Blast to Shut Down as Ethereum Layer-2 Assets Collapse 98%

Blast, once a blockchain holding more than $2 billion in crypto assets, is shutting down after declining activity and rising operating costs left the Ethereum layer-2 network unable to sustain itself. The project is also facing growing competition from larger platforms such as Coinbase and Robinhood, which have launched Ethereum-based networks of their own.

Blast announced the closure Friday, just over two years after launching. The team said the economics of running the network were no longer viable because the cost of maintaining the layer-2 had surpassed the revenue it generated. It added that it could not identify a credible path toward making the network economically sustainable.

The announcement triggered a 19% decline in Blast’s native BLAST token, extending a sharp slide since its launch. BLAST is now down roughly 98% from its debut price.

Blast attracted significant attention before its network went live in 2024. Users had deposited more than $1.1 billion ahead of the launch, with expectations surrounding a potential token airdrop helping drive early participation, CoinDesk reported at the time.

The network’s financial position deteriorated as speculative capital shifted elsewhere and onchain activity weakened. DeFiLlama data shows Blast’s total value locked reached more than $2 billion in June 2024 but has since dropped to about $32 million. Network revenue has also collapsed, falling to just $1,793 last month from a peak of approximately $3.5 million in June 2024.

Blast’s shutdown highlights the broader pressure facing blockchain networks as the industry becomes more competitive.

Operating a blockchain requires ongoing spending on development, infrastructure and security even when user activity declines. A recent series of crypto exploits has further underscored the importance and cost of security, while advances in AI tools could make it easier for attackers to identify potential weaknesses in blockchain code.

Competition among Ethereum layer-2 networks has also intensified.

Large consumer-facing platforms with established user bases are increasingly launching their own networks. Coinbase developed Base and has used its exchange users and developer ecosystem to drive activity, while Robinhood launched its own Ethereum layer-2 earlier this year and quickly recorded substantial onchain activity.

Smaller networks are consequently competing for developers, users and transaction fees in an increasingly crowded ecosystem. Blast’s shutdown illustrates the challenges a chain can face when declining activity no longer generates enough revenue to cover its operating expenses.

Blast users have until Oct. 26 to withdraw their assets to Ethereum through the project’s interface, according to a post from the team on X. After that deadline, users will need to interact directly with the bridge contracts to complete withdrawals.

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