Blast L2 Solution Shuts Down Amid Unsustainable Operating Costs

The Blast network, a Layer 2 (L2) solution on Ethereum, has announced its shutdown due to unsustainable operating costs. The chain's revenue had plummeted to just $110 per day, while its costs exceeded its income. This collapse highlights the fragility of L2 growth, particularly when it is driven by airdrops and a focus on attracting passive yields.

In November 2023, Blast's founder, Tieshun Roquerre (also known as Pacman), launched the network with a promise of automatic Lido staking rewards and MakerDAO deposit rates for deposited ETH and stablecoins. The airdrop-driven growth model attracted over $2.27 billion in capital, making Blast one of the top-ranked L2s in the Ethereum ecosystem. However, the network's TVL (Total Value Locked) plummeted to just $32 million by the time of the shutdown, a 98% drop from its peak.

The Blast model was built on the idea of 'native yields', where users' deposited ETH earned yields through Lido staking, and stablecoins earned interest through MakerDAO. However, this design led to a structural issue: the yields went to users, while the costs fell on the chain. As a result, the chain struggled to cover its sequencing costs, data availability fees, infrastructure maintenance, and security audits.

Experts say that Blast's shutdown is a natural consequence of its airdrop-driven growth model. Blast's founder, Pacman, acknowledged this, stating, 'I regret that we couldn't make this chain sustainably long-term, but I thank the users, developers, and teams who gave Blast its moment.' The shutdown process will unfold in several steps, with users able to withdraw their assets to the Ethereum mainnet through the standard interface.