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$400 million in ETH Withdrawn from Blast L2 Network Following Mainnet Launch

Approximately $400 million worth of Ether (ETH) has been withdrawn from Blast, the Ethereum layer-2 network, following the debut of its mainnet on February 29th at 9:00 pm UTC. This launch has liberated nearly $2.3 billion in staked cryptocurrency previously confined within the network.

Blast, functioning as an optimistic rollup blockchain scaler, provides users with a potential annual return of up to 4% on deposited Ethereum (ETH) and 5% on stablecoins stored on the network. These returns are generated from staked ETH and United States Treasury Bills (T-Bills) managed by MakerDAO.

Ethereum Layer 2 Chain Blast Releases Official Mainnet

Following its launch, Blast’s total value locked (TVL) has declined to $520 million, with approximately $1.8 billion withdrawn, according to data from DeFiLlama.

Assets on the platform comprise roughly 479,000 ETH, 78.5 million USDC, 68.3 million USDT, 148,000 stETH, and 31 million DAI, as reported by a Dune Analytics dashboard.

Blast, self-proclaimed as the “only Ethereum L2 with native yield,” garnered significant attention with its deposit-only bridge announcement in November. This bridge swiftly amassed over $2 billion in deposits, rewarding depositors with Blast “points” for holding their ETH.

The expectation was that these points could eventually be exchanged for tokens via an airdrop, motivating traders to participate in “points farming” to accumulate them.

Airdrops are commonly utilized by crypto protocols to distribute tokens to early users and contributors, typically facilitating decentralized governance. Blast aims to differentiate itself in the competitive Ethereum scaling landscape—populated by networks like Polygon, Arbitrum, Optimism, and Base—by incentivizing users with native yield on staked cryptocurrency and a share of tokens through airdrops.

Now that the network is operational, traders holding Blast Points have the option to redeem their deposits and might explore better opportunities elsewhere. Given the substantial appreciation in the price of ETH since Blast began accepting deposits late last year, rising from approximately $2,000 to about $3,450, some traders may be seeking to capitalize on their profits.

Blast Network Hits $2 Billion TVL Milestone Amid Controversy and Alleged Exit Scam

Initially facing criticism, Blast, backed by Paradigm, encountered concerns regarding its one-way bridge and the optics of soliciting deposits during its development phase.

However, despite this skepticism, Blast emerged as one of the most active layer-2 networks in terms of deposits even before its mainnet launch. It managed to attract $2.3 billion in deposits from 181,000 users, generating an annual yield of $85 million.

Avid airdrop hunters have actively engaged in farming the blockchain, anticipating the distribution of Blast tokens announced by the team, scheduled for May.

Nevertheless, the network encountered its first alleged exit scam on February 26 when a gambling protocol named “Risk on Blast” vanished with 420 ETH, equivalent to around $1.25 million at the time, which had been collected from user funds for its RISK presale token.

In November 2023, Dan Robinson, Head of Research and General Partner at Paradigm, the VC firm co-leading Blast’s $20 million seed round, expressed concerns about the messaging and execution of the announcement, criticizing the decision to lock up funds for months and suggesting that much of the marketing undermined the seriousness of the team’s efforts. Blast founder Pacman acknowledged that Paradigm had requested changes to the launch plan but emphasized that the ultimate decision rested with Blast.

Despite these early challenges, Blast has garnered support from various projects, including NFT platform Zora and pricing oracle provider Pyth, both of which announced their integration with Blast recently. Furthermore, developers building decentralized apps (dApps) on Blast are slated to receive 50% of the upcoming airdrop allocation, enhancing the ecosystem’s appeal.

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Cryptocurrency is essentially virtual money that operates in a decentralized manner, not through a bank but directly on multiple independent computers.

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