Layer 2 network Blast becomes third largest holder of Ethereum amid pyramid scheme allegations

Blast, a newly launched Ethereum (ETH) Layer 2 network that promises “native yields” on ETH and stablecoin holdings, quickly secured the position of third-largest holder within just three days of launch, according to On-Chain of Stake Ether data.

Etherscan data suggests that the platform has accumulated over 140,000 Ethereum, worth around $286 million, using the liquid staking protocol Lido since its launch on November 20th. This accumulation represents approximately 1.5% of the total Ether staking volume.

Debank’s data also shows that the protocol’s multi-sig wallet currently holds assets worth more than $335 million, including Lido’s staked Ether and MakerDAO’s stablecoin DAI.

Blast pyramid scheme controversy

However, Blast’s rapid growth over the past three days has sparked intense criticism within the crypto community due to its pyramid-like Blast points system, which rewards early users based on the number of users they refer.

Details on the project’s website say that users will receive an additional 16% of points if their recommendations attract more participants, and an additional 8% if the next stage attracts more participants.

One intriguing aspect is that inflows into the protocol continue to be unilateral and there is no possibility of withdrawal until its scheduled launch in February next year.

Simon Dedic, CEO and managing partner of crypto investment firm MoonRock Capital, explained that Blast’s unique selling point is “Ponzi airdrop farming.” He added:

“[To be honest] Blast_L2 is the perfect example of why non-crypto people hate Web3. [It is not]It represents a technical development compared to the other L2 and does not offer any exciting applications that can be used beyond that. While withdrawals are disabled.”

In addition to its Ponzi-like structure, attention has been drawn to Blast’s multi-sig wallet.

Polygon engineer Jarrod Watts believes The protocol requires three out of five signatories to authorize suspicious actions. Watts emphasized that the linked addresses were new and had unknown identities.

However, despite the risks involved, Watts doubts the possibility of the money being stolen.

Similarly, Cos, the founder of SlowMist, noted that Blast works as an updatable contract with a 3/5 multi-signature setup and has no time lock.

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