Blast, New Ethereum Layer-2 Network, Quickly Becomes Third-Largest Staker Amid Controversy

Blast, the latest Ethereum layer-2 network, has made a significant splash in the cryptocurrency world by becoming the third-largest holder of staked ether, just three days after its launch. On-chain data from Etherscan reveals that since its inception on Nov. 20, Blast has accumulated over 140,000 staked Ethereum, worth approximately $286 million, through the liquid staking protocol Lido. This represents about 1.5% of the total volume of staked Ether.

Further data from Debank indicates that Blast’s multi-sig wallet now holds assets exceeding $335 million, including Lido’s staked Ether and MakerDAO’s stablecoin DAI.

However, Blast’s meteoric rise is not without controversy. The crypto community has raised concerns over its pyramid-like points system, which rewards early users for referrals. The Blast website details that users gain an additional 16% of points for referrals, and an extra 8% if their referrals bring in more users. Critically, the protocol currently only allows inflow of funds, with no withdrawal option available until a scheduled launch in February of the next year.

Simon Dedic, CEO and managing partner of MoonRock Capital, criticized the platform’s approach, calling it “Ponzi airdrop farming.” He pointed out that Blast does not offer any significant technical advancement over other layer-2 solutions, nor does it present any compelling applications. The disabling of withdrawals further raises eyebrows.

Adding to the concerns, Polygon engineer Jarrod Watts commented on the setup of Blast’s multi-sig wallet, which requires 3 out of 5 signatories for authorization but is clouded by the anonymity of the associated addresses. Despite these reservations, Watts remains skeptical about the risk of fund theft.

Cos, founder of SlowMist, also weighed in, noting that Blast operates as an upgradeable contract with a 3/5 multi-signature setup but lacks a time lock, which could be a point of vulnerability.

In summary, while Blast’s rapid rise in the Ethereum ecosystem is noteworthy, the platform’s structure and operational mechanisms have sparked debate and scrutiny within the crypto community, highlighting the complex balance between innovation and security in the evolving world of decentralized finance.