Blast: Unlocking Native Yield and new business model for DApps

Blast is the only Ethereum Layer 2 with native yield for ETH and stablecoins without changing the experience that web3 new and DeFi users expect.

Under the hood, Blast is an EVM-compatible, optimistic rollup created using the OP stack.

How much is the Yield?

• It’s 4% for ETH and 5% for stablecoins.

Where is the yield coming from?

ETH:

• The ETH you bridge to Blast is staked on Lido.
• ETH yield from Layer 1 staking is automatically transferred to users via rebasing ETH on Layer 2.

Stablecoins:

• Users who bridge stablecoins receive USDB, Blast’s auto-rebasing stablecoin.
• The yield for USDB comes from MakerDAO’s on-chain T-Bill protocol.
• USDB can be redeemed for DAI when bridging back to Ethereum.

Why would developers choose Blast?

Gas Revenue Sharing

Other Layer 2s keep revenue from gas fees for themselves. Blast gives net gas revenue back to dApps programmatically. dApp developers can keep this revenue for themselves or use it to subsidize gas fees for users.

Native Yield from Liquidity on their dApp

Developers can opt-in to Blast’s native yield by providing the liquidity locked in their smart contracts. This allows them to earn extra yield, enabling new business models where protocols don’t need to collect fees from users.

Risks Associated with Blast Yield:

• Currently, the ETH is staked with Lido, and if the Lido node operators get slashed due to a bug or any other issue, then users’ ETH balance on Blast will also be reduced. we have seen slashing incidents happen in the past. During April 2023, 11 of the RockLogic node operators participating in the Lido pool were slashed for 13.77 ETH, which is small or 0.0023% of the total protocol TVL at the time of the event. The losses get distributed among the users.
• There could be a bug in the Lido smart contracts or MakerDAO’s contracts, leading to potential risks.
• A multi-sig controlling users’ funds on Ethereum can create an issue.
• Blast has to wait in a queue until their withdrawal request is processed on Lido this can create an issue when everyone is trying to exit.

Network Growth:

Currently, Blast is ranked 4th in terms of TVL, with $2.64B locked.

Blast’s TVL has mostly stayed flat since March 13th, while Arbitrum and Base have each attracted more than $1B during the same period.

Will Other Layer2s Adopt Native Yield?

Yes, if other Layer2s don’t adopt native yield, they will be left behind by the Layer2s that offer it. However, the current structure may present too much risk that the leading Layer2s like Base, Arbitrum, and Optimism may not want to take.

How Can This Be Solved?

One of the best designs, in my view, is to keep the User’s fund without native yield and Let the developer put the TVL on their DApp to opt-in for the Yield.

Layer2s should explore other designs that can reduce the risk associated with native yield.