Blast airdropped $Blast tokens to the community at 10 PM on June 26, marking the end of a massive airdrop feast. Undoubtedly, based on investment institutions, community enthusiasm, and TVL, Blast is the only top-tier project this year that can be compared to ZKsync. Layer 2 has entered the next phase; after a large-scale and highly controversial airdrop event, how will Blast itself and the future of the Layer 2 ecosystem develop?

## Project Background

Environment-Driven Innovation

For a long time, in the conventional Layer 2 ecosystem, users stake ecological tokens, stablecoins, and other tokens to earn Layer 2 ecological tokens as rewards. Meanwhile, Layer 2 project teams utilize the staked tokens to perform transaction verification under the POS model and are willing to provide token incentives for users to participate in the maintenance and development of the network, achieving a win-win situation. Generally speaking, since Layer 2 is built on Layer 1, the funds staked on Layer 2 need to bear two types of systemic risks from Layer 2 and Layer 1. Therefore, Layer 2 projects often need to offer interest rates higher than those of Layer 1 staking as risk compensation. For example, in the Polygon network, the annual interest rate for Matic can generally reach 8%-14%, while the annual interest rate for ETH on the ETH network is generally around 4%-7%. So, is there a way to enhance the capital gains obtained from Layer 2? Thus, Blast was born.

Figure 1 Blast-logo

Basic Information

Blast is an Ethereum Layer 2 network based on Optimistic Rollups, launched by PacMan, the founder of Blur, which previously distributed the fifth-largest airdrop in history. Compared to other Layer 2 projects that focus on expanding transaction capacity, improving transaction speed, and reducing gas fees, Blast focuses on addressing the shortcomings of Layer 1 while providing higher economic benefits. Overall, Blast will be the first Layer 2 to offer fixed income from ETH and stablecoin staking, and this narrative based on returns may guide Layer 2 construction back from technical attributes to the financial attributes of Web3 itself.

Development History

• November 2023, Project Launch: Blast was founded by PacMan, the creator of the NFT platform Blur, as a scaling solution for Ethereum, securing $20 million in seed funding led by Paradigm and Standard Crypto.
• November 2023, Turning Point Statement: Blast announced its unique revenue model, returning Ethereum staking and RWA protocol earnings to users, offering 4% ETH returns and 5% stablecoin returns.
• February 2024, Mainnet Launch: Blast officially launched its mainnet, but prior to this, users were unable to withdraw funds locked on the platform, leading to some user dissatisfaction.
• May 2024, Airdrop Plan: The originally planned BLAST token airdrop in May was postponed to June 26 for various reasons, and the airdrop allocation was increased to compensate participants.
• June 26, 2024, Airdrop Release: Blast will conduct an airdrop on June 26, with 50% of the airdrop rewards allocated to developers (through Blast Gold points) and the other 50% allocated to early users (including those who bridged funds to the network before the mainnet launch).

Market Growth

The Blast chain has received strong market support, continuously growing, and as of the time of writing, its TVL has reached $1.6B, making it the 6th in TVL rankings and 11th in Protocols rankings, with its locked assets accounting for 1.71% of all locked assets on-chain.

Figure 2 Proportion of Locked Assets in Blast

Figure 3 Changes in Various Indicators of Blast

## Token Economics

Token Functions

The $Blast token will have functions similar to other Layer 2 tokens, including ecological governance, airdrop incentives, and staking rewards, and currently does not have any particularly outstanding features. However, in terms of ecological governance, the Blast ecosystem has more complete governance rules and regulations compared to other Layer 2 ecosystems, which may reflect the relative completeness of Blast's ecological construction.

Token Distribution

The total supply of Blast tokens is 10 billion, allocated to the community, core contributors, investors, and the foundation.

• The community will receive 50% of the airdrop, totaling 5,000,000,000 tokens, which will be unlocked linearly over 3 years from the TGE.
• Core contributors will receive 25.5% of the airdrop, totaling 2,548,022,684 tokens, with 25% unlocked one year after the TGE and 75% unlocked linearly over the following 3 years.
• Investors will receive 16.5% of the airdrop, totaling 1,651,977,315 tokens, with 25% unlocked one year after the TGE and 75% unlocked linearly over the following 3 years.
• The Blast Foundation will receive 8% of the airdrop, totaling 800,000,000 tokens, which will be unlocked linearly over 4 years from the TGE.

Figure 4 Blast Airdrop Distribution

Phase One Airdrop

• Users holding Blast Points will share 7% of the total supply airdrop rewards based on the number of points held.
• Users holding Blast Goal will share 7% of the total supply airdrop rewards based on the number of points held.
• The Blur Foundation will receive 3% of the total supply airdrop rewards to distribute to the Blur community.

In addition, the airdrop for the top 0.1% of wallets will be released linearly over 6 months, which effectively alleviates the massive selling pressure during the token release. At the same time, the number of Blast Goals is far less than that of Blast Points, so the benefits of holding Blast Goals far exceed those of Blast Points.

Figure 5 Blast First Quarter Airdrop Distribution

## Narrative Features

Perfect Compatibility with EVM

The level of EVM compatibility is crucial for Layer 2 on ETH; the higher the compatibility, the lower the migration costs and the faster the ecosystem construction. Although perfect EVM compatibility is not unique to Blast, the Blast chain adopts a flexible choice approach to compatibility, reflecting a certain degree 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 automatic re-basing, where contracts can choose whether to participate in this mechanism. For contracts that do not require this mechanism, DAPP migration can be easily completed with minimal code modification.

Perfect Solution for Multiple Benefits

The slogan of the Blast ecosystem is that it is the only Layer 2 that can achieve native earnings from ETH and stablecoins. How is this achieved?
ETH is not an ERC-20 native token; generally, in decentralized blockchain and DeFi, we deposit ETH into contracts, and wallets can receive corresponding amounts of WETH, etc. The WETH obtained through conversion can earn returns in DEX, lending platforms, liquidity pools, etc. In this process, users often incur high gas fees, making it difficult for users with smaller amounts of capital to participate in staking activities. At the same time, staking ETH on platforms like Lido requires conversion to STETH, which also faces similar loss issues.
At this point, Blast proposes the Auto-Rebasing solution, which aims to automatically update user account balances without needing to go through WETH, STETH, or any other ERC20 tokens. Currently, ETH staked on Blast automatically interacts with Lido for staking, directly updating the native ETH balance, allowing users to earn returns without any operation. Additionally, the native stablecoin USDB provided by Blast can be exchanged for DAI when bridged back to Ethereum through MakerDAO's T-Bill protocol.
This solution may seem quite complex, but essentially it automates the staking of tokens originally locked in contracts into DeFi such as Lido and MakerDAO, continuously converting them into native token returns, achieving compound interest while avoiding high gas fees. Meanwhile, the Blast development team has indicated that they will have the capability to operate independently of Lido and MakerDAO in the future, so the funds staked in Blast not only have the potential to earn staking rewards from the Blast chain itself but also have a base interest rate similar to that of the ETH chain, achieving the perfect multiple benefits.

Figure 6 Comparison of Blast with Other L2s

## Ecological Construction

The construction of the Blast ecosystem covers multiple tracks such as SocialFi, GameFi, DeFi, and NFT. Compared to traditional Layer 2, the Blast ecosystem has better narrative and comprehensiveness, integrating various functions and characteristics to form a diversified ecosystem.

DEX Leader Thruster

Thruster is a yield-focused DEX designed for degens, supported by Blast Points chads, founders, and an excellent community. Its TVL has grown rapidly since March, currently reaching $438m. During the Blast airdrop event, users can earn Blast Points and Thruster Credits by providing liquidity and cross-chain activities, enjoying multiple benefits.

Figure 7 Thruster TVL Growth

• Thruster inherits the AMM model of conventional DeFi, allowing users to provide liquidity and earn fees.
• Thruster offers a simple mode and a complex mode web UI, providing convenience for users.
• Thruster utilizes the automated USDB and ETH staking returns from the Blast chain, thereby enhancing the liquidity and trading efficiency of the DEX itself, supporting the launch of new tokens.
• Thruster has creatively designed a weekly no-loss lottery Thruster Treasure pool reward, attracting a large number of active users to participate.
  

Figure 8 Thruster---logo
In addition, Thruster also offers different versions of the AMM model, such as Thruster V3, which uses concentrated liquidity AMM with different trading fee structures, suitable for high-frequency traders.

Leverage Lending Leader Juice Finance

Juice Finance is currently the largest leverage lending platform on the Blast chain, utilizing an innovative cross-margin DeFi protocol, primarily providing lending and yield farming functions, and optimizing user returns and point acquisition by integrating Blast's native rebase tokens (such as ETH, WETH, and USDB) and gas refund mechanisms. Its TVL currently stands at $394m.

Figure 9 Juice Finance TVL Growth

• Leverage Lending: Users can lock WETH as collateral in the protocol and borrow up to 3 times the amount in USDB, which can be deployed in other yield strategies on the Blast chain to maximize returns.
• Yield Farming: Similar to other yield farms, Juice Finance offers users various strategy vaults where they can deposit USDB to earn returns. Notably, Thruster is also included in the strategy vault services provided.

Figure 10 Juice Finance
Compared to other lending platforms, Juice Finance also features permissionless lending and cross-margin capabilities, providing users with a foundation to fully utilize their capital advantages for capital gains.

Capital Efficiency Enhancement Platform Zest

Figure 11 Zest Platform
On conventional collateral platforms, the collateral rate generally reaches 150%, which does not fully utilize the token's utility. Zest will leverage the native ETH returns from the Blast chain to enhance capital efficiency. When users stake $150 worth of ETH in Zest, they can receive $100 worth of zUSD and $50 worth of Leveraged ETH, inheriting the ETH yield from zUSD and the volatility from Leveraged ETH. Since all fluctuations of ETH are absorbed by Leveraged ETH, zUSD offers risk-free leveraged returns, enhancing capital efficiency.
Therefore, compared to other platforms, Zest provides a higher yield and lower risk auxiliary solution, suitable for achieving higher returns in conjunction with other DeFi.

Figure 12 Zest Yield Chart

SocialFi Leader

Fantasy is a revolutionary social finance trading card game that combines elements of social finance and trading card games, providing users with a new mode of interaction and earning.

Figure 13 Fantasy Market
The Fantasy project was initially launched by Travis Bickle on May 1 on the Blast mainnet, becoming one of the 47 award-winning works in the BIG BANG competition. Compared to traditional SocialFi projects, Fantasy defines a new way to associate social media influence with platform currency and collectibles, pointing to a new direction for improving user stickiness in SocialFi.

• Essential Features: The Fantasy platform provides cards featuring well-known traders, investors, industry analysts, and project initiators from the Crypto Twitter community as avatars, using cards as a medium for profit distribution, distinguishing it from traditional SocialFi.
• Earning Characteristics: Players holding cards can earn a passive income of 1.5% of the ETH from their card trading volume while earning the 4% native return from the Blast chain itself.
• Competition Nature: The cards purchased by players form a deck, which is ranked weekly based on market trading activity and social media influence to earn rewards.

As of the time of writing, the total trading volume of NFTs on the Fantasy platform has reached $93.11M, with participation from over 36.7K users, making it the 5th ranked SocialFi on the Blast chain.

Figure 14 Fantasy Data
Although Fantasy currently connects users closely through card decks and the platform, how to retain users after rewards and even attract more users to participate remains a significant challenge. So far, the actual user base of Web3 cannot compete with that of traditional media platforms, and the profit-seeking nature of users is far greater than that of traditional platforms, making this issue a dilemma that all SocialFi platforms inevitably face.

## Future Development and Risk Opinions

Figure 15 Blast Promotional Image

Future Development Trends

Compared to all previous Layer 2s, Blast is the first to narrate the economic benefits of Layer 2. Essentially, it is similar to the first Layer 2 solution that attempted to solve Layer 1 scaling—both have pioneered a new research idea and path. Therefore, it is undeniable that Blast has a very high possibility of becoming a symbolic project like Uniswap. The future development of Blast may relate to the following points.

• Due to Blast's high yield characteristics, it will inevitably attract continuous funding from other Layer 2s and the Ethereum chain itself in the long term until the yield characteristics of the Blast chain balance with those of other chains.
• The automatic yield capability of the Blast chain provides fertile ground for the development of DeFi, and DeFi projects built on Blast naturally have higher stable returns than those on other chains, leading to faster development speeds.

Hidden Risk Analysis

The Blast chain relies on its powerful Auto-Rebasing function to automatically obtain Layer 1 staking returns, avoiding currency losses caused by inflation; this is essentially a form of automated multiple benefits, obtaining returns from both Layer 1 and Layer 2 simultaneously.

• From a technical perspective, Blast achieves automated staking through Auto-Rebasing, reducing staking gas fees while minimizing individual user operational risks and optimizing overall capital efficiency.
• From a risk perspective, staking through Lido and MakerDAO to obtain returns undoubtedly greatly increases the systemic risk of funds across the entire chain, and whether market fluctuations will lead to losses due to funds not being recoverable in time remains uncertain.
• From a permission perspective, the automatic staking of funds to Lido and MakerDAO by Blast means that users automatically bear corresponding risks, raising questions about whether this undermines users' rights to manage their funds.

Overall, the high returns of Blast are not given for free; they come with an increase in overall systemic risk. However, for individuals with small amounts of capital, the growth of returns clearly far exceeds the growth of risks, still presenting a very promising outlook. At the same time, the yield characteristics of Blast are likely to be adopted by other Layer 2s, which is also worth continuous attention.