Ethereum layer-2 network Blast to shut down as costs outstrip revenue

Blast, the Ethereum layer-2 network that once held more than $2bn in crypto assets, is shutting down, saying the cost of running the chain now exceeds the revenue it generates.

"Unfortunately, the economics of operating the chain no longer make sense," the project said on Friday in a post on X announcing the closure. The team added that it saw no credible path to making the network economically sustainable.

Users have until 26 October to withdraw their assets to Ethereum's main network through Blast's interface. After that date, funds will remain reachable only by interacting directly with Blast's bridge contracts on Ethereum, and the team said it would publish instructions before then. According to Decrypt, withdrawals will first pause for about a week while Blast pulls the network's assets out of the liquid staking protocol Lido, after which the withdrawal delay will be cut to 24 hours.

Launched in November 2023 by the team behind the NFT marketplace Blur, Blast pitched automatic yield on ETH and stablecoin balances. Users deposited more than $1.1bn before the network went live, and the investment firm Paradigm co-led its $20m seed round.

The decline has been steep. Total value locked peaked above $2bn in June 2024, according to DeFiLlama data cited by CoinDesk, and has since fallen to $32m. The network generated just $1,793 in revenue from usage last month, down from a peak of about $3.5m in June 2024. Its BLAST token fell 19% after the announcement and is now about 98% below its launch level.

Blast is not the only layer-2 to fold this year. Wallet maker Zerion wound down its Zero Network, and Silicon Network, linked to the South Korean exchange Korbit, stopped accepting deposits on 2 September.

CoinDesk said the closure points to consolidation among blockchains, as security costs rise and large platforms such as Coinbase and Robinhood run Ethereum-based networks of their own. Smaller chains are left competing for developers, users and transaction fees in an increasingly crowded market.

Sources

• CoinDesk
• Decrypt