Blast Founder Denies Ponzi Allegations

Amid growing criticism from the crypto community, the founder of the newly launched layer-2 project, Blast, has spoken out to defend the project.

As reported by Coin68, one of the most talked-about projects in the crypto market last week was Blast, a layer-2 solution on Ethereum promising high interest rates for ETH and stablecoin deposits. Within just four days of its launch, Blast attracted over $440 million in deposits from nearly 53,000 users.

However, many investors have accused Blast of operating as a ponzi scheme after reviewing the project's information. They pointed out that Blast lacks a testnet or mainnet and only uses a multisig wallet to hold funds, without disclosing the identities of the five wallet managers. Additionally, investors’ funds are locked until the mainnet launch in February 2024.

The pyramid-like referral reward program of Blast has also led many to mock the project for not even attempting to hide its ponzi nature.

In response to these criticisms, both the official X (Twitter) account of Blast and its founder, Pacman, issued statements early on 25/11 to reassure the community.

Pacman acknowledged seeing many claims labeling Blast as a ponzi and asserting that the interest rates offered are unsustainable. He clarified that Blast generates its interest by deploying users' funds to earn yields on DeFi protocols like Lido and MakerDAO, asserting that the interest rates are legitimate.

Pacman also refuted claims that investment firm Paradigm is directly involved in launching Blast. He revealed that if Paradigm had intervened, many aspects of Blast would have had to change significantly. While admitting to seeking technical advice from Paradigm, he emphasized that all decisions are made solely by the Blast development team.

Regarding the referral reward program, Pacman stated that it is essential to attract a stable user base to support the economy being built on this layer-2 network. He argued that users inviting friends to join Blast are aiding the project and therefore deserve appropriate rewards.

Blast's post addressed the decision to use a multisig wallet to store user deposits. The project claimed this design has proven its safety and security, being used by similar projects like Optimism, Arbitrum, and Polygon.

The smart contract of this multisig wallet is upgradable, allowing the project to respond to unexpected issues.

Blast also stated that the holders of the five keys required to unlock the multisig wallet are experienced professionals in the crypto industry, though their identities remain undisclosed. The project has implemented measures to minimize the risk of key exposure, such as using cold storage, geographical separation, and ensuring no more than 3 out of 5 keys use the same cold wallet provider to prevent common vulnerabilities.