Blast, which once held more than $2 billion worth of crypto assets, is winding down its Ethereum layer-2 network after declining activity and increasing costs made the chain economically unsustainable. The shutdown also comes as major platforms including Coinbase and Robinhood expand their own Ethereum-based networks.
The layer-2 project announced Friday that it would close a little more than two years after launching. Blast said the expense of maintaining the network now exceeds the revenue generated by the chain, leaving the project without a credible route to long-term economic sustainability.
BLAST, the network’s native token, dropped 19% following the announcement, adding to its decline since launch. The token has now lost approximately 98% of its value from its debut.
Blast initially attracted substantial capital ahead of its 2024 launch. More than $1.1 billion had been deposited into the network before it went live, with expectations of a token airdrop contributing to the early demand, according to CoinDesk’s reporting at the time.
That momentum did not last. As speculative funds moved to other opportunities and network activity declined, Blast’s total value locked fell sharply. DeFiLlama data shows TVL reached above $2 billion in June 2024 before dropping to around $32 million. Monthly network revenue has suffered a similar decline, reaching only $1,793 last month compared with roughly $3.5 million at its June 2024 peak.
The shutdown reflects the wider pressure facing blockchain networks as the sector becomes increasingly competitive.
Maintaining a layer-2 network requires continued investment in development, infrastructure and security regardless of how much activity the chain generates. Recent crypto exploits have highlighted the need for strong security measures, while AI-powered tools could potentially help attackers discover vulnerabilities in blockchain code more efficiently.
Blast is also operating in a market where larger consumer platforms can bring established user bases to their networks.
Coinbase launched Base, leveraging its exchange customer base and developer ecosystem to generate network activity. Robinhood also launched an Ethereum layer-2 earlier this year and quickly attracted significant onchain activity.
As more established companies enter the layer-2 market, smaller networks face greater competition for users, developers and transaction fees. Blast’s closure demonstrates the financial pressure that can emerge when network activity falls below the level needed to support operating costs.
Users can withdraw their assets to Ethereum through Blast’s interface until Oct. 26, the team said in a post on X. Once that deadline passes, withdrawals will have to be completed by interacting directly with the network’s bridge contracts.
