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Home»ADOPTION NEWS»Blast founder rejects Ponzi scheme criticism, says Paradigm suggests change in strategy
ADOPTION NEWS

Blast founder rejects Ponzi scheme criticism, says Paradigm suggests change in strategy

By Crypto FlexsNovember 24, 20234 Mins Read
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Blast founder rejects Ponzi scheme criticism, says Paradigm suggests change in strategy
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Blast founder Tieshun Roquerre, also known as Pacman, addressed some of the “misconceptions” circulating about the platform, including claims by critics likening Blast to a Ponzi scheme. He also said investor Paradigm asked him to change his go-to-market strategy after the reception.

Blast launched in invite-only early access mode on Tuesday after raising $20 million from Paradigm and Standard Crypto. Blast offers native Layer 2 yield generation on Ether and stablecoins with automatically compounded balances of 4-5% along with invitation rewards known as “Blast Points,” the team said at launch. The project has raised more than $400 million in linked assets to date, according to the Dune Analytics dashboard.

Roquerre acknowledged that the revenue Blast offers to users may feel “too good to be true,” but said Blast’s high revenue comes from legitimate platforms like Lido and MakerDAO. Lido’s returns are derived from Ethereum’s staking rewards, while MakerDAO’s returns are derived from on-chain T-Bills, he said.

“These rates of return are unsustainable – they are a core component of the on-chain and off-chain economy,” Roquerre continued. “The reason the yield feels so good on Blast is because they make this yield the default for everyone . . . giving users a yield that has been hidden in plain sight. In effect, they democratize higher yields. “

Roquerre also addressed Blast’s comments about invitation rewards. He argued that it is not a marketing strategy for growth, but rather a strategic move to foster community growth that recognizes users’ contributions through expanding the ecosystem. This is something worth getting rewarded for. Critics have likened Blast’s compensation structure to being similar to a pyramid scheme.

The founder also wanted to respond to the meme that Paradigm was the actual entity behind the project’s launch, saying the cryptocurrency investment firm was “completely uninvolved” in Blast’s go-to-market strategy. “Honestly, if they had been involved, they would have asked me to make a lot of changes to the launch of Blast,” he said. Blast added that it had contacted Paradigm about the study but not its internal go-to-market plans.

He said Paradigm has asked him to change the post-launch plans he is considering, but the Blast team will make the final decision.

Blast’s multi-signature security

In a separate post today, Blast attempted to open up its multi-signature security in response to criticism that it is controlled by just five people.

Blast, like other layer 2 solutions like Arbitrum, Optimism, and Polygon, leverages a subtle multi-signature security model to ensure the integrity of its platform, which he said is “very effective” if the project is done correctly. Recognizing that security exists on a spectrum with different dimensions and attack vectors, Blast said that while immutable smart contracts may seem more secure, there may still be bugs that cannot be detected despite audits. Upgradable smart contracts also have risks, Blast added. This is especially true for token-based upgrades and time locks, which can be exploited by malicious actors.

To counter these issues, Blast said it uses multi-signatures, where each signing key is held in cold storage managed by an independent, geographically distributed entity. The signatories are “deep technical engineers with experience in high-risk apps, from financial applications to smart contracts,” he added.

To “take security to the next level,” Blast said it plans to diversify its hardware wallet providers to mitigate risks from potential hardware compromises and “ensure that no single hardware wallet type is used three to five times.”

Disclaimer: Larry Cermak, CEO of The Block, is an angel investor in Blast.


Disclaimer: The Block is an independent media outlet delivering news, research and data. As of November 2023, Foresight Ventures is a majority investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, impactful and timely information about the cryptocurrency industry. Below are our current financial disclosures.

© 2023 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.

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