to engage with the platform through the acquisition of Blast points.
These points can be earned by introducing other users through unique referral links, creating a structure where early users can potentially gain more points based on the number of users they bring in. Technical documents reveal that users can receive an additional 16% points when their invited users bring in more participants, and another 8% if the second level brings in more people.
This has raised concerns about the sustainability and transparency of the protocol. A crypto trader on X remarked that “Blast is actually insane,” highlighting concerns about the conversion of deposited ETH into stETH on a multisig of anonymous developers.
The growing number of layer-2 networks in the DeFi space has also sparked debates over whether there is a genuine need for more platforms like Blast. With 232 blockchains in existence, according to DeFiLlama, the market is already saturated with various platforms sharing similar functions and users.
Ethereum remains the largest, commanding 55% of the total value locked, followed by Tron and BSC. The question then arises, does the DeFi space need another layer-2 network, especially one with such a unique staking mechanism?