Investment company Paradigm criticizes Ethereum L2 network Blast’s launch

q w 3 – images.unsplash.com

Investment firm Paradigm has joined the list of parties expressing concerns over Blast, the recently announced Ethereum layer-2 scaling network led by the founder of the top NFT marketplace Blur. Despite attracting over half a billion dollars in locked funds from users seeking yield and rewards, Blast has faced substantial criticism from multiple sources.

On Sunday, Dan Robinson, Paradigm’s head of research and general partner, shared his view in a social media post over Blast’s launch.

“There are a lot of components of Blast that I’m excited about and would be interested in engaging with people on. That said, we at Paradigm think the announcement this week crossed lines in both messaging and execution,” Robinson said.

“For example, we don’t agree with the decision to launch the bridge before the L2, or not to allow withdrawals for three months, since we think it sets a bad precedent for other projects. We also think much of the marketing cheapens the work of a serious team.”

Blast functions as an Ethereum layer-2 network, providing “native yield for Ethereum and stablecoins,” allowing users to stake or lock up their funds within the network to earn an interest-like return.

It also offers rewards similar to Blur for users who lock up their funds early, aiming to attract early adopters before a possible airdrop. Blur has already granted hundreds of millions of dollars’ worth of its BLUR token to NFT traders, boosting the marketplace ahead of the previous leader, OpenSea.

Users are enthusiastically locking up their funds in anticipation of Blast’s network launch in 2024, which has brought Blast’s total value locked (TVL) to about $535 million, as per data from DeFi Llama.

Early users are currently securing their funds in a bridge intended to link Ethereum to Blast in the future. Despite this, the Blast network is not operational yet. Withdrawal of these funds won’t be possible until the mainnet rollout in February, raising security concerns due to past instances of network bridges being exploited for significant amounts of crypto. Additionally, some traders and industry professionals have likened its reward and referral model to a Ponzi scheme.

There are misunderstandings on Blast, says co-founder

On Friday, Blast and Blur co-founder Tieshun “Pacman” Roquerre dismissed complaints on Blast, explaining that there were a few misunderstandings regarding Blast.

“I’ve seen a number of misunderstandings about Blast spreading around. While many of these are humorous memes, it’s important to set the record straight on a few points,” said Pacman.

He revealed that Paradigm, one of the investors in Blast’s $20 million seed round, did not take part in Blast’s rollout strategy. Pacman disclosed that Paradigm had suggested changes to the launch, and while Blast was considering them, the final decisions would be made internally.

Pacman praised Paradigm’s excellence in research, citing its contributions to projects like Uniswap and Blend, as well as the development of tools for Ethereum’s advancement. He revealed that Blast consults with Paradigm for technical L2 design but handles its Go-To-Market strategies internally without input from Paradigm.

“There are different ways to contribute to an L2. You can be a developer of the underlying protocol, you can create applications on top of the L2, and you can be a user of the L2. A city is nothing without its people. If you are a user and help make Blast a thriving L2 by bringing friends along, you are providing real value and should be rewarded for that. That’s why invite rewards exist,” said Pacman.