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Controversy Over Layer-2 BLAST as Paradigm Says Launch ‘Crossed Lines’
- All flash, no bang? New Ethereum layer 2 network Blast accused of a cheap and scammy approach to its recent launch.
- Blast allows users to earn staking rewards—but the mainnet doesn’t exist yet so assets are locked in the network’s bridge, sparking concerns.
The launch of the new Ethereum layer 2 scaling solution, Blast, has attracted criticism from one of its earliest investors—the crypto investing firm Paradigm—for what the firm says are marketing tactics that “cheapen the work of a serious team”.
Others have likened Blast’s launch strategy to a Ponzi scheme, based on an overly-gamified approach, the promise of substantial airdrops, and offering seemingly unsustainable rewards to users in return for locking up their assets before the network is even complete.
What Is Blast?
Blast is billed as an Ethereum layer 2 network which allows users to earn staking rewards by locking up their funds on the network. It’s being developed by the same team, led by Tieshun “Pacman” Roquerre, that created the Ethereum NFT marketplace, Blur.
The primary intended use case for Blast is to help to scale Blur and further drive its success.
Despite Blast’s mainnet not actually going live until next year, users hoping to earn substantial rewards have already locked over US$ 500 million (AU$ 750 million) in Blast’s one-way deposit contract. Users can also earn rewards by referring other users to lock up their assets on the network. These assets will be locked in the deposit contract for three months.
Because the mainnet doesn’t actually exist yet, users are currently locking up their assets on the network’s bridge to Ethereum, which has sparked further concerns due to the vulnerability of bridges to hacks.
Paradigm Not Impressed With Tactics
Paradigm’s criticism of Blast came on Sunday in a post on X from the firm’s Head of Research and General Partner, Dan Robinson, in which he said the firm had several serious disagreements with the Blast team over the way they’d conducted the launch:
(W)e at Paradigm think the announcement this week crossed lines in both messaging and execution. For example, we don’t agree with the decision to launch the bridge before the L2, or not to allow withdrawals for three months, since we think it sets a bad precedent for other projects. We also think much of the marketing cheapens the work of a serious team.
Dan Robinson, Paradigm Head of Research and General Partner Robinson continued on to say Paradigm have spoken with the Blast team, but continue to have significant disagreements with them over their launch strategy:
We’ve been discussing our concerns with the team and appreciate their willingness to engage with us, but there are still many points of disagreement. We invest in strong, independent founders who we don’t always agree with. But we understand that people may look to us to set an example on best practices in crypto. We don’t endorse these kinds of tactics and take our responsibility in the ecosystem seriously.
Dan Robinson, Paradigm Head of Research and General Partner Blast Denies Ponzi Mechanics, Says Rewards Sustainable
The founder of Blast, Tieshun “Pacman” Roquerre took to X to address the criticism, saying that while the rewards may seem too good to be true, they’re actually generated in sustainable, and not at all Ponzi-like ways:
There’s a meme going around that Blast is a ponzi. The yield that Blast provides users can feel too good to be true, so this meme is understandable. But to put it simply, the yield Blast provides comes (initially) from Lido and MakerDAO.
Founder of Blast, Tieshun “Pacman” Roquerre Roguerre went on to explain the rewards come from staking users’ deposited assets with Lido and investing in tokenised short-term Treasury bonds (t-bills) through MakerDAO, insisting these methods are safe and sustainable:
These yields are not unsustainable. They are a core component of the on-chain and off-chain economy. The reason the yield feels too good to be true in Blast is because Blast makes this yield the default for everyone. It gives users yield that was hiding in plain sight. In effect, democratising higher yield.
Tieshun “Pacman” Roquerre, Blast Co-founder 
Author
Jody McDonald
Jody is a Brisbane-based freelance writer who specialises in writing about business, technology, and the future of work.
