🐳 Daily Edition: A Postmortem on Blast

For those who weren’t familiar with the project, Blast was an ETH L2 with its main value proposition being native DeFi yield on ETH and stablecoins held on the chain. This yield was predominantly generated by passing the capital on to Lido. The majority of its usage came from airdrop farmers, and after the airdrop, people didn’t consider the yield enough to justify thinner liquidity and a smaller dapp ecosystem.

What are the takeaways from this experience?

Airdrops are interesting because they guarantee users for your product, but that type of user is generally extractive. Most airdrops fail because the product isn’t better than the alternatives. The people who were there for the airdrop would rather find another airdrop to farm than continue using a product that isn’t significantly better. Unless you think your user experience is good enough to convert a farmer into a full-time user, expect the chain to be in a worse spot after the airdrop than before.

I think it’s also important to consider the role of L2s going forward. When I started using ETH in 2017, it was painful. It was slow and expensive, and often the friction wasn’t worth the transaction. Everyone yearned for something better, and eventually L2s came along to fix ETH’s shortcomings.

It’s not 2017 anymore. ETH is much more efficient and capable than it used to be. Rather than spending hundreds of dollars on gas, you can now expect to spend a few cents at most. It’s important to note that this is largely because L2s now account for 96% of Ethereum’s throughput today.

The demand for new L2s is much lower than it once was. We needed blockspace and efficiency, and we got it. Below one cent and one second, people don’t care about being marginally cheaper or marginally faster.

I expect more L2s to close their doors this cycle. We’ve exceeded demand for blockspace, and chain revenues simply aren’t enough to keep most of these niche operations going. Blast’s monthly chain revenue is just $2,000. There are a lot of L2s that raised a tremendous amount of money and are now staring down the barrel of a very similar situation.

Beluga is excited to partner with Polyester for the launch of their testnet campaign, featuring prizes and token rewards for early users. Polyester is a next-gen spot DEX backed by top investors and funds across crypto and TradFi, offering markets for any coin on any chain with a user experience that feels like you’re trading on a CEX.

Check out the testnet here.

Check out our most recent livestream with Christopher Perkins from Franklin Templeton’s crypto arm. We discuss the value of fundamentals when evaluating cryptocurrencies, where the market goes from here, and whether the four-year cycle is structural.

Disclaimer

The content on this site is for informational purposes only and should not be construed as investment advice. While Beluga strives to ensure the accuracy and timeliness of information, there may be discrepancies when comparing our data to that of financial institutions, service providers, or specific product websites. Always consult with a professional before making any financial decisions. Will McKinnon is the Head of Content for Beluga and has spent every day for many years trading coins. For that reason there are too many to name, however his largest holdings by a significant margin are Ethereum and Bitcoin. NFA DYOR