Blast: Opening a New Chapter for Layer 2 with Profit Narratives

On the evening of June 26, Blast airdropped $Blast tokens to the community, marking the end of this massive airdrop feast. Undoubtedly, in terms of investment institutions, community enthusiasm, and TVL, Blast is the only top project this year that can rival ZKsync. Layer 2 has entered a new stage; after this large-scale and somewhat controversial airdrop, how will Blast itself and the Layer 2 ecosystem develop?

1. Project Background

Environment-driven Innovation

In traditional Layer 2 ecosystems, users obtain Layer 2 tokens as rewards by staking ecosystem tokens, stablecoins, etc. At the same time, Layer 2 project teams utilize the staked tokens to complete transaction validations under the POS model and are also willing to provide token incentives for users to participate in network maintenance and development, creating a win-win situation. Typically, because Layer 2 is built on Layer 1, the funds staked in Layer 2 must bear the dual system risks from both Layer 2 and Layer 1. Therefore, Layer 2 projects often need to offer interest rates higher than those of Layer 1 staking as a risk compensation. Is there a way for Layer 2 to achieve higher capital returns? Blast has emerged to address this.

Basic Information

Blast is an Ethereum Layer 2 network based on Optimistic Rollups. Unlike other Layer 2 solutions that focus on increasing transaction capacity, improving speed, and reducing gas fees, Blast focuses on addressing the shortcomings of Layer 1 while providing higher economic benefits. Overall, Blast will become the first Layer 2 to offer fixed income from ETH and stablecoin staking. This narrative, which is based on returns, may guide the development of Layer 2 from technical attributes back to the financial attributes of Web3.

Development History

• November 2023: Project launch, secured $20 million in seed round financing
• November 2023: Announce unique yield model, offering 4% ETH yield and 5% stablecoin yield
• February 2024: Mainnet Launch
• May 2024: Airdrop plan postponed to June 26, increasing allocation amount
• June 26, 2024: Airdrop will be conducted, 50% allocated to developers, 50% allocated to early users.

Market Growth

The Blast chain is highly sought after in the market and continues to grow. As of the time of writing, its TVL has reached $1.6B, making it the 6th ranked chain by TVL and the 11th ranked in Protocols, with locked assets accounting for 1.71% of all locked assets across chains.

2. Tokenomics

Token Function

The $Blast token features are similar to other Layer 2 tokens, including basic functionalities such as ecological governance, airdrop incentives, and staking rewards. In terms of ecological governance, the Blast ecosystem has more comprehensive governance rules and regulations compared to other Layer 2 ecosystems.

Token Allocation

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

• Community receives 50%, linear unlocking over 3 years
• Core contributors receive 25.5%, 25% will be unlocked after one year, and 75% will be linearly unlocked over the subsequent 3 years.
• Investors receive 16.5%, 25% unlocked after one year, 75% subsequently unlocked linearly over 3 years.
• Blast Foundation received 8%, linear unlocking over 4 years

Phase One Airdrop

• Blast Points users share 7% of the total supply
• Blast Goal points users share 7% of the total supply
• The Blur Foundation receives 3% of the total supply for allocation to the Blur community.

Airdrops for wallets in the top 0.1% will be released linearly over 6 months to mitigate selling pressure at the time of token release. The number of Blast Goals is far less than Blast Points, making holding Blast Goals more beneficial.

3. Narrative Characteristics

Perfect compatibility with EVM

Blast is perfectly compatible with EVM and adopts a free choice method. Contracts can choose whether to participate in the "Auto-Rebasing" function, making it easy for DAPP to migrate.

A perfect solution for multiple fish consumption.

Blast automatically updates user account balances through the Auto-Rebasing scheme without needing tokens like WETH or STETH. ETH staked in Blast automatically interacts with Lido for staking, directly updating the native ETH balance. The native stablecoin USDB can be exchanged for DAI when bridged back to Ethereum through MakerDAO's T-Bill protocol.

Essentially, Blast will automatically stake the tokens locked in the contract in DeFi platforms such as Lido and MakerDAO, continuously converting them into native token yields, achieving compound interest while avoiding high gas fees. In the future, Blast is expected to operate independently from Lido and MakerDAO to achieve this, allowing staked funds to earn staking rewards on the Blast chain at a base interest rate comparable to that of the ETH chain.

4. Ecological Construction

The Blast ecosystem encompasses multiple tracks including SocialFi, GameFi, DeFi, and NFT, featuring better narrative and comprehensiveness.

DEX Leader Thruster

Thruster is a yield-focused DEX, with TVL rapidly growing since March, currently reaching $438m. Features include:

• Inherit the conventional DeFi AMM model
• Provide simple and complex mode UI
• Use Blast chain to automate USDB and ETH staking rewards
• Design a weekly non-loss lottery Thruster Treasure pool reward

Leveraged Lending Leader Juice Finance

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

• Leverage Lending: Use WETH as collateral to borrow up to 3 times USDB.
• Yield Farm: Offers a variety of strategy vaults
• Unpermissioned lending and cross-margining features

Capital effect enhances platform Zest

Zest utilizes the native ETH yield of the Blast chain to enhance capital efficiency. Users staking $150 ETH can receive $100 zUSD and $50 Leveraged ETH, with the ETH yield inherited from zUSD and volatility inherited from Leveraged ETH. zUSD provides risk-free leveraged returns, improving capital efficiency.

SocialFi leader Fantasy

Fantasy is a social finance trading card game that combines elements of social finance and trading card games. Features:

• Cards based on well-known figures in the Crypto Twitter community
• Cardholders can earn 4% native rewards from the Blast chain and 1.5% ETH from card trading volume.
• Weekly competitions award prizes based on market trading activity and social media influence rankings.

As of now, Fantasy NFT has a total trading volume of $93.11M, with 36.7K participants, making it the 5th ranked SocialFi on the Blast chain.

V. Future Development and Risk Opinions

future development trends

• The high yield characteristics of Blast may continue to attract funds from other Layer 2 and Ethereum chains.
• The automatic yield capability of the Blast chain provides fertile ground for the development of DeFi, and DeFi projects built on Blast may grow faster.

Risk Analysis of Concealment

Blast achieves automatic acquisition of Layer 1 staking rewards through Auto-Rebasing, which is essentially a form of automation that allows for multiple benefits from one effort.

• Technical aspects: Achieve automated staking, reduce gas fees, minimize individual operational risks, optimize capital efficiency
• Risk Level: Increase the systemic risk of the entire chain's funding through staking with Lido and MakerDAO.
• Permission Levels: Automatic staking actions may involve issues regarding the user's authority over fund disposal.

Overall, the high returns of Blast come with an increased overall risk to the financial system, but for individual small funds, the growth in returns still far outweighs the growth in risks, indicating a good outlook. The yield characteristics of Blast may be adopted by other Layer 2 solutions and are worth continued attention.