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Blast’s $650m in deposits would make it third biggest layer 2 — if it existed

Blast’s $650m in deposits would make it third biggest layer 2  —  if it existed
DeFi degens stack over half a billion dollars in Blast's multi-signature contract. Credit: Rita Fortunato/DL News
What you'll learn
  • Blast has attracted close to $650 million in deposits.
  • Blast hasn't launched yet.
  • If it existed, it would be the third biggest Ethereum layer 2 blockchain.

Blast, a controversial Ethereum layer 2 blockchain project, continues to draw investors despite concerns over its contract controlled by five signers.

The blockchain project developed by Blur NFT marketplace creator Tieshun Roquerre, better known by his online alias Pacman, has so far attracted $648 million in deposits in just eight days, DefiLlama data shows.

Blast rockets past $500b in investor deposits

Blast would be the third biggest Ethereum layer 2 project in terms of investor deposits, surpassing even Coinbase’s Base at almost $594 million. Base was the latest buzzy layer 2 blockchain just a few months ago. Optimism, with $3.7 billion, comes at distant second.

While the $594 million of investor deposits for Base represents total on-chain deposits, the investments in actual DeFi protocols deployed on the network is almost $300 million, as per data from DefiLlama.

Blast does not yet have a blockchain, not even a testnet, so the deposits are locked in a so-called bridge contract – effectively a multi-signature wallet — on Ethereum. Investors, however, seem unperturbed by that.

Blast has been a draw for the crowd of high-risk investors known as “degens” in DeFi.

The launch has elicited criticism from several quarters including its main backer, crypto venture capital firm Paradigm. Dan Robinson, Paradigm’s research chief, said Blast’s marketing was setting a “bad precedent” that could “cheapen the work of a serious team.”

Pascal Caversaccio, an independent security researcher, told DL News last week that it was irresponsible for Blast to “FOMO people into another layer 2 chain via seemingly risk-free yield, while ignoring so many unknown unknowns.”

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Blast’s security arrangement has also come under scrutiny as it is a 3/5, shorthand for three-of-five, multisig arrangement. This means the deposit contract is controlled by five signatories and only three are required to remove funds from a wallet holding almost $650 million in investments.

Blast also had to deal with a minor issue on Thursday that saw a depositor lose $100,000 after transferring crypto to the deposit contract.

The issue in question was a mistake in the way Blast swaps USDT deposits for DAI. Blast initially set its slippage parameter for USDT to DAI swaps at 10%. Slippage refers to the difference between the actual value of trade and the expected end value.

A high slippage like 10% allows a swap to happen as long as the price fluctuation does not exceed the set value. This high margin for error attracts arbitrage bots who can pay high tranaction fees to profit from such high slippage by reordering trnsactions on the blockchain.

One such bot was able to take advantage of the situation and drained $100,000 from the affected user.

The Blast team said that it fixed the high arbitrage issue and compensated the affected user with a 10% bonus on top of the original $100,000 deposit.

Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. To share tips or information about stories, please contact him at