Author: Trustless Labs
Blast airdropped $Blast tokens to the community at 10 pm on June 26, marking the end of a massive airdrop frenzy. Undoubtedly, in terms of investment institutions, community popularity, and TVL, Blast is the only project this year that can be compared to ZKsync. Layer2 has entered the next stage, and after the large-scale and highly controversial airdrop event, what is the future of Blast itself and the Layer2 ecosystem?
1. Project Background
Environment-Driven Innovation
In the conventional Layer 2 ecosystem, users obtain Layer2 ecosystem tokens as rewards by staking ecosystem tokens, stablecoins, and other tokens. At the same time, Layer2 projects are willing to provide token incentives to encourage users to participate in network maintenance and development through token staking for transaction verification and other activities under the POS model. Generally speaking, because Layer2 is built on Layer1, the funds staked on Layer2 need to bear two types of system risks from Layer2 and Layer1. Therefore, Layer2 projects often need to provide interest rates higher than Layer1 staking as risk compensation. Taking the Polygon network as an example, the annual interest rate for Matic can generally reach 8%-14%, while the annual interest rate for ETH on the ETH network is generally 4%-7%. So, is there a way to further increase the capital gains obtained by Layer2? That’s where Blast comes in.
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Figure 1: Blast logo
Basic Information
Blast is an Ethereum Layer 2 network based on Optimistic Rollups, launched by PacMan, the founder of Blur. Blur, created by PacMan, has distributed the fifth-largest airdrop in history. In contrast to other Layer2 projects that focus on expanding transaction capacity, improving transaction speed, and reducing gas fees, Blast focuses on improving the shortcomings of Layer1 while providing higher economic benefits. Overall, Blast will be the first Layer2 to offer fixed income for ETH and stablecoin staking. This narrative based on income may guide the development of Layer2 to return from technical attributes to the financial attributes of Web3.
Development History
November 2023, Project Launch: Blast was founded by PacMan, the founder of the NFT platform Blur, as an Ethereum scaling solution. The project raised $20 million in seed funding led by Paradigm and Standard Crypto.
November 2023, Pivotal Announcement: Blast announced its unique revenue model, which returns the revenue from Ethereum staking and RWA protocol to users. The project offers 4% ETH revenue and 5% stablecoin revenue.
February 2024, Mainnet Launch: Blast officially launched its mainnet, but users were unable to withdraw their funds locked on the platform, causing dissatisfaction among some users.
May 2024, Airdrop Plan: The BLAST token airdrop, originally scheduled for May, was postponed to June 26 due to unforeseen circumstances, and the airdrop allocation was increased to compensate participants.
June 26, 2024, Airdrop Announcement: Blast will conduct an airdrop on June 26, with 50% of the airdrop rewards allocated to developers (via Blast Gold points) and the other 50% allocated to early users (including users who bridged their funds to the network before the mainnet launch).
Market Growth
Blast has been highly sought after in the market and has grown continuously. As of the time of writing, its TVL has reached $1.6 billion, making it the 6th ranked chain in terms of TVL and the 11th ranked chain in terms of Protocols. Its locked assets account for 1.71% of all locked assets on chains.
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Figure 2: Blast’s share of locked assets
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Figure 3: Blast’s key metrics
2. Token Economics
Token Functionality
The $Blast token has similar token functionalities to other Layer2 tokens, including ecosystem governance, airdrop incentives, and staking rewards. So far, it does not have any outstanding features. However, in terms of ecosystem governance, the Blast ecosystem has more comprehensive governance regulations and rules compared to other Layer2 ecosystems, which may reflect the relative completeness of the Blast ecosystem construction.
Token Distribution
The total supply of Blast tokens is 10 billion, distributed to the community, core contributors, investors, and the foundation.
The community will receive 50% of the airdrop, totaling 50,000,000,000 tokens, to be unlocked linearly over a period of 3 years from the TGE (Token Generation Event) date.
Core contributors will receive 25.5% of the airdrop, totaling 25,480,226,842 tokens. 25% will be unlocked after 1 year from the TGE date, and the remaining 75% will be unlocked linearly over the following 3 years.
Investors will receive 16.5% of the airdrop, totaling 16,519,773,158 tokens. 25% will be unlocked after 1 year from the TGE date, and the remaining 75% will be unlocked linearly over the following 3 years.
The Blast Foundation will receive 8% of the airdrop, totaling 8,000,000,000 tokens, to be unlocked linearly over a period of 4 years from the TGE date.
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Figure 4: Blast’s airdrop allocation
Phase 1 Airdrop
Users holding Blast Points will share 7% of the total supply as airdrop rewards based on the number of points they hold.
Users holding Blast Goal will share 7% of the total supply as airdrop rewards based on the number of points they hold.
The Blur Foundation will receive 3% of the total supply as airdrop rewards to be distributed to the Blur community.
In addition, the airdrop for the top 0.1% of wallets will be linearly released within 6 months, effectively reducing the selling pressure during token release. Moreover, the quantity of Blast Goal is much smaller than Blast Points, so holding Blast Goal provides significantly higher benefits than holding Blast Points.
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Figure 5: Blast’s Q1 airdrop allocation
3. Narrative Features
Perfect Compatibility with EVM
The level of EVM compatibility is crucial for Layer2 on ETH. The higher the compatibility, the lower the migration cost and the faster the ecosystem construction. Although perfect EVM compatibility is not unique to Blast, Blast’s approach to compatibility reflects a certain level of innovation.
Blast’s perfect compatibility with EVM relies on the contract’s ability to freely choose whether to “Auto-Rebase.” Auto-Rebasing refers to the automatic resetting of the base. In the contract, the mechanism can be chosen to participate or not. For contracts that do not need to choose this mechanism, DApps can be easily migrated with minimal code changes.
Perfect Solution for Multiple Benefits
The slogan of the Blast ecosystem is the only Layer2 that can achieve native income for ETH and stablecoins. How is this achieved?
ETH is not a native ERC-20 token. Typically, when we deposit ETH into a contract in DeFi and cross-blockchain transfers, we can obtain an equivalent amount of WETH and other tokens. The obtained WETH can generate income in DEXs, lending platforms, liquidity pools, etc. In this process, high gas fees are often incurred, making it difficult for users with small capital to participate in staking activities. At the same time, staking ETH on platforms like Lido requires conversion to STETH, which also incurs similar losses.
At this point, Blast proposes the Auto-Rebasing solution, which aims to automatically update the user’s account balance without the need for WETH, STETH, or any other ERC20 tokens. Currently, ETH staked in Blast is automatically staked with Lido, directly updating the native ETH balance without any user intervention, allowing users to automatically earn income. In addition, Blast’s native stablecoin USDB can be exchanged for DAI through MakerDAO’s T-Bill protocol when bridging back to Ethereum.
This solution may seem complex, but essentially, it automatically staked the tokens locked in the contract in Lido, MakerDAO, and other DeFi platforms, continuously converting them into native token income. This achieves compounding interest operations while avoiding high gas fees. At the same time, the Blast development team has indicated the ability to achieve this operation independently of Lido and MakerDAO in the future. Therefore, funds staked in Blast can not only obtain Blast’s staking rewards but also have similar basic benefits to the ETH chain.
