The Web3 protocol explosion reached $823M TVL despite bugs and controversy

Weeks after the controversial Web3 protocol explosion in mid-November, total value locked (TVL) reached $823 million, a 26.5% gain over the past seven days, according to data from Defilama.

Behind its explosive growth is its unique business model. The protocol is a balancing solution for the Ethereum network and provides native products for users to leverage their funds. Users are promised 4% yield on Ether (ETH) and 5% yield on stablecoins.

However, the rollout of the protocol was marked by challenges and unpopular developments. On November 30, Blast revealed that a $100,000 deposit from a user on the protocol was lost after it was converted to DAI. The problem was caused by a faulty slip measurement on the user interface, resulting in Blast paying the user $10,000 in damages.

The 10% compensation will be covered by Blast's $20 million in capital raised from investors like Paradigm — the same venture capital firm that lost $278 million on the bankrupt crypto exchange FTX. But Blast's relationship with Paradigm has its challenges.

In late November, venture capital (VC) firm Dan Robinson, head of research, shared a statement expressing disapproval of Blast's strategy of launching a bridge before the Layer-2 network goes live. Blast expects to release a testnet and developer airdrop in January, with the mainnet expected to be available in February.

“We think it sets a bad example for other projects,” says Robinson at X (formerly Twitter), saying that most marketing strategies are undercutting the work of a hard-working team.

Blast and Paradigm have been working together to resolve the issues, but the VC firm's role in the startup's decision-making remains unclear, as does Blast's management structure and technical documentation.

Another interesting discussion around the protocol is the lack of extraction functionality. Users depositing on Blast believe that the team will add a timed withdrawal feature in the coming months.

Despite the challenges, Blast has attracted more than 75,000 members in just a few weeks, and has hired top engineers for the jobs it currently does.

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