Web3 protocol Blast has reached $823 million in total value locked (TVL) just weeks after its controversial launch in mid-November, with a 26.5% gain over the past seven days, according to data from DefiLlama.
Behind Blast’s speedy growth is its unique business model. The protocol is a scaling solution for the Ethereum network and offers native yields to users who stake their funds. Users staking are promised a 4% yield on Ether (ETH) and a 5% yield on stablecoins.
However, the protocol’s emergence has been marked by challenges and unpopular developments. On Nov. 30, Blast revealed that a user staking on the protocol saw $100,000 disappear after converting a deposit to Dai (DAI). The issue was caused by a misconfigured slippage parameter on the user interface, resulting in Blast paying the user $10,000 in compensation.
The 10% compensation will be covered by some of Blast’s $20 million capital raised from investors such as Paradigm — the same venture capital firm that lost $278 million on bankrupt crypto exchange FTX. But Blast’s relationship with Paradigm faces its own challenges.
In late November, the head of research at the venture capital (VC) firm, Dan Robinson, shared a statement expressing his disagreement with Blast’s strategy of launching a bridge before its layer-2 network goes live. Blast anticipates releasing its testnet and having a developer’s airdrop in January, while its mainnet should be available in February.
“We think it sets a bad precedent for other projects,” Robinson wrote on X (formerly Twitter), adding that much of the marketing strategy was cheapening the work of a serious team.
Blast and Paradigm have been working together to address the issues, but the VC firm’s role in the startup’s decision-making remains unclear, as does Blast’s governance structure and technical documentation.
Another noteworthy discussion surrounding the protocol is the lack of withdrawal functionality. Users depositing and staking on Blast trust that the team will add a withdrawal feature at some point in the coming months.
Despite the challenges, Blast has attracted over 75,000 members in just a few weeks, and it is currently hiring senior engineers for its upcoming deployments.
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