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Layer 2 Ponzi Claims! Blast – A Layer-2 blockchain set to launch in March has attracted over 225 million dollars in staked Ethereum (stETH) and stablecoins since Monday.
Layer-2 networks are built on top of Layer-1 blockchains like Ethereum to make transactions faster and cheaper. Blast had announced its plan to stake Ethereum (ETH) and generate returns through Real World Assets (RWAs). According to the platform’s claim, a large portion of the 225 million dollars that Blast has collected was staked in the liquid staking protocol Lido, making Blast the seventh largest stETH holder.
Despite its popularity, Blast faced skepticism from many crypto investors. Some observers likened Blast points to a pyramid scheme, where early users earn more points based on the number of users they bring in. Technical documents show that users receive an additional 16% points when the users they invite bring in more participants, and an additional 8% when the second level brings in more people.
In response to these claims, the platform’s founder PacmanBlur had this to say:
“The returns Blast provides to users may feel too good to be true, therefore these joked structures are understandable. However, to put it simply, the returns Blast provides (initially) come from Lido and MakerDAO.“
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He also explained that these returns are not sustainable and are a fundamental component of on-chain and off-chain economy. He also clarified that Paradigm had no involvement in Blast’s launch and that Blast’s referral system is not a new mechanism. He emphasized that Blast would be nothing without its own community and that its goal is to grow the highest yield L2 and on-chain economy as much as possible.
However, particularly in the cryptocurrency market, it is advisable to be cautious when “too good to be true” returns are involved. In the past, dollar-indexed stablecoin UST promised over 20% returns and its system collapsed, almost nullifying all UST’s value.