BLAST SHUTS DOWN — THE FAILURE OF THE WAVE FARMING AND FOMO LAYER 2 MODEL $BLAST announced the shutdown of its network on October 2 due to operational costs exceeding revenue and no viable path forward to sustain operations. - The project previously raised $20 million and attracted over $2 billion in deposits before mainnet, but current reported TVL has dwindled to approximately $32 million. 1. Outsourcing Yield, Adding Token Expectations to Attract Deposits - The original mechanism was straightforward: users deposited $ETH, which Blast staked via Lido to earn staking yields; stablecoins were deposited into MakerDAO, with the generated yields passed back to users. - Initial promotional rates were around 4% for ETH and 5% for stablecoins, with additional incentives in the form of points and anticipated airdrops to attract capital. Blast integrated existing yield sources into its Layer 2 experience, but deposit attraction still heavily relied on expected token value. 2. Over $2 Billion in TVL Failed to Retain Users - TVL dropped from over $2 billion to approximately $32 million — a reduction of more than 98%, or roughly 60-fold. - However, these were pre-mainnet bridge deposits, and TVL figures are not directly comparable; thus, this does not precisely reflect capital withdrawn from the network. - Overall, the massive outflow trend still indicates that the initial fundraising did not translate into a sustainable, actively used platform. 3. User Yields Did Not Cover Chain Operational Costs - Yields from Lido and MakerDAO were passed on to users, while Blast’s revenue model allocated net gas fees to applications. - The network still bore infrastructure and operational expenses, meaning high deposit volumes did not guarantee sufficient revenue to sustain operations. The shutdown announcement confirms the economic model is no longer viable, though no detailed financial breakdown has been provided to attribute costs to specific line items. => I assess Blast’s failure as stemming from its inability to convert yield- and airdrop-driven capital flows into durable usage sufficient to support the network. After the disappointing airdrop, Blast failed to create any compelling new incentives or experiences to re-engage users.