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The Blast Mainnet Unlocks Staked Crypto, Triggers $400 Million in Withdrawals

180,000 Blast users withdraw $400 million after the mainnet launch 

The mainnet launch of Blast, an Ethereum Layer-2 solution, on February 29 at 9:00 pm UTC. This significant event unlocked approximately $2.3 billion in staked cryptocurrencies, previously inaccessible to the platform's 180,000 users. The launch signaled a new era for Blast users, who promptly withdrew $400 million in Ether (ETH) from the network, tapping into the vast reservoir of digital assets that had been locked away.

Blast, leveraging an optimistic rollup technology, has redefined the scalability of blockchain, offering users up to a 5% annual percentage yield on Ether and stablecoins. This yield is generated from the staking of ETH and United States Treasury Bills (T-Bills), meticulously managed by the blockchain protocol and Dai stablecoin creator, MakerDAO. The anticipation built around the mainnet's debut was palpable, as crypto previously sent to the network was immobilized, leaving users eagerly awaiting the moment they could finally access their funds.

The value locked within Blast soared to a peak of $2.27 billion on the day of the launch, illustrating the immense trust and financial commitment of its user base. However, following the mainnet activation, the total value locked (TVL) experienced a 17.5% decrease, stabilizing at $1.87 billion. This downturn reflects the withdrawal of just under $400 million by users, as reported by DeFiLlama, indicating a significant but expected liquidity movement post-launch.

 

The immediate impact and controversies surrounding Blast's launch

One significant voice of concern came from Dan Robinson, the research head at Paradigm, a seed investor in Blast. In a detailed post on X from November last year, Robinson openly criticized the decision to initiate the bridge before the Layer-2 launch and to delay withdrawals for three months. He argued that such moves set a concerning precedent for future projects, potentially undermining trust and transparency in the DeFi space.

Robinson stated:

"We at Paradigm think the announcement this week crossed lines in both messaging and execution. For example, we don’t agree with the decision to launch the bridge before the L2, or not to allow withdrawals for three months," 

The launch period saw the emergence of airdrop hunters, drawn by the prospect of a new Blast token set to be introduced in May. 

Controversy further escalated with the first reported exit scam on the network. A gambling protocol dubbed "Risk on Blast" absconded with 420 ETH, approximately $1.25 million, from users participating in its RISK presale token. Such incidents serve as a stark reminder of the risks inherent in the DeFi sector.