Why is the XTech Deal Drawing Attention and Being Labeled as a Scam

The rising popularity of Blast, a layer 2 network built on Ethereum, has caught the attention of the crypto community. However, critics have dubbed the project a pyramid scheme.

Blast, created by Tieshun Roquerre, also known as Pacman, the mastermind behind the Blur NFT marketplace, offers users a native return model for Ethereum and stablecoins. It charges a 3.4% fee for Ethereum deposits and an 8% fee for stablecoin deposits. Critics argue that Blast operated as a pyramid scheme because users were initially unable to withdraw their funds.

Blast functions as a layer 2 network that handles staking for its users, providing native yield. It automatically links assets to the Ethereum mainnet, where they are staked and start earning interest. The return on user deposits is ensured by staking ETH in the Lido liquid staking protocol. For stablecoin deposits, income is generated through the MakerDAO DeFi protocol, with revenue accruing in the project’s stablecoin, USDB. Interest rates are cumulative and are applied to the balance over time, rather than the initial deposit. This model is based on the Risk-Free Rate (RFR) return structure.

Blast introduces two features called Blast Points and Blast Gold. Blast Points accumulate on their own but are also awarded for deposits, user invitations, and participation in the testing of projects on the Blast blockchain. Blast Gold is distributed to users based on the amount of funds they deposit, and it plays a significant role in the ecosystem’s financial projects. On June 26, the Points and Gold awarded to users were converted into BLAST tokens through an airdrop.

Blast offers two ways for users to earn points. Firstly, users receive spins that grant them a random number of points, typically ranging from 100 to 2,000. In rare cases, users can get a super spin that multiplies the number of points rolled by 2-9 times. Secondly, users receive a percentage of the points earned by the investors they invite. Traders who register with a referral link receive 16% of the points they earn, and an additional 8% for their referrals.

Blast has quickly surpassed many existing layer 2 protocols, attracting millions of user deposits within just four months. Since its launch in February, it has gained approximately 280,000 monthly active users and has surpassed other layer 2 solutions in terms of the number of bridge deposits. By the time the platform launched its token on the exchange, it had locked in over $2 billion worth of user assets.

However, Blast has faced accusations of fraud. During the airdrop campaign, 17 billion tokens were distributed, with 7 billion going to holders of Blast Points and another 7 billion going to users who interacted with decentralized applications using Blast Gold. Three billion coins were allocated to the Blur Foundation for distribution to the Blur NFT marketplace community. Some users accused Blast of being a scam and criticized Pacman, claiming that he is a serial scammer. Others pointed out the active distribution of phishing links across the network, which scammers used to deceive users.

Looking ahead, Blast developers plan to deploy their application infrastructure and crypto wallet on the Blast network, aiming to compete with MetaMask. They believe that existing layer 2 solutions are too focused on optimizing their networks and rely on third parties to create an ecosystem. Blast aims to fully optimize both its infrastructure and the range of apps it offers.

The developers state that the Blast phase one incentive system will target blockchain applications that already meet market demands, such as decentralized exchanges supporting derivatives or lending protocols. They believe that this profitability calculation system will attract even more users to the project. They point to the success of Blur, which quickly surpassed its rival OpenSea, as evidence of the effectiveness of the incentive system. The developers are determined to make Blast the leading layer 2 network.

Blast has captured the attention of a wide audience due to its innovative features and the opportunity it provides for additional income. As an innovative layer 2 solution for Ethereum, it has enormous potential for development. The ability to earn returns by staking funds has attracted many users and investors.