Blast’s Founder Denied Accusations That The Project Was a Ponzi

Blast’s founder has denied allegations that their project is Ponzi-based. This project is known for its commitment to paying high interest rates to depositors of ETH and stablecoins on Ethereum’s layer-2 platform. It has attracted more than 440 million USD in deposits from about 53,000 users after just 4 days of launch.

Blast has reached $443 Million in TVL within 4 days.

52,836 community members are now earning yield (~4% for ETH and 5% for stables) + Blast Points. pic.twitter.com/yiakjeKlss

— Blast (@Blast_L2) November 24, 2023

However, many investors expressed concern when they discovered that the project does not have a testnet or mainnet. Instead, just use a multisig wallet to hold funds without revealing the identities of the 5 wallet managers. Deposits to Blast will be locked until the mainnet officially launches in February 2024.

In particular, Blast’s referral reward program in the form of a “pyramid” has made many people suspicious and think that the project may be a form of Ponzi.

Faced with negative reactions from the community, both Blast’s Twitter account and Pacman’s founder spoke up to resolve the issue.

I've seen a number of misunderstandings about Blast spreading around. While many of these are humorous memes, it's important to set the record straight on a few points:

— Pacman | Blur + Blast (@PacmanBlur) November 24, 2023

Pacman said he has examined many comments calling Blast a Ponzi and confirmed that Blast’s interest rates are sustainable. Originated from the project investing user funds in DeFi protocols such as Lido and MakerDAO.

Pacman also denied Paradigm investment fund’s direct involvement in Blast’s implementation. Just disclose that Paradigm only provides consulting on certain technology aspects. He emphasized that the decision-making power still lies entirely in the hands of the Blast development team.

As for the referral reward program, Pacman claims it needs to attract a stable number of users to support the layer-2 economy. He believes that inviting friends to join Blast is a way to help the project and deserves to be rewarded.

Blast’s post also mentions the use of multisig wallets to store user deposits. With the view that this design ensures safety and security. Has been applied by many other projects such as Optimism, Arbitrum and Polygon.

On multisig security.

Read this thread to understand the security model of Blast along with other L2s like Arbitrum, Optimism, and Polygon.

— Blast (@Blast_L2) November 24, 2023

At the same time, Blast affirms that the holders of the 5 keys to unlock the multisig wallet are experienced experts in the cryptocurrency industry. However, their identities are still not announced.

Layer-2 said that they have taken measures to minimize the risk of key exposure. Including cold wallet storage, geographical separation and no 3/5 keys using the same cold wallet service provider to prevent common vulnerabilities.