Ethereum L2 Blast to Shut Down; About $51M Still Locked in Contracts as Token Slides 19%

Blast, an Ethereum Layer 2 network, is winding down operations, citing an unsustainable cost structure. The team said Friday the chain costs more to run than it generates, and that no credible path to fixing the imbalance has emerged. The network, which marketed itself as a lower-cost venue and drew deposits by paying interest and promising token rewards, once held $2.24 billion as of June 2024. Activity has since deteriorated sharply: DeFiLlama data shows total value locked has dropped to $32.3 million from the 2024 high, a decline of nearly 99%. Chain revenue over the past day was $110. The BLAST token fell 19% following the announcement. Founder Tieshun Roquerre, known as "Pacman" and also the creator of the Blur digital collectibles marketplace, said he was disappointed Blast could not become sustainable over the long term. He thanked users, developers and teams, adding that the project's lifespan was shorter than expected. Financial stress had already surfaced earlier. Blast posted negative revenue in March, when the strain was first flagged. The project previously raised $20 million from investors. L2BEAT estimates roughly $51 million bridged from Ethereum remains in Blast's contracts. Of that, $46.6 million is staked ETH held with Lido. Withdrawals may initially be frozen because Blast must first pull funds back from Lido, a process that takes about a week; the withdrawal waiting period then falls from seven days to 24 hours. Users can use the normal app until October 26. After that date, withdrawals require interacting directly with Blast's Ethereum contracts. L2BEAT also highlights governance and security risks. Five keyholders control the contracts, and any three can immediately modify them or pause withdrawals. The network's fraudproof system, designed to allow anyone to challenge an incorrect state, never fully functioned, according to L2BEAT. The site warns a malicious proposer could finalize an invalid state, potentially leading to a loss of funds. L2BEAT flagged the design risk but did not allege misuse. Blast becomes the latest in a run of 2026 shutdowns, alongside Lisk's blockchain closure and the Bitcoin Layer 2 network Botanix. Blast drew deposits within weeks of launch, but two years on it is generating $110 per day.