Blast Storm The Secret and Controversy behind TVL’s Explosive Growth

The Explosive Growth of TVL Uncovering the Secret and Controversy of the Blast Storm

dt X DeFi_Cheetah，DODO Research

Recently, the most eye-catching project in the Ethereum ecosystem is undoubtedly Blast. Along with the announcement of the second phase airdrop rewards of Blur, another L2 public chain developed by the Blur team, Blast TVL has already surpassed $600 million in just nine days, approaching Solana’s total value locked (TVL) of $662 million.

Blast Introduction

The goal of Blast is to create a unique L2 public chain with native Ethereum and stablecoin yield. However, the whitepaper and technical details have not been released yet. Users who have been allowed to deposit funds into the mainnet contract can already start earning LSD & RWA yield and participate in scoring activities.

The high amount of funds locked in Blast in such a short period of time is all thanks to the strong team and investor background, led by LianGuaicman, the founder of Blur, and backed by renowned VCs like LianGuairadigm, eGirls Capital, and famous CTs like DegenSLianGuairtan and Andrew Kang. It can be said that their background is impeccable.

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Blast Token Airdrop

In addition to the strong team background, the expected airdrop is another key point for the rapid growth of Blast TVL. Blast started its airdrop scoring activity even before its L2 mainnet was launched, which reminds people of Blur’s fifth-largest airdrop in Ethereum history, where early users earned fortunes through scoring activities and airdrops.

In the Blast airdrop rules, the amount of funds deposited is related to the airdrop scoring, and an invitation system is introduced. The funds deposited by invited users can affect the scoring of the original inviter. The more people invited and the larger the funds they bring in, the higher the airdrop scoring. Another factor in calculating the scoring is whether the address has used Blur in the past. Addresses that have earned higher Blur scores will receive higher Blast airdrop scores. This rewards early users who supported the team. It is important to note that Blast currently does not have an exit mechanism. According to the current roadmap, deposited funds can only be withdrawn when the mainnet is launched on February 24, 2024. The airdrop scoring will start redemption on May 24th, which means there will be a three-month lock-up period and the airdrop will take place half a year later.

Blast Controversy

The Blast frenzy has swept through the entire crypto community, and Twitter is full of discussions about Blast. However, some people believe that despite claiming to be an L2 public chain, Blast is essentially just a deposit contract that helps users deposit money into Lido/MakerDAO. It cannot be considered a true L2. They also question the $600 million locked in Blast, which is managed through multisig, with the contract allowing upgrades and no time lock mechanism. This raises concerns about security. In response to this, the Blast team stated that L2 solutions like Arbitrum, Optimism, and Polygon also use multisig models, and the custodians of the multisig are experienced engineers with expertise in high-risk applications such as financial applications and smart contracts. They have promised to update the multisig hardware wallet within the next week.

In addition, LianGuairadigm, as one of its important investors, also expressed disagreement with Blast’s move to allow users to deposit funds and not be able to withdraw them for three months before the mainnet launch. They believe that the marketing activity of inviting links will reduce the team’s efficiency. LianGuairadigm believes that Blast has set a bad precedent for other projects. However, despite the conflicting ideas, they choose not to interfere with the operation of founder LianGuaicman and will continue to support LianGuaicman and his team, stating that they are world-class developers who can bring value to the industry.

Also, there has been much discussion about Blast depositing funds into LIDO / MakerDAO. Lido has been continuously criticized by the community for its large scale, which leads to excessive centralization of Ethereum. Blast’s move to deposit a large amount of TVL into Lido will only further centralize Ethereum. The security risks of Lido will become a time bomb for the DeFi world and even the entire cryptocurrency industry. Similarly, depositing a large amount of stablecoin funds into MakerDAO will lead to the overall DeFi world’s high dependence on top applications and lower market risk resistance.

Author’s Opinion

@DeFi_Cheetah

I have been reading those optimistic tweets about Blast, and in my opinion, it can be considered as a speculative play, but it is not my primary investment target. Because I believe that Blast’s strategy of converting user deposits to generate income carries risks of dependence on MakerDAO and LidoFinance. From a short-term speculative perspective, this may sound like a more capital efficient operation. However, in the long run, this direction that leads to centralization should not be the mainstream of Ethereum but rather the development of decentralized LSDs that incentivize fraxfinance’s $frxETH v2 and RocketPool.

At the same time, with the convergence of L2 chains, especially after the cost reduction of EIP-4844, economies of scale will become more evident, and the larger the scale, the more it can occupy a leading position. Therefore, I don’t believe that having native income is very attractive. The currently dominant Arbitrum and Optimism can easily catch up. Of course, the information disclosed by Blast is limited at the moment. If there is more news, I will further research.

@19971122 DT

In my opinion, LianGuairadigm has always been one of the VCs that understands the cryptocurrency industry the most. Their products may not always be particularly innovative in terms of technology, but they can always stimulate market reactions in terms of token mechanisms. I still remember a few months ago when the Social Fi product FriendTech became popular. At the beginning of the project, only a small group of degenerate players used it, but when LianGuairadigm announced their investment and brought in a points mechanism, it completely triggered market FOMO, and tutorials on earning points were everywhere.

And Blast has a similar story. Gnosis Chain or Canto is also in progress, which has the concept of Ethereum and stablecoin native income. It is not particularly innovative, but what really stirs up market sentiment is the points mechanism. Blast directly does what all the unreleased L2 chains dare not say but silently do. They clearly tell everyone that they want you to provide TVL, and they openly state that you can get so many points for providing a certain amount of TVL.

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