L2s available on the market are many and varied, all with their seemingly unique gimmicks and flavors. It’s not uncommon to see raises for new, shiny roll-ups announced every other week alongside massive capital inflows through bridges once mainnet is deployed. The financial opportunities on a new frontier are enticing to speculators looking to capitalize on a vacant chain with an unestablished ecosystem, especially if there is a native token yet to be released. Blast is no exception.

Introduction

Unveiled in late November last year, the EVM based optimistic roll-up offering native yield to depositors, was greeted with skepticism thanks to it’s rather peculiar marketing materials and quickly found itself in controversy on Twitter. Despite all this, the platform attracted roughly ~$800m in deposits within the first month of it’s bridge being open for business. As of now, the value of assets deposited to Blast have more than tripled.

Breakdown of assets is as follows:

stETH: $2.44b (86.4%) — USDB: $197.51m (7.0%) — ETH: $186.71m (6.6%)

In exchange for marinating liquidity in the yield manager contracts until February with no means of withdrawing, users were entitled to yield from various sources alongside points that can later be redeemed for rewards in the distant future.

The yield plus a set of new features — some of which, firsts for L2s, are the main selling points for Blast.

• revenue share for protocols;
  transaction fees generated by applications based on Blast are automatically returned back to the operators, providing flexibility for builders that want to grow their treasuries or provide incentives to users
• native yield-bearing stablecoin;
  bridged USDC is converted to Blast’s stablecoin utilizing MakerDAO’s treasury bill protocol to provide an approximate yield of ~5% and can be redeemed 1:1 once sent back to Ethereum
• L1 staking yield on an L2;
  yield from liquid staking tokens such as Lido’s stETH are automatically transferred to Blast balances via automatic rebasing

In this industry, numbers give us a better representation of the sentiment than vocal community members and commentators on social channels, so let’s see how the market has recently reacted.

Basing our valuation on the purely hypothetical notion that the total supply of Blast is exactly 1b, the fully diluted value comes out to around $6.1b as per the data from Aevo. There was a small selloff on the day of launch, a common pattern that we went over in a recent article dedicated to pre-market assets.

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The Ecosystem

A strong driving force behind the ecosystem’s expansion is Blast’s elaborate points campaign that incentivizes capital retention with points being rewarded per block based on the amount of assets deposited.

Externally Owned Addresses and Smart Contracts earn points at a rate of approximately 117.089 per ETH per hour.

In addition to boosts from referrals, multipliers for no extra capital are offered by interacting with specific applications, which in turn increases visibility and amplifies engagement.

Given the fact that 50% of the upcoming airdrop will be allocated towards the aforementioned points, this could potentially be a lucrative opportunity for investors.

The latest trading price for a Blast point on Whales Market was $0.00392, meaning that depositors are earning roughly $11.02 a day per ETH on paper without multipliers or referral bonuses.

Following Blast’s initiative dubbed “Big Bang”, a competition held in an effort to invite and support builders on the network by providing connections and financial incentives, more than 3000 unique participants were recorded. 47 of which were selected in the final draw and are comprised of a wide variety of categories: Infrastructure (10), Decentralized Exchanges (11), Lending (8), SocialFi (2), NFTs (10) and GambleFi (6).

Now that the flood gates have been opened for a little bit more than a week, we can observe how much of the idle liquidity flowed into the ecosystem.

No matter which of the two TVLs you look at (the former being DefiLlama’s default setting), it’s evident that a good chunk of it was and is actively being deployed.

The dominant category at the moment is lending with two protocols at the forefront, making up most of the total value locked in the sector. The most popular applications at the moment being (in no particular order):

• Ring Protocol (DeFi Product Suite);

  • Few (Yield);

    powering all Ring applications, Few acts as an asset layer for token wrapping to claim native yields in one step from it’s underlying token and enable novel functions for AMMs such as virtual liquidity and leverage trading

    • Ring Swap (Decentralized Exchange — Forked from Uniswap V2);

    • Ring Launchpad (Launchpad);

• Orbit Protocol (Lending — Forked from Aave V3);
  decentralized liquidity protocol that facilitates the lending and borrowing of ETH and USDB and offers various rewards for doing so
• Baseline Protocol (Liquidity Manager);
  offers ERC20 tokens persistent on-chain liquidity and non-liquidatable leverage
• Pac Finance (Lending — Forked from Compound V2);
  self-paying lending and margin trading protocol that supports a wide variety of assets
• Thruster (Decentralized Exchange);
  the premier decentralized exchange on Blast with a yield-first focus and fair launches for those looking to deploy

Since protocols also earn Blast rewards, a lot of projects have taken the route of giving back to the community by re-distributing rewards to those who help bootstrap liquidity and establish a user base.

Moving Forward

Having gone over the past and present, what can we expect to see in the future now that the dust has settled?

Yield Ambitions
Mentioned in the official documentation, the community will have the power to supplement, or potentially fully replace MakerDAO and Lido with Blast’s own native or other third party solutions to lessen dependency.

Now let’s do some comparative analysis to gauge whether Blast can remain competitive against other relevant L2s and capture a larger market share to sustain it’s growth.

An interesting metric that we are going to use in this analysis is Total Bridged Value Locked (bTVL), which includes all canonically and externally bridged assets. This helps us identify liquidity better than just going off of regular TVL numbers, which often times include native assets minted on the chain that fluff up the numbers.

For example ~51.64% of Optimism’s reported TVL on l2beat is it’s own native token that is not entirely in circulation (more than half of the supply is held by three individual addresses).

The second useful metric Total Ecosystem Value Locked (eTVL), displays the total value of assets deposited to applications within the local ecosystem.

With all this in mind, we can attempt to draw some conclusions from the data that we diligently gathered:

Valuation Justification
By comparing the total value of assets bridged and actively used resources in it’s ecosystem to Blast’s fully diluted valuation, it appears that in terms of intent to capitalize on the opportunities available on the platform, it’s not as overpriced as some of the other entries on the list. This doesn’t really concern the ecosystem itself, but could be relevant for the price action of it’s native token.

Ecosystem Contribution
In terms of readily available liquidity present on Blast being utilized in products deployed on the chain, it definitely isn’t the leader. This might either be due to the ecosystem still evolving and looking to establish itself or participants being more interested in the yield benefits of the L2. It’s also possible that users have bridged their assets solely to take advantage of the airdrop campaign with no real attentiveness towards developments taking place on Blast.

It might be a little bit early to form a strong bias around Blast, but a reliable way of indicating the sentiment could be revisiting these metrics after the reward programs have ended to see how much of an impact the inevitable withdrawal of mercenary capital will create.

Conclusion

Albeit still in it’s early phase, Blast is something worth keeping on your watch list as it has it’s own charm and array of functionalities not present in most of the run-of-the-mill, copy and paste roll-ups. New chains that manage to stick around, tend to bring something worthwhile to the table, provide opportunities and enrich the space.

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