Can Blast Pull It Off?

The controversial, cash-swole L2 just hit mainnet. Can it sustain the hype?
Feb 29, 20245 min read

Blast first arrived on the scene with a bang.

Ever since the announcement of Blast's $20M raise back in November, the crypto community has questioned how it could possibly justify supporting a project so hellbent on courting funds that its lead investor, Paradigm, had to distance themselves from the project.

Fast forward three months, and crypto unsurprisingly seems content to let the $2+ billion in TVL speak for itself.

Today, the network finally makes its mainnet debut. The big question is, can they keep the party going long enough to build a sustainable network?

While the next few weeks of Blast activity should give us a sense of the level of demand for this kind of L2, the real test will come in May when Blast’s airdrop can be claimed. While only time will tell, examining the tactics Blast employed thus far, the performance of its sister project, Blur, and the potential benefits of native yield may give us a sense of the blockchain’s future.👇

What Sets Blast Apart?

Blast’s innovation lies as much in its pre-launch strategy as it does in its technical functions. From the beginning, Blast cultivated a unique feel, only allowing people to bridge if they received a referral code — giving the whole experience an air of exclusivity.

What many refer to as Ponzinomics came baked into this referral system, with users earning a percentage of the points their invitees receive for bridging ETH or stablecoins. This tactic proved successful. In a little over a month, they had accumulated over $1B in TVL, which Blast then used as an incentive to attract developers to their Big Bang Competition. 

💥 The Big Bang Competition

The developer-centric competition, running from January 16 through February 18, saw 3,000 projects competing to be one of the first to launch on Mainnet.

The competition offered first-mover exposure to Blast's amassed TVL, a significant allocation of the upcoming airdrop, and direct, continued support from Blast investors and operators.

Many of the 47 winners, announced last Friday, chose to allocate all of their forthcoming airdrops to users in an attempt to “pay it forward” and further attract attention. While these projects have sacrificed the potential airdrop reward, by incentivizing user activity with the airdrop, projects will instead make profit from Blast’s native yield and gas fee sharing, which they clearly expect to be a more lucrative pursuit.

⛽️ Native Yield and Gas Fee Sharing

Blast's native yield and gas fee-sharing features arguably stand out as its most distinguishing features.

By integrating with Lido and MakerDAO on the backend, Blast offers a 4% and 5% APY for ETH and stablecoins, respectively, for just being anywhere on the chain.

Blast also shares net revenue from gas fees with the dapps that incur them, providing developers with another revenue stream to utilize. This confluence of incentives sets up the L2 as a place for users to park capital and developers to earn income directly from their smart contract contributions.

Between its initial launch strategy and its unique technical functionality, Blast shows off standout features that make it unlike any other blockchain we have seen yet.

But, still, the question looms, will this be enough to keep it running after the airdrop?

Will Blast Sustain Momentum?

We're going to get a sense of Blast's staying power in the coming weeks, but by examining the trajectory of Blur after its airdrops and digging into specific use cases and business models enabled by native yield and gas fee sharing, we can better sense of whether the network will live on or not. 

🥕 Blur and its Airdrops

The trajectory of Blur, the NFT trading platform also founded by Pacman, following its own airdrops. signals promise for Blast.

After its first airdrop, Blur did experience a decline in weekly volume, thought it was a downturn mirrored across the NFT market overall, which bottomed out in October 2023. Following this, Blur's market share did not just recover—it grew. The platform currently accounts for ~77% of weekly volume, a number which continued to grow even after the launch of Blur’s second airdrop in November last year.

Though it wasn't immune from market dynamics, Blur's innovative incentive program kept power users active on the platform and substantial airdrops often only served to court more attention to the platform.

For Blast, a similar approach of innovating its incentive structure, with novel dynamics like native yield and gas fee sharing to retain and attract users, shows a commitment to a playbook that has already worked for Blur.

👷‍♂️ Examples of Native Yield and Gas Fee Sharing at Work

While 4-5% yield and gas fees on a rollup may not seem like much at first, Blast’s native yield and gas fee-sharing enable unique use cases and business models previously impossible or unprofitable.

For a couple examples, take a look at Monoswap and BlastOff.

Monoswap, a new DEX on Blast, uses native yield to provide points with real purpose outside of maybe being redeemed for a token. For actions on their platform, users receive MonoXP (their points), providing them unique rewards and privileges — like being able to share in native yield redistribution, gas revenue sharing, developer airdrop allocation, and overall profits from the Mono ecosystem. Through this, MonoXP demonstrates an attempt to intensely align users with a platform, putting points to use in a novel manner while also further gamifying the DeFi experience.

Next, launchpad and yield aggregator BlastOff puts yield to work in a novel fashion with Native Yield IDOs. On their platform, users staking ETH and stables can choose to allocate a portion of their yield to support IDOs, merging passive income with early investment opportunities without risking the principal. Together, these two platforms demonstrate use cases only possible with native yield which could provide Blast staying power. 

The Verdict?

Blast's journey from its controversial debut to its Mainnet launch has certainly been entertaining to watch.

By teaming contentious (yet eye-catching!) pre-launch strategies with unique technical features, Blast has already attracted a significant following among a degen audience whose time and money isn't too easy to attract. The comparison with Blur's trajectory post-airdrop, alongside the novel use cases enabled by native yield and gas fee sharing, further cement the argument for Blast's sustained relevance.

With all these forces in play, it's clear that Blast has put itself in an enviable position to thrive in this renewed bull market, leveraging its offerings and community engagement to stand out among the scores of upstart L2s.

Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.

Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.

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