In just two months, the Blast network has gathered more than $130 million in total locked funds at an astonishing speed, successfully breaking the fastest record of Layer 2 and leading the wave of L2 Native Yield. This not only proves the attractiveness of the Blast network, but also shows the confidence and enthusiasm of users and developers in the ecosystem.
Blast is a Layer 2 network initiated by Pacman, the founder of Blur. It was officially launched on November 21, 2023, and attracted a total locked value (TVL) of US$230 million in just 48 hours. The Blast network is based on Optimistic Rollup technology, is compatible with the Ethereum mainnet, and supports EVM and Solidity. According to Pacman's introduction, Blast's vision is not just Blur services, but hopes to support all types of Dapps, including DEX, blockchain, derivatives trading, NFTFi, SocialFi, etc. The Blast model has attracted a large number of users and funds. As of February 1, 2024, Blast's TVL has exceeded US$1.3 billion.
1. Characteristics of the Explosion Network Mechanism
Blast Network is the first blockchain network that provides the possibility of partitioning benefits for funds in Layer 2 accounts. The main features of the Blast network mechanism include:
1. The asset balances of users and developers of the Blast network will automatically compound, and over time, the asset balances will gradually increase, thus generating income. The income of the Blast network mainly comes from two aspects: one is the ETH staking income, and the other is the stablecoin interest income. Specifically:
a.ETH staking income: After the user receives the ETH bridge to the Blast network, Blast will host these ETH and lock them on the Layer 1 network, and use the Lido protocol to stake the original network to obtain ETH staking income. Currently, the ETH staking income is actually about 4%. Blast will automatically convert these income into USDB and distribute them to users, developers and the Blast Foundation according to a certain ratio.
b. Interest income from stablecoins: Users receive stablecoins (such as USDC, USDT, DAI, etc.) through the Blast network. Blast automatically converts these stablecoins into an equal amount of USDB and withdraws them through protocols such as MakerDAO, thereby obtaining interest income from stablecoins. Currently, the interest on stablecoins is about 5%. Blast distributes these earnings to users, developers, and the Blast Foundation in the same proportion. The user's USDB balance on the Blast network automatically compounds, that is, over time, the user's USDB balance will gradually increase, thereby increasing the user's income.
2. The Blast Network introduces an automatic base stablecoin called USDB, which is always equal to $1. The role of USDB is to provide a unified unit of account for the Blast Network, as well as a unit of account for cross-chain transfers and revenue distribution. Users use USDB as the unit of account when trading on the Blast Network, whether buying or selling ETH or other tokens. When users exit the Blast Network, they can exchange USDB for any supported stablecoin or ETH and bridge back to the Layer 1 network. In this way, the Blast Network can achieve a seamless cross-chain experience while avoiding the risk of exchange rate fluctuations.
3. The Blast network uses a mechanism called Gas revenue consumption, that is, when users conduct transactions on the Blast network, they need to pay a certain amount of Gas fees, which will be collected and distributed to users in a certain proportion. Specifically, 50% of the Gas fees of each transaction will be distributed to users as a reward for participating in the Blast network; 25% will be distributed to developers as an encouragement for developers to build the Blast ecosystem; and 25% will be distributed to the Blast Foundation as support for the maintenance and development of the Blast network. In this way, the Blast network can achieve a virtuous cycle, that is, the more users, the more transactions, the more Gas, and the more income, thereby attracting more users and developers to join the Blast network.
4. Blast plans to issue airdrop tokens BLAST in May 2024. 50% of the airdrop will be allocated to users and 50% will be allocated to developers. BLAST tokens will be the governance tokens of the Blast network, and holders can participate in various governance matters of the Blast network, such as parameter adjustments, protocol upgrades, and fund allocations. BLAST tokens will also be effective tokens of the Blast network, and holders can enjoy various benefits and privileges of the Blast network, such as lower gas fees, higher averages, and priority use of new features.
5. Blast also has a points mechanism. Blast Points are points for slow users and developers to contribute to the Blast network. The number of points will determine the proportion of airdrop tokens. Users and developers can obtain Blast Points by participating in various activities on the Blast network, such as depositing assets, trading, inviting friends, using DApps, etc.
2. Big Bang Competition
The Big Bang competition is a sign of Blast Network's entry into the new battlefield of Layer 2. The competition was held from January 17 to February 17 and was divided into three key stages: intention registration, project submission, and selection of award winners. Through this competition, Blast Network further accelerated the development of its ecology and provided a platform for project parties to showcase and develop. Competition theme categories include perpetual contract DEX, spot DEX, blockchain protocol, NFT/game, SocialFi, GambleFi, infrastructure, and also tells about projects that use Blast revenue or gas revenue consumption in particularly unique ways. This also reflects which sectors Blast officials are optimistic about.
The Blast network provides quota opportunities and rewards for DApps participating in the Big Bang competition. Not only will the entries receive valuable rewards, but they can also be deployed and operated on the Blast network, enjoying the benefits of the ecosystem, specifically encouraging project parties to actively participate in the development of Blast.
1. Release of ETH locked liquidity: In February, Blast will release ETH locked liquidity. Projects participating in Big Bang will have the opportunity to share the released $140 million TVL and the 104,000 users who participated in the lock-up.
2. Personalized guidance from investors: All project parties participating in Big Bang will receive personalized guidance from investors to provide more support for their development on the Blast network.
3. Airdrop Rewards: Blast has deployed 50% of the AirDrop base to incentivize developers, of which more than 90% will be distributed to DApps on the Blast mainnet, providing developers with black hole airdrop opportunities.
3. Blast Ecosystem Potential Project
Since the announcement of the Big Bang competition, the Blast Network has announced more than 60 projects to work with and build on it. The following is an introduction to some representative projects, which cover multiple fields, including DEX, infrastructure, network, NFT, games, etc., showing the diversity and vitality of the Blast Network ecosystem.
4. Blast Network Risk Analysis
Although the rise of the Blast network has brought new vitality and opportunities to the Layer 2 ecosystem, it is also accompanied by certain risks and challenges.
1. Risk of decreased liquidity attractiveness: The high liquidity of the Explosion Network may attract liquidity from other second-layer projects, resulting in increased competition. This may lead to reduced liquidity for other projects, which in turn affects their performance in the market. In addition, in order to retain users and investors, other projects may take radical measures to grab liquidity, such as increasing rewards or reducing handling fees, which may trigger a wave of Token stimulation and increase market uncertainty.
2. Risk of income sustainability: Although the Blast network solves the problem of no benchmark interest rate for funds deposited on other Layer 2 chains, it also brings certain risks. As more projects and funds flow into the Blast network, its inherent income model may face pressure, especially when the market environment changes or competition intensifies. If the Blast network cannot continue to provide attractive returns, it may lead to capital repatriation and a decline in investor confidence, thus affecting the stability and development of its income ecosystem.
3. Technical uncertainty: The Blast network is still in the testing risk stage, and its main network is expected to be launched in February 2024. Users cannot withdraw their assets during this period. If a security breach, hacker attack, or project party runs such a situation, users may face the risk of asset loss.
4. Market speculation risk. The attraction of the Explosion Network mainly comes from its high returns and airdrop expectations, but it may also lead to users' speculative mentality and short-term behavior. Once the market sentiment changes, or the airdrop value of the Explosion Network does not meet user expectations, users may fluctuate significantly, causing the TVL and number of users of the Explosion Network to drop significantly.
5. Prospects of blast furnace network ecology
The ecological development prospects of blast furnace network mainly include the following aspects:
1. Scale expansion: The Blast network can provide users with initial returns on ETH and stablecoins, as well as airdrop rewards and social fission mechanisms made by invitation, which are not available on other L2 networks. The Blast network can also quickly attract users. The Blast network also has $20 million in investment from well-known institutions such as Paradigm and Standard Crypto, as well as technical support from the Blur team, all of which provide strong guarantees for the future development of the Blast network.
2. Ecosystem construction opportunities: Blast Network is able to leverage its early earnings and airdrop rewards strategy to rapidly expand its user and funding scale, thereby promoting the construction and development of the ecosystem and laying a solid foundation. At the same time, Blast Network can also summarize the successful experience of other L2 networks, such as providing more application scenarios, optimizing user experience, increasing security and scalability, etc., to enhance its competitiveness and influence.
3. Challenges in maintaining users and funds: The challenge for the Blast network is how to maintain the stability and loyalty of its users and funds, as well as how to maintain competition in the fierce L2 market, create its own characteristics and advantages, and attract more developers and project parties to join its ecosystem to form a virtuous network effect.
4. Rectification of the L2 market: The rise of explosive networks may have an impact on the second-layer market, promoting the degree of market reshuffle, but it may also cause certain market shocks and uncertainties. Some projects may be eliminated or forced to improve, which may have an impact on the VCs and investors behind them.
In summary, the Blast network is an innovative and potential L2 network. It can provide users with the original benefits of ETH and stablecoins, as well as the social fission mechanism of airdrop rewards and invitation production, which changes the competitive supplement of the L2 network. However, the Blast network still needs to maintain its users and form the stability and loyalty of funds, as well as create its own characteristics and advantages in the highly competitive L2 market, and create a benign network effect to bring more value and innovation to the Ethereum ecosystem and the evolving decentralized financial landscape.