Since our last report on Blast, the project has continued to advance significantly. In the four days following our coverage, it has attracted an additional $255 million, bringing its TVL to over $575 million. This achievement ranks it fourth among Layer 2 networks, slightly below Base but ahead of ZkSync. However, this rapid growth has not been without controversy. The team behind Blast is now facing considerable criticism for their aggressive and somewhat contentious marketing strategies.
Essentially, the team has initiated an extensive marketing campaign, introducing a “pyramid scheme” where users earn points (convertible into future airdrop) by recruiting new depositors to their smart contract. This is happening despite the absence of a live product or even a testnet.
Jarrod Watts, a developer from Polygon Labs, recently shared his insights on X (formerly Twitter), highlighting several contentious aspects of Blast’s approach.
The primary criticism leveled against Blast centers on its current status: it is not yet operating as a true Layer 2 network. At present, the project’s smart contract primarily functions to collect funds and stake them in protocols such as Lido. Key features typically associated with a Layer 2 network are absent in Blast – there is no testnet, no transaction processing, no bridge to facilitate asset transfers, no rollup technology for batch processing transactions, and no mechanism to send transaction data to the Ethereum mainnet.
Despite these concerns, Blast currently holds over half a billion dollars in its smart contract. Remarkably, this substantial sum is essentially governed by a 3-of-5 multi-signature wallet. This means that the control of these funds rests in the hands of just three to five fairly unknown individuals.
Watts noted that while he doesn't suspect that the blast team intends to misappropriate the funds, the lack of any safeguarding measures beyond the multisig wallet is concerning.
Key investors of Blast, including Paradigm which funded the project, have also raised concerns about the platform’s marketing tactics. Dan Robinson, a researcher at Paradigm, specifically criticized the decision to launch a bridge before the Layer 2 network, as well as the restriction on withdrawals for three months.
He views these choices as setting a negative precedent for other projects in the industry. Furthermore, Robinson and his team believe that use of such aggressive marketing strategies “cheapens the work of a serious team.”
Nevertheless, he also noted that Paradigm backed Blast’s team because they have demonstrated an ability to build great products over many years, and there are many components of Blast that they are excited about.
Despite potential concerns, Blast’s team is undeniably skilled in marketing. They have effectively capitalized on crypto users’ desires for airdrops and yield on their holdings to attract liquidity. Though this approach prioritizes marketing over security, it has proven to be highly effective in terms of user engagement and attention.
However, whether this approach will ultimately succeed is yet to be determined. We continue to Observe.
