Original author: Kaori, BlockBeats
Original editor: Jack, BlockBeats
L2s, who were once regarded as treasures by crypto VCs, are being backfired by their own PUA behavior.
Since Blur founder Pacman launched his new L2 project Blast this week, L2, a track that has been far behind the Bitcoin ecological bull market, has once again received great attention from the market. Only this time, no one is the winner.
As Blasts TVL exceeded the 10 million US dollar mark in just one day, people began to reflect on the past industry unspoken rules of the L2 track. The L2 technology aristocrats who refuse or are reluctant to return airdrops to the army of hair-pullers seem to be facing an unprecedented dilemma in the face of absolute market trends.
L2 They are very anxious
Blur founder Pacmans new L2 project Blast has earned a lot of attention these days through social fission and airdrop expectations.
Blast claims that the existing base interest rate for Layer 2 is 0%. By default, the value of users assets will depreciate over time, while on Blast, users balances will automatically compound interest and earn additional Blast rewards.
When a user deposits funds into Blast, Blast will then use the corresponding ETH locked on the Layer 1 network for native pledge of the network, and automatically return the obtained ETH pledge income to the users on Blast. In addition, Blast also supports passive interest generation of stablecoins.
For users, in addition to the passive income earned from staking, Blast also introduces a points system similar to the gameplay of Blur. Regarding the current description of points, the official only revealed that Blast plans to launch the mainnet and develop withdrawals on February 24 next year, and open the redemption of Blast Points on May 24.
On November 22, Blast stated on its social platform that its TVL reached US$81.2656 million on the first day of launch, and the number of users reached 23,368. As of the time of writing, Blasts TVL has reached US$260 million, and nearly 40,000 addresses have transferred funds to the network.
Comparing the TVL growth rate of L2 in the past, this field has never seen a growth curve like Blast. In contrast, the current mainstream L2 leaders have almost nothing to gain from this wave of growth. As of writing, according to L2 BEAT data, Ethereum L2 TVLs 7-day settlement increase of ETH is only 2.82%.
The left picture is from Dune Analytics; the right picture is from L2 BEATS
The rapid rise of Blast TVL has brought visible anxiety to some L2 nobles. Steven Goldfeder, CEO of OffChain Labs, Arbitrum’s parent company, bluntly stated in a tweet this morning that Blast is a “monster.”
Playing PUA will also cause backlash
Since the L2 bull market brought about by Arbitrums generous donation at the beginning of the year, market expectations for the L2 track have become increasingly high. But as the encryption market enters the deep bear market, the game and competition between L2 projects and retail investors, as well as with each other, has become increasingly fierce.
In this context, PUA has become the default unspoken rule for players on the track. Whether it is mutual involvement on RaaS or repeated delays in airdrop distribution, it is a symptom of this problem.
The emergence of Blast as a spoiler in the L2 war is reminiscent of Pacmans other project Blur and its devastating blow to the NFT track. Of course, there is also the BRC-20 inscription market known as the Victory of Retail Investors.
Lessons from Opensea and BRC-20
Blur came out on October 19, 2022. On November 27 of the same year, Blur surpassed Openseas trading volume of 5,300 ETH with a trading volume of 5,500 ETH. As of November 2023, Blur has become the leader in the NFT market, accounting for 61.7% of the market with sales of US$43.17 million.
NFT market trading volume; Source: Dune
Looking back at the confrontation between Blur and OpenSea in the NFT market, OpenSeas wavering stance on airdrops may be the main reason for its defeat.
In the test network stage, Blur attracted a large number of fans in a short period of time by recommending a waiting list. Users need to invite 5 people to participate before they can gain access. After the project is officially launched, Blur plans to conduct three airdrops for different types of users. And the scale of each airdrop will be larger than the last one, whetting the appetite of users.
When traffic starts to lose to Blur, OpenSea turns on passive defense. On February 18, OpenSea announced that transaction fees would be reduced to 0 for a limited time and optional royalty services would be enabled. OpenSea admitted that since October last year, effective transaction volume and users have shifted to an NFT market that does not fully implement creator income. Despite our best efforts, this shift is still accelerating sharply.
On November 4, OpenSea laid off about 50% of its employees. A spokesperson said that OpenSea is undergoing major organizational and operational changes and is focused on building a more flexible and better version. In this regard, OpenSea co-founder and CEO Devin Finzer said: Sometimes, OpenSea feels like a follower rather than a leader, which is not what we want to do.
The most important reason for the current situation is that OpenSea does not have airdrop incentives and does not return the fees contributed by users to users in a way that is popular in the cryptocurrency world. Therefore, user dissatisfaction has been rising. Blur is also taking advantage of users profit-seeking mentality to squeeze out the market leader OpenSeas share through points and airdrop expectations.
Going back to the recent past, under the bustling Bitcoin ecosystem, Ethereum and the L2s seemed a little overwhelmed.
The Ordinals protocol enables the issuance of ERC-20 on the Bitcoin network to be achieved on the Ethereum network. The emergence of BRC-20 allows retail hot money, which has been silent for a long time in the bear market in 2023, to find its own narrative. At the same time, it also makes Bitcoin The transaction volume and fees have increased significantly, benefiting many parties.
According to The Block’s data dashboard, Bitcoin’s seven-day average transaction fees have surpassed Ethereum’s. The average transaction fee of Bitcoin has also been rising, rising from US$8.59 on November 12 to US$12.75 on November 19, an increase of more than 48%.
7-day average fees for Bitcoin and Ethereum; Source: The Block
Although the Bitcoin network does not have mature ERC 20 standards and smart contract protocols like Ethereum, nor does it have native on-chain asset operation protocols such as AMM protocols and aggregation protocols. Even Bitcoin is not Turing complete, but ordi, eths, sats, etc. The star inscriptions waiting for the birth of this Bitcoin bull market have allowed retail investors to make real money.
If you still hold on to the past thinking and stick to assets such as Ethereum or L2, you will most likely miss this bull market. As this sentence says, the technology + VC model of Ethereum and L2 can no longer satisfy the market. There are a large number of ordinary users who want to obtain wealth effects.
The game between technology and airdrops, L2 is being counterattacked by PUA
Airdrop was originally a strategy used by Uniswap to deal with the vampire attack of SushiSwap. It eventually became the biggest shortcut for ordinary people in the encryption field to obtain wealth effects, but now this road is not easy to follow.
On August 9, Scroll, the Ethereum Layer 2 solution, issued a statement stating that there will be no token airdrop activities. The announcement also made many people who were looking forward to the old L2 airdrop shed bitter tears. After all, they are still suffering. Waiting for the airdrop of ZkSync Era and other L2 projects.
However, under this wealth creation effect, projects that issue coins and earn handling fees are the biggest winners in this hair-raising game. For example, earning handling fees and bridge fees collected when cross-chain make the project party make a lot of money. Whether to issue airdrops or not to provide financial incentives to the Lu Mao Party is not their primary consideration.
What they are thinking about is how advanced technology can empower Ethereum, or how to harvest the first wave of users through the “PUA” hairdressing studio.
On November 14, Vitalik Buterin brought the previously abandoned expansion solution Plasma back into the public eye at a speech in Istanbul. In the past, Ethereum’s Layer 2 expansion included Plasma, Rollup, Validium, Parallel and other solutions. However, at present, Optimistic Rollup occupies the main market of Layer 2. The representative project of Optimistic Rollup, Arbitrum TVL, accounts for 60.05% of the Layer 2 market. Optimism Accounting for 22.02% of the Layer 2 market.
L2 TVL share; Source: DeFiLlama
Rollups dominant market share has not stagnated the L2 landscape. On the contrary, many L2 solutions have gained popularity through technological innovation to seize market share.
In October 2022, Optimism introduced the OP Stack, which is a highly scalable, highly interoperable modular open source blueprint of various types. As a set of standardized open source modules, developers can assemble a customized chain through OP Stack to serve any specific blockchain use case.
After nearly half a year of research and development, zkSync also immediately announced the launch of ZK Stack, a modular open source framework for building customized zkRollups, giving developers complete autonomy, from selecting the data availability mode to using the projects own Token decentralized sorter.
Due to the large number of star projects, fierce competition on the L2 track has become a well-known fact in the entire encryption industry. In addition to OP Stack and ZK Stack launched by Optimism and zkSync, competition between the OP Rollup camp and ZK Rollup camp in the RaaS field also includes Orbit launched by Arbitrum and Appchain launched by Starknet. In the field of zkEVM, the tense relationship between the two domestic light projects Scroll and Taiko has also become an open secret in the industry.
However, a number of L2 projects seem to have realized that technology has been involved until now, and they are being attacked by Blast. As the person in charge of the L2 leading project, Steven Goldfeder’s anxious speech is evident:
“By keeping our friends and some of the most trusted brands silent when promoting single-node chains as Ethereum Layer 2 platforms, we have created a trend that is now even bigger. It’s not too late to fix it, but it’s There needs to be a very open and honest community conversation about what Layer 2 is and which chains are actually secured by Ethereum.”
iPhone or bad blood?
The L2 Blast launched by the founder of Blur has undoubtedly escalated this L2 war to a fierce stage, but the Ethereum L2 data analyst L2 BEAT did not include Blast in the Active projects column. The reason is that although Blast claims to be LaunchBridge, it is not Rollup Bridge, is just a simple escrow contract protected by 3/5 multi-signature and contains all relevant EOA.
For an L2 item to be listed on the L2 BEAT page, the system needs to publish the L2 data (tx data or status difference) and the L2 status root to L1. In addition, the L2 state root must be accompanied by a proof of validity, or there must be a fraud proof mechanism, but according to L2 BEAT, such functionality is not yet available in Blast.
Mindao, the founder of dForce, also has doubts about whether there is really technological innovation behind Blast. He believes that Blas completely decomposes the L2 narrative and downgrades it from infrastructure to JPEG/APP. Technology OG despises that those who use Blast have zero requirements for security, decentralization, etc. But are users pursuit of technology really that high?
Apparently Blast’s staking data provides the answer. Lido DeFi Development Manager@MacroMate 8 In a tweet, he said that Blast added 91,000 stETH to Lido last night. At this rate, Blast will push Lido to more than 33%.
He also mentioned that the competition in L2 was not that fierce a year ago, but now with Blast, the situation has become different. It’s clear that in order to compete, L2 projects need to offer returns on top of the risk-free staking rate, not just airdrops. He even predicted that within one to two years, most L2 will lock ETH in their bridge contracts and may even use these ETH for liquidity mining.
In the new L2 competition, can Blast create the iPhone moment in the L2 field as expected, or will it become the bad blood of Theranos in Silicon Valley?