Blast to wind down Ethereum L2 after costs outpace revenue
Reported by Cointelegraph · AI-assisted summary by ChikoCorp AI News Desk
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Summary
Ethereum layer-2 network Blast is shutting down because its operating costs have surpassed the revenue generated by the chain. The Blast team stated there is no “credible path” to making the network economically sustainable and urged users to withdraw their assets to the Ethereum mainnet by October 26. Withdrawals will temporarily be unavailable during the unwinding of Lido assets, which should take about a week.
Why it matters
The source indicates that Blast’s economic model proved unsustainable, highlighting challenges layer-2 networks face in achieving self-sufficiency amid changing market conditions. The shutdown affects users’ ability to manage assets on the network and reflects broader difficulties in sustaining growth in the Ethereum layer-2 and NFT sectors.
Key context
Blast was founded by Tieshun “Pacman” Roquerre, founder of the NFT marketplace Blur, which launched in late 2022 and initially outperformed OpenSea in trading volume. Blast launched its mainnet in February 2024 after attracting over $2 billion in deposits through a strategy involving native yield on ETH and stablecoins and a points program linked to an expected token airdrop. However, since peaking in June 2024, Blast’s DeFi total value locked has dropped more than 98%, mirroring a similar decline in Blur’s TVL.
Key numbers and entities
Blast, Blur, Ethereum, and Ethereum mainnet are key entities mentioned. Blast’s DeFi TVL peaked at approximately $2.2 billion in June 2024 and then declined by over 98%. Blur’s TVL peaked above $200 million in early 2024 and now is about $27 million. Withdrawal deadline is October 26.
What remains unclear
The source does not detail the specific reasons behind the economic unsustainability, such as which costs led to losses or what revenue streams were insufficient. It also does not specify the fate of the Blast team post-shutdown or any potential plans for token airdrops previously anticipated.