Paradigm-backed Layer 2 Blast to wind down network as costs exceed revenue

Ethereum Layer 2 Blast said it will wind down its network because operating costs exceed revenue and it sees no credible path to economic sustainability.

The project now has a little over $32 million in total value locked, according to DeFiLlama, down sharply from more than $2 billion in TVL ahead of its February 2024 mainnet launch.

"We launched Blast with the goal of building a self-sustaining chain for users and developers. Unfortunately, the economics of operating the chain no longer make sense," the project wrote Friday in a post on X. "The ongoing costs of maintaining Blast exceed the revenue generated by the L2, and we do not see a credible path to making the chain economically sustainable."

Blast aimed to provide native yield for ETH and stablecoins, with returns generated through ETH staking and real-world asset protocols and automatically distributed to users.

The project is asking users to withdraw their assets to Ethereum mainnet. Blast said it will first begin withdrawing its Lido assets, a process expected to take about a week, during which withdrawals will be temporarily unavailable. Once that process is complete, withdrawals will resume with a 24-hour delay, and users will be able to withdraw through Blast’s normal interface until Oct. 26. After that date, users will need to interact directly with Blast’s bridge contracts on Ethereum.

Blast went live in November 2023 following a $20 million funding round led by Paradigm and Standard Crypto. The project exceeded $2 billion in TVL from nearly 200,000 early-access users ahead of its mainnet launch.

The BLAST token fell 17% on Friday, reducing its market capitalization to around $23 million.