Blast is a newly introduced Ethereum layer 2 network that has captured attention with its innovative concept of native yield. Unlike other layer 2 solutions, Blast allows users to earn crypto yield simply by holding certain tokens in their wallets.
Understanding Blast on Ethereum
Blast is an Ethereum Virtual Machine (EVM)-compatible layer 2 platform designed to provide native yield for ether (ETH) and stablecoins. As an optimistic rollup solution, it aims to address Ethereum's scalability issues by boosting the network’s transaction capacity while reducing costs.
Launched with its testnet in January 2024 and followed by the mainnet in February, Blast was founded by Tieshun Pacman Roquerre, who also created the NFT marketplace Blur. At present, Blast boasts a total value locked (TVL) exceeding $2 billion.
What sets Blast apart from other Ethereum layer 2 solutions is its provision of native yield for both ETH and stablecoins.
The Mechanics of Blast
Blast generates yield for decentralized finance (DeFi) users through Ethereum staking. Staking on Ethereum involves locking tokens temporarily to validate network transactions.
Traditionally, staking requires active management by users. However, Blast streamlines this process by handling staking within its ecosystem, offering an L2 platform with integrated yield.
When assets are transferred to the Ethereum mainchain via Blast’s network, they are automatically staked, initiating the yield-generation process. Blast’s smart contracts manage the interest collection, which is then automatically distributed to users in the form of ether (ETH) and stablecoins.
Yield Generation on Blast
Blast offers a 4% annual interest rate for ETH and a 5% rate for stablecoins like USDT, USDC, and DAI deposited on its network. These rates are compounded, meaning they apply to the growing balance over time rather than just the initial deposit.
The native yield is facilitated by rebasing tokens and is based on the Risk-free Interest Rate (RFR) yield structure.
The 4% yield on Ethereum is derived from liquid staking on the Ethereum network. Post-merge, Ethereum’s proof-of-stake (PoS) system offers a 4% annual percentage rate (APR) on staked ETH. Blast leverages this through partnerships with platforms like Lido, utilizing staked assets for yield generation.
Similarly, stablecoins transferred to Blast are directed to T-bill protocols, such as those by MakerDAO, to generate yields. Blast channels these stablecoins into MakerDAO’s T-bill protocol, where users receive USDB on Blast. USDB accrues stablecoin profits at a 5% APR, which users can redeem for USDC when transferring back from Blast.
The Blast Airdrop
To join the airdrop, users need an invitation link from peers through a referral system. They can then register on the airdrop page to claim their sign-up reward. Additional rewards can be unlocked by bridging assets to the platform or inviting other users.
Airdrop points are awarded based on the value of assets bridged and the number of successful referrals.
While the bridge to Blast is live, airdrop participants can only redeem their points starting in May 2024. Part of the airdrop is allocated for participants of Blur’s Season 3.
Moreover, a portion of the airdrop is reserved for developers, particularly winners of the Big Bang contest and mainnet dApps. Developers can redistribute their airdrop points to users, enhancing liquidity and expanding the user base.
Valuation and Future Prospects of Blast
Blast has gained significant momentum, with a TVL surpassing $2 billion. The network aims to revolutionize the crypto and gaming industries by providing a layer 2 solution with native yield.
Comparing Blast with other staking projects of similar TVL, its current valuation is approximately $3 billion to $4 billion. Following the token airdrop, investors can use this valuation as a benchmark. Additionally, with a potential bull market in the latter half of 2024, Blast’s valuation could potentially increase by another 2-4x before year-end.
