Blast Ethereum Layer 2 Network Faces Significant Decline
The once-powerful Blast, the world’s second-largest Ethereum Layer 2 network, endured a significant plummet in usage and market value. Observers have noted a marked exodus of users from the platform, seeking more promising alternatives elsewhere.
DeFi Total Value Locked Takes a Hit
Blast’s DeFi, or decentralized finance, total value locked, or TVL, demonstrated a thriving market presence in mid-2024 at its peak. In June that same year, Blast’s TVL accounted for an impressive $2.2 billion worth of market volume. However, this wave of success was short-lived as this soaring figure took a sharp turn downwards just one month later at the much-hyped token generation event (TGE). As of now, Blast’s TVL stands at a dismal $65 million, revealing a cataclysmic 97% decrease from its highest point. Moreover, this figure reflects a 30% drop in just a month, testament to Blast’s quick and sharp decline.
The Beginning of the End
The significant slump started after Blast introduced a disputable deposit vault in November 2023. This new feature encouraged users to lock their capital with the chain to gain points. Shortly after this new feature’s introduction, in February 2024, Blast unveiled its farming system. This innovative system combined a point system to incentivize on-chain TVL and a new Blast Gold system, which rewarded users with money from native protocols. This launch marked Blast’s mainnet going live.
Fallout From Unsuccessful Airdrop
The Life of the platform took a turn as it became a center of attraction for airdrop farmers, who hoped to replicate the memorable success of the February 2023 Blur airdrop. The latter was led by the esteemed lead developer PacMan and was financed by investment company Paradigm. Despite the high stakes, the Blast airdrop fell considerably short of expectations, leading to widespread disappointment among users. The BLAST token launched at a $2.9 billion valuation, far from the $5 – $10 billion forecasts by many investors and analysts. This significant imbalance hastened Blast’s decline, leading to a 60% shrink in its TVL in under two months following the airdrop.
Poor Performance of BLAST Token
The BLAST token hasn’t fared any better since its disappointing launch, being now 91% down from its all-time high. Its current valuation stands at a meager $250 million fully diluted valuation (FDV), marking a stark contrast to more optimistic market projections. This decline in value reflects a prolonged phase of weak performance from the Blast platform and its associated token.
Sharp Decline in Daily Active Users
Blast’s difficult period has also translated to a significant decrease in daily active users (DAUs), dropping from a peak of 77,000 following the airdrop to a bare 3,500, according to data from TokenTerminal. This eclipses in contrast to leading L2s like Base and Arbitrum, which have around 1.3 million and 400,000 DAUs respectively. Nevertheless, it is theorized that a portion of these high numbers can be attributed to bot activity.
This downfall story of Blast illuminates the volatile and unpredictable nature of cryptocurrency markets, with fortunes rising and falling almost overnight. Only time will tell whether Blast can recover from this setback and reclaim some of its lost glory.
