Blast hits $300M in TVL, but what should you know?

Blast, a new Ethereum layer 2 network created by the founder of Blur and Paradigm, has seen its total value locked (TVL) spike to over $300 million less than three days after its launch.

According to data from DeFiLlama, the yield-focused L2’s TVL has reached $310 million, with 86% of the deposited assets in Lido staked Ethereum (stETH) and 13% in DAI. Specifically, the Blast smart contract has more than $271 million worth of ETH staked on Lido and over $40 million DAI to Maker.

The jump to above $310 million comes just hours after the Blast team announced the network’s TVL had surpassed the $230 million mark. At the time, Blast said 37,131 community members had started to earn yield - 4% for ETH and 5% for stablecoins. There were also Blast points on offer, which will give holders access to an airdrop planned for May.

Is Blast an L2?

Blast, which revealed a $20 million backing from investment firms Paradigm and Standard Crypto, launched on November 21. It claims to be the only L2 on Ethereum that offers native yield for Ether and stablecoins.

But Blast is currently deposit-only, with this one-way functionality set to be in place until February 2024 when the protocol’s mainnet is expected to go live. What this means is that for now, users have no way to withdraw funds until then.

Again Blast’s restaking of user assets on Lido with control of the contract with fiver signer addresses has attracted criticism. According to Polygon engineer Jarrod Watts, the five signer wallets of the contract are unfortunately all new addresses whose identities are currently unknown.

“Blast is not an L2,”Watts noted in a thread on X, adding that what the smart contract does is to accept user funds and stake them in protocols like Lido. He added:

Users who send money to the contract as “basically trusting 3-5 strangers”, noting the risks associated with this.