Blast Cuts Losses, Shuts Down L2 Network Amid Rising Costs

Blast, a relatively new Ethereum Layer 2 (L2) network, has announced that it will shut down its operations due to high costs outpacing revenue. This decision has raised concerns about the sustainability of smaller rollups in the L2 space.

Blast launched in November 2023 with a funding round of $20 million from Paradigm and Standard Crypto, and had secured over $2 billion in deposits from users before its mainnet launch in February 2024. However, since then, the figures have drastically dropped, with DeFiLlama reporting a DeFi TVL of around $32 million and L2BEAT listing about $38 million secured by the platform.

The imbalance in Blast's economics is clear, with annualized fees of $755,500 and revenue of $22,700. Reducing costs through Ethereum's EIP-4844, which introduced blobs to transmit data at a lower cost, has not been enough to sustain the network.

The shutdown of Blast is part of a bigger contraction in the L2 space, with rollup value locked dropping by 36% since its peak in October 2025. The weakness is not limited to L2s alone, with over 99 blockchain projects closing in the first six months of 2026, according to RootData.

Upbit and Bithumb have already taken action, designating BLAST as a trading-caution asset, citing concerns about sustainability and the end of mainnet operations. Blast will first withdraw its Lido holdings, a process expected to take about a week, and users can withdraw through Blast's interface until October 26, after which they will need to use its Ethereum bridge contracts directly.