Blast: A New Chapter of Yield-Driven Layer 2

Blast conducted an airdrop of $Blast tokens to the community on the evening of June 26, marking the conclusion of an important airdrop event. From the perspective of investors, community enthusiasm, and TVL, Blast is undoubtedly a top project this year that can compete with ZKsync. As Layer2 enters a new stage, how will Blast itself and the Layer2 ecosystem evolve after this large-scale and somewhat controversial airdrop?

1. Project Background

Innovation comes from demand

In traditional Layer 2 ecosystems, users obtain ecosystem tokens as rewards through staking. At the same time, project parties utilize the staked funds to complete transaction verification under the POS model and provide token incentives for users to participate in network maintenance, creating a win-win situation. Since Layer 2 is built on top of Layer 1, the staked funds must bear dual system risks, so Layer 2 projects often offer staking rates higher than those of Layer 1 as compensation. For example, the annual interest rate for Matic on the Polygon network typically ranges from 8% to 14%, while the annual interest rate for ETH on the ETH network is generally between 4% and 7%. To further enhance the capital efficiency of Layer 2, Blast was born.

Project Overview

Blast is an Ethereum Layer 2 network based on Optimistic Rollups, launched by PacMan, the founder of Blur. Unlike other Layer 2 solutions that focus on scalability, speed, and lowering gas fees, Blast aims to address the shortcomings of Layer 1 while providing greater economic benefits. It is the first Layer 2 to offer fixed income staking for ETH and stablecoins, and this yield-focused concept may guide Layer 2 development back to the financial essence of Web3.

Development History

• November 2023: Project launch, securing $20 million in seed funding led by Paradigm and Standard Crypto.
• November 2023: Announce a unique yield model, offering 4% ETH yield and 5% stablecoin yield.
• February 2024: The mainnet officially launches.
• May 2024: The originally scheduled airdrop plan has been postponed to June 26th, and the airdrop allocation has been increased.
• June 26, 2024: Execute airdrop, 50% allocated to developers, 50% allocated to early users.

market performance

Blast Chain is highly favored in the market, with a TVL of $1.6B, ranking 6th in TVL and 11th in Protocols, with locked assets accounting for 1.71% of all on-chain assets.

2. Token Economics

token functionality

The $Blast token has basic functions such as ecological governance, airdrop incentives, and staking rewards, similar to other Layer 2 tokens. It is worth noting that the Blast ecosystem has established relatively comprehensive rules and systems for governance.

Token Distribution

The total supply of Blast tokens is 10 billion, distributed as follows:

• Community: 50%, 50,000,000,000 tokens, linear unlocking over 3 years.
• Core contributors: 25.5%, 25,480,226,842 tokens, 25% unlocks after one year, 75% unlocks linearly over the next 3 years.
• Investors: 16.5%, 16,519,773,158 tokens, 25% unlock after one year, 75% linear unlock over the next 3 years.
• Blast Foundation: 8%, 8,000,000,000 tokens, linear unlocking over 4 years.

First Round Airdrop

• Blast Points holders will share 7% of the total supply.
• Blast Goal token holders will share 7% of the total supply.
• The Blur Foundation receives 3% of the total supply for distribution to the Blur community.

Airdrops for wallets ranked in the top 0.1% will be released linearly over 6 months to alleviate initial selling pressure. The number of Blast Goals is less than the Blast Points, so holding Blast Goals yields higher returns.

3. Project Features

EVM perfectly compatible

Blast allows users to freely choose the "Auto-Rebasing" feature through contracts, achieving perfect compatibility with EVM. This flexibility makes DAPP migration more convenient.

Efficient Yield Plan

Blast proposes the Auto-Rebasing solution, which updates users' ETH balances directly without the need for intermediary tokens like WETH or STETH. ETH staked on Blast automatically interacts with Lido for staking, allowing users to directly earn rewards. USDB can be exchanged for DAI when bridged back to Ethereum through MakerDAO's T-Bill protocol.

Essentially, Blast will automatically stake funds on DeFi platforms like Lido and MakerDAO, enabling compound interest operations while avoiding high gas fees. In the future, Blast is expected to independently realize this function, allowing users to receive both Blast chain staking rewards and rates close to the base rate of the ETH chain.

4. Ecological Construction

The Blast ecosystem covers multiple fields such as SocialFi, GameFi, DeFi, and NFT, forming a diversified ecosystem.

DEX leader Thruster

Thruster is a DEX aimed at users with high yield demands, with a TVL of $438m. Features include:

• Adopts the AMM model, allowing users to provide liquidity to earn fees.
• Provides two UI modes: simple and complex.
• Utilize the Blast chain to automate USDB and ETH staking yields, enhancing liquidity and trading efficiency.
• Design weekly non-loss lottery Thruster Treasure pool rewards to attract active users.

Leverage Lending Platform Juice Finance

Juice Finance is the largest leveraged lending platform on the Blast chain, with a TVL of $394m. Main features:

• Leverage Lending: Users can use WETH as collateral to borrow up to 3 times the USDB.
• Yield Farm: Offers a variety of strategy vaults, allowing users to deposit USDB and earn returns.

Juice Finance also features permissionless lending and cross-margining capabilities, helping users make the most of their capital advantages.

Capital Efficiency Optimization Platform Zest

Zest utilizes the native ETH yield of the Blast chain to enhance capital efficiency. Users who stake $150 ETH can receive $100 zUSD and $50 Leveraged ETH. zUSD inherits the ETH yield rate, while Leveraged ETH takes on volatility to achieve risk-free leveraged returns.

SocialFi represents Fantasy

Fantasy is an innovative platform that combines social finance and trading card games. Features include:

• Provides cards based on well-known figures in the Crypto Twitter community.
• Cardholders can earn 4% native yield from the Blast chain and 1.5% ETH from card trading volume.
• Players build decks to participate in weekly tournaments and receive rewards based on market activity and social influence rankings.

The total trading volume of the Fantasy platform NFTs reached $93.11M, with 36.7K participants, becoming the 5th ranked SocialFi project on the Blast chain.

5. Prospects and Risks

development trend

• Blast, as the first project focused on the economic benefits of Layer 2, is expected to become a landmark presence.
• Its high yield characteristics may continue to attract other on-chain funds until equilibrium is reached.
• Blast chain provides a solid foundation for DeFi development, helping DeFi projects to grow rapidly.

potential risks

• The Auto-Rebasing feature improves capital efficiency but may increase systemic risks.
• Staking through Lido and MakerDAO may lead to difficulties in capital recovery due to market fluctuations.
• The impact of the automatic staking mechanism on users' rights to manage their funds still needs to be discussed.

Overall, the high returns of Blast come with increased systemic risk, but for small investors, the growth in returns may outweigh the increase in risk. The revenue model of Blast may be adopted by other Layer 2 solutions and is worth ongoing attention.