This week, the development team behind the leading NFT marketplace "Blur" introduced its own Layer 2 network, "Blast". In just a few days, users deposited over $370 million into the protocol to benefit from a future token airdrop.
Since the past three years during the explosive growth of non-fungible tokens (NFTs), OpenSea has been the dominant marketplace. It wasn't until the beginning of 2023 that the aggregator Blur managed to gain the leading position by using a clever airdrop incentive mechanism. Now the Blur development team, in collaboration with sponsor Paradigm, is attempting a similar strategy for the Layer-2 network Blast.
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Blast: a Layer-2 network with native yield
Blast's announcement post on Twitter describes Blast as "The only Ethereum L2 with native yield for ETH and stablecoins". The network is based on the principle of market efficiency and aims to benefit from liquidity flows to protocols with the highest yields. Traditional Layer 2 networks do not currently offer Ether and stablecoin yields at the blockchain level. In contrast, Blast will invest the assets deposited via DeFi protocols and distribute them to users via a rebasing mechanism.
The network utilises the Ether (ETH) staking yield of around 4% per annum. Moreover, deposited stablecoins such as USDC, USDT, and DAI are invested in MakerDAO's US Treasury Bond programme, which yields 5%. the Ether earned is then credited directly to users' wallets. Simultaneously, the new USDB stablecoin represents the blockchain dollar. Yield-generating deposits on the network are open immediately, however the network's official launch isn't scheduled until February 2024.
Questionable airdrop incentive to attract users
While the idea of a layer 2 solution with passive yield at the blockchain level is innovative, the rapid deposit of over $370 million can be attributed to a questionable airdrop system. For each deposit, users receive 'points' to purchase loot boxes containing a random amount of airdrop credits for the future Blast token. To earn more points and increase their chances of winning, users must invite new friends, whose deposits will bring additional benefits.
Explanation of the Blast referral system / Source: Blast L2
This system resembles a classic pyramid scheme, but it seems to work. Within a few days, Blast surpassed competing Layer 2 networks such as Base, Gnosis and zkSync Era in terms of total value locked (TVL). This even despite the fact that the blockchain will only be launched in February 2024. Additionally, there is a significant security risk, as the $370 million in user funds are currently only secured by a 3/5 multi-sig wallet.
