Blast to Close Down as Layer-2 Assets Plunge 98% From Peak

Blast is shutting down its Ethereum layer-2 network after a steep decline in activity made the chain too expensive to maintain. The project once hosted more than $2 billion in crypto assets, but weakening usage, falling revenue and intensifying competition have undermined its business model.

The network announced the closure Friday, just over two years after its launch. Blast said the ongoing expense of operating the chain now exceeds the revenue it generates and that it does not see a credible way to restore economic sustainability.

BLAST dropped 19% after the announcement, extending a prolonged decline that has taken the token about 98% below its launch price.

The network initially attracted significant capital before going live in 2024. Users had deposited more than $1.1 billion ahead of the launch, with expectations of a token airdrop helping fuel early participation, CoinDesk reported.

However, that early momentum quickly weakened as speculative capital moved to other parts of the crypto market. DeFiLlama data shows Blast’s total value locked peaked at more than $2 billion in June 2024 before falling to approximately $32 million. Network revenue has also plunged, reaching just $1,793 last month compared with a peak of roughly $3.5 million in June 2024.

The closure highlights the growing pressure on smaller blockchain networks as the industry becomes more crowded.

Operating a blockchain requires continued expenditure on infrastructure, development and security regardless of whether user activity remains high. Recent crypto exploits have increased scrutiny around security spending, while AI tools could potentially help malicious actors search blockchain code for vulnerabilities more efficiently.

Competition has also intensified as major consumer platforms launch Ethereum networks that can draw on large existing user bases.

Coinbase’s Base has benefited from the exchange’s users and developer ecosystem, while Robinhood launched its own Ethereum layer-2 earlier this year and generated substantial early onchain activity.

Smaller chains must therefore compete for developers, users and transaction fees against networks backed by established platforms. Blast’s shutdown illustrates the challenge of maintaining a blockchain when revenue generated from activity is no longer enough to cover operating costs.

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