$400 Million in ETH Withdrawn from Blast L2 Network Following Mainnet Launch

Around $400 million in Ether (ETH) has been withdrawn from the Ethereum layer-2 network Blast after the launch of its mainnet on February 29 at 9:00 pm UTC. This unlocked nearly $2.3 billion in staked crypto that was previously locked up on the network.

Blast, an optimistic rollup blockchain scaler, offers users up to a 4% annual return on deposited Ethereum (ETH) and 5% on stablecoins held on the network, generated from staked ETH and United States Treasury Bills (T-Bills) managed by MakerDAO.

Ethereum Layer 2 Chain Blast Releases Official Mainnet

Blast 메인넷이 출시되었습니다.

얼리액세스 사용자는 메인넷으로 브리지하고 다른 곳에서는 찾아볼 수 없는 Blast 네이티브 Dapp을 사용할 수 있습니다👇 pic.twitter.com/BPBnxMxWbt

— Blast (@Blast_L2) March 1, 2024

Blast’s total value locked (TVL) saw a high of $2.27 billion on Feb. 29, which has now fallen 17.5% to $1.87 billion after the launch with just under $400 million withdrawn, according to DeFiLlama data.

Assets on the platform include roughly 469,000 ETH, 77.3 million USDC, 67.1 million USDT, 148,000 stETH and 24.7 million DAI , according to a Dune Analytics dashboard. Users can now withdraw their funds with the launch of the live mainnet.

Blast, which claims to be the “only Ethereum L2 with native yield,” attracted significant attention with its deposit-only bridge announced in November. This bridge quickly accumulated over $2 billion in deposits, with depositors receiving Blast “points” for holding their ETH.

The assumption was that these points could eventually be redeemed for a token airdrop, prompting traders to engage in “points farming” to accumulate them. According to the Blast website, the airdrop is set for May 2024.

Crypto protocols use airdrops to give out tokens to early users and contributors, typically aiding in decentralized governance as well. Blast aims to make an impact in the crowded Ethereum scaling market—which includes networks like Polygon, Arbitrum, Optimism, and Base—by incentivizing users with both native yield on staked cryptocurrency and a share of tokens via airdrops.

With the network now live, traders holding Blast Points have the option to redeem their deposits and may seek better opportunities elsewhere. Given that the price of ETH has appreciated significantly since Blast opened to depositors late last year, from around $2,000 to about $3,450, some traders may be looking to capitalize on profits.

Blast Network Hits $2 Billion TVL Milestone Amid Controversy and Alleged Exit Scam

Blast, backed by Paradigm, initially faced criticism, with concerns raised about its one-way bridge and the optics of soliciting deposits while still under development.

Despite this skepticism, Blast became one of the most active layer-2 networks in terms of deposits even before the mainnet launch, attracting $2.3 billion in deposits from 181,000 users and generating an annual yield of $85 million.

The network had surpassed its $2 billion TVL milestone for the first time days earlier, on Feb. 27. Airdrop hunters have been actively farming the blockchain in hopes of receiving a Blast token, which the team has announced will be distributed in May.

The network also experienced its first alleged exit scam on February 26, when a gambling protocol called “Risk on Blast” disappeared with 420 ETH, equivalent to around $1.25 million at the time, collected from user funds for its marketed RISK presale token.

In November 2023, Dan Robinson—Head of Research and General Partner at Paradigm, the VC firm that co-led Blast’s $20 million seed round—wrote that the firm thought the “announcement this week crossed lines in both messaging and execution.”

He further criticized the decision to lock up funds for months and said that “much of the marketing cheapens the work of a serious team.” Blast founder Pacman admitted that Paradigm asked them to “make changes” to the launch plan, but he said that it was ultimately Blast’s own decision to make.

Despite these early challenges, Blast has garnered support from several projects, including NFT platform Zora and pricing oracle provider Pyth, both of which announced their integration with Blast on Thursday. Moreover, developers creating decentralized apps (dApps) on Blast are set to receive 50% of the upcoming airdrop allocation, further enhancing the ecosystem’s appeal.

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