Blast: A new paradigm. The “points” meta end game.

Today we will be talking about the Blast incentives system, since we last talked we have had a few soft launches of some anticipated “points” games. Which I went over extensively in my previous article, you can check it out here :). Although the idea was right, we were clapped by some large macro headwinds. The ramp up in inflation, and a no landing scenario vs the expected the soft landing scenario. But not to worry dear reader, we were coming off the best 2 quarter performance in crypto that we’ve seen since the start of the previous cycle, and a deep pull back was expected. Remember 30-40% pull backs are normal in an exponential asset class, the game is to survive until the next injection of liquidity. I will make another article outlining my long-term thesis on this idea soon, but for now let’s return to today’s subject matter. Blast. Pacman’s love child. The game master is back at it again and the tge is right around the corner going live on May 19th.

The horizon looks bright, as the “points” meta comes full circle back to the game master. I’ve talked about Jupiter, Jito, Marginfi, Kamino, and several other protocols in my previous articles and despite (some of) their success, these protocols borrowed the main idea from Pacman. We started this journey off with Blur season 1, and the points system worked so well that everyone decided to copy it. However, nobody could predict that the pacman would be able to snowball his idea and create an entire L2.

So let’s start with what is blast. Blast was designed as a competitor to other L2s such as Arbitrum and Optimism. If you’re reading this article, you’ve prob sent a Tx on Ethereum before and were prob shocked when you realized it costs $8 to send a $5 transaction, and took roughly an entire minute for it to confirm on the blockchain. So an L2 helps to solve this problem, by building a new chain on top of Ethereum that is faster, and cheaper for users. Fees are fractions of cent, and transactions are confirmed within seconds or less. All while having the security layer of Eth on top to protect the decentralization of the network. As L2s became more popular, Pacman asked the simple question of why aren’t users able to claim a native yield on top of their holdings. Ethereum offers a staking yield post POS. USD offers a yield through government treasuries. So why haven’t any of these L2s thought about the engineering problem of offering yield to its users. At the end of the day crypto land is a financialized world, and why wouldn’t users want to add an additional yield for doing what they were already doing. Pacman solved this problem with Blast. Not only does it offer yield, its L2 is very competitive with others in terms of their speed and costs. Costs often being a fraction of a cent, and speeds at less than one second to confirm. Blast is very user friendly. Not only this but the gas fees are then refunded back onto the contract owners, whom the user is interacting with. Providing revenues to protocols built on top of blast.

Pacman is a genius and the product was just what the users were asking for. The next steps was to just build a flywheel, to onboard users on to the ecosystem just as he had done with Blur. What better way to onboard users, than to onboard his already most loyal community. So at the end of the last season of Blur, Blast was revealed. You could now stake your hard earned blur to earn equity in a shiny new Protocol and by the way this protocol wasn’t going to be valued as an NFT marketplace, it was going to be valued as a Layer 2 + a liquid staking protocol.

Blur is the most valuable NFT marketplace in the game, and if they can achieve similar success on Blast it’s entirely possible we will see one of the highest airdropped valuations to a protocol to date. When adding up their competitors we can see the market share is worth over 23B collectively. We know that currently most of this wealth is currently stored in just a few protocols, with polygon, arbitrum, and optimism holding more than half the market share. Each are fair comps to Blast. Standing at 7.2B, 2.9B, 2.8B respectively. Additionally it is fair to assume that not only will blast be able to capture a portion of the L2 market but also a part of the staking market, as this is it’s core offering vs other products. The total market here is even larger than the L2 market, worth a total of 30.5B collectively. Judging by the hype surrounding this new drop we can expect blast to climb the leaderboards on dominance in each of these huge markets.

In a Q&A call I recently was in with Pacman, it was revealed that at the TGE we might end up seeing more than one season similar to the way he had done with Blur. Although he was hesitant to share undisclosed details, he did mention that it would be based on the market need at the time. What I suspect he means by market need at the time, is where we are in terms of sentiment. One part of the genius of Blast is that its tge aligns with the first wave of approvals/denials for the Ethereum spot ETFs. Blackrock having a near 99% approval on its ETF applications. Recent research from Standard chartered shows that we are likely going to be denied the very first wave of ETH ETFs, as the SEC still needs time defining what is a security and commodity. However, I think most market participants know that Larry Fink will eventually get his way, and that an ETH spot ETF will come to light at some point in the near future. So whether or not we get seasons, I think entirely depends on if we get ETH spot ETF approvals by the TGE. The TGE is on May 19th and the first final deadline for the ETH spot ETF is on May 23rd for VanEck’s application. Blackrock’s final deadline is in late August. Judging by this info, I think it is possible we see Blast tokens come out in seasons, and that the next season may align with Blackrock’s ETF approval.

If we do get multiple seasons, I think it would be wise to continue to play the game until ROI expectations are met or invalidated. Users can still expect to receive a high yield in the form of blast tokens just on your stakings, while not having to risk the principle itself (aside from exploitation risk, which is inherent to any crypto protocol).

The blast Ponzi started off with a pre-launch farm, one where there was only a leaderboard and points. Users, quickly deposited funds and referred and shilled to get as high up on the leaderboard as possible. Eventually the real game was opened. Pacman announced the launch of mainnet late February, and with it a shiny new iteration to the points system was revealed. That the developer reward would now come in the form of blast gold and that it was sharable back to the users. This was huge, as it added another layer of gamification for users and builders. Half the equity goes to blast gold, which is why I think farming gold might just be the giga left curve play. But for those who don’t want to touch their principle, blast still offers juicy passive earnings on appreciation, yield, and equity.

Blast gave developers the risky option of hoarding all the gold to themselves, or distributing It back to users. Crypto being very reflexive and community focused, meant that any slip up on a the protocols end would be picked up very quickly by your favorite KOL and your DAU’s would immediately suffer as a result. So most major dapps are opting to return 100% of gold back to users, adding to the flywheel of the entire market. Gold is rewarded in 5 layers of distributions, cumulatively it will add up to the equivalent of half the total airdrop rewarded. Each round of distribution, gives way to new protocols and gives out more gold for each of the previous protocols to hand out to their users.

Maybe the most innovative aspect of pacman’s launch of blast was the start of the Blast Big Bang competition. The blast big bang competition was designed to build the first layer of Dapps onto Blast, a L2 is nothing without the products on it. The competition was designed to onboard the best builders in Crypto, and immediately incentivize founders by offering a large and motivated user base, as well as a share of a pie into the future of the Blast ecosystem. Pacman a y combinator alumn, was very familiar with competing and working with entrepreneurs in building the best products in web2. The Big Bang competition worked so well because of the rewards behind Blast gold. The game master created an incentives system not only for users on the platform, but now also for the builders. You can view the whole list of the Big Bang competition winners here. Categories range from everything from perp dexes to gamblefi to NFT markets. Each with different weightings of gold. Socialfi being ranked among the highest as pacman continues to listen to the Users and put the community first. The whole marketplace was now gamified, the flywheel of users continue to build and so too did the innovation and creativity of the products in the marketplace.

Most people who are farming Blast, are forgetting that Blur users will get a share of the equity in the ecosystem, it was part of the way Pacman onboarded users after all. While we don’t know how much equity exactly, we can make some conservative guesses. If you are bullish Blast you should be bullish Blur as it is entirely under farmed right now as all the whales go for the easy option of just staking liquidity for points. Only time will tell who shall conquer in the end, but based on some of the EV expectations below Blur farmers will surely earn their fair share in the end.

In conclusion the anticipated launch of Blast has not only garnered attention from the crypto community but has also piqued the interest of investors and developers alike. The potential for high returns and the opportunity to participate in the ecosystem's growth has positioned Blast as a frontrunner in the crypto space. As the adoption of Layer 2 solutions continues to rise, Blast stands out as a promising platform that offers more than just a scalable and efficient infrastructure. Its unique approach to incentivizing users and developers through the distribution of Blast Gold has created a dynamic and engaging ecosystem. The introduction of the Blast Big Bang competition further demonstrates the commitment of the team behind Blast to foster innovation and attract top-tier builders to the platform. By offering a share of the ecosystem's future and a motivated user base, Blast has set the stage for a wave of groundbreaking Dapps to thrive on its network. The gamification of the entire marketplace within Blast has not only fueled user engagement but has also spurred the development of diverse and creative products. With a focus on putting the community first, Pacman's strategic decisions have continuously enhanced the user experience and strengthened the ecosystem. The future looks promising for Blast, and as the platform expands its reach and influence, it is poised to redefine the dynamics of the crypto market. With its innovative features, strategic incentives, and community-driven approach, Blast is set to establish itself as a cornerstone of the crypto ecosystem.

Blast TVL is currently standing at 1.51B with a peak of 2.3b. We know from the past that pacman loves handing out candy to his users with blur farmers getting 51% of the total amount of tokens issued throughout a total of 3 seasons. The way I am looking at this from a investors standpoint is that if we see a valuation of more then three to five times that of TVL, we can assume almost a near 100% roi (given you are also farming gold which I will talk a bit about later in the article). Assuming what we know about the tokenomics of Pacman in the past and by doing some simple maths, if users get back 20%, of a 10B fdv protocol that roughly equates to the peak TVL. Judging by some of Blast comps, including Jupiter (being similar in expectations), arbitrum and Manta. We know it is entirely possible for us to breach that double digit billy mark, if the market allows it. This ROI expectation is speculative, and is dependent on whether or not we see multiple seasons.