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Good Morning,
Blast’s shutdown is the clearest verdict yet on the points-farming era, as a chain that once lured billions with native yield now concedes it cannot earn enough to cover its own running costs.
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In Today’s Email:
**What Matters:Paradigm-Backed Blast Winds Down 👀Product of the Week:Base Ships Cobalt for Regulated Assets 🔎Charts:**Bitcoin ETF Inflows Hold Firm, Drift Recovery Starts at 1% 📊
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WHAT MATTERS
**State of play: **Blast, the L2 that drew over $2B in deposits before it even launched, is shutting down after concluding that operating costs exceed revenue with no credible path to sustainability.
TVL has collapsed to about $32M, while the BLAST token fell 17% on Friday to a roughly $23M market cap.
Blast went live in November 2023 after a $20M round led by Paradigm and Standard Crypto.
The chain promised native yield on ETH and stablecoins, sourced from ETH staking and real-world asset protocols.
Withdrawals will pause for about a week while Blast unwinds its Lido assets, then resume with a 24-hour delay.
Users can exit through Blast’s interface until Oct. 26, after which they must interact directly with its bridge contracts on Ethereum.
Why it matters: Blast is one of the highest-profile L2 shutdowns yet, proving that incentive-driven deposits do not translate into the fee revenue needed to keep a chain running.
**Our take: **Blast was built to farm points rather than retain users, and the dozens of generic L2s that copied its playbook face the same math once incentives dry up.
For builders and investors: Treat pre-launch TVL as a marketing figure and judge L2s by whether fee revenue covers operating costs, since chains without that margin are now being closed rather than subsidized.
PRODUCT OF THE WEEK
Base’s third mainnet upgrade, Cobalt, pushes the Coinbase-incubated L2 further toward regulated finance, pairing conditional trading tools with issuer controls built for tokenized securities and compliance-heavy assets.
Validity Transactions stay dormant until set conditions, such as a target pool price before a given block, are met, and are never included otherwise.
Composite Policies let issuers combine existing KYC allowlists and sanctions blocklists with AND or OR logic, without offchain syncing.
Schedule Multiplier Updates align B20 with ERC-8056, letting issuers schedule balance display changes such as stock splits.
A new seizeWithMemo function lets authorized admins move balances out of frozen accounts, recording the source, destination, amount, and memo onchain.
Base plans to cut block times from 2s to 200ms and add native smart accounts with gas sponsorship and batching in the coming months.
**Other cool products: **
Sanctum𝕏launchesApp 2.0 for Solana staking.Avant Protocol𝕏launcheson Base via Morpho.Morpho𝕏launchesP2P Orders on Morpho Midnight.Ondo Perps𝕏launchesspot trading for Ondo Stocks.Robinhood𝕏launchesperpetual futures for US users.WOO X𝕏launchesdedicated MiCA-aligned EU platform.
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CHARTS OF THE WEEK
**State of play: **US spot bitcoin ETFs pulled in $2.65B in September, cooling from August’s $3.52B but still marking their second-best month since October 2025, a sign institutional demand is steadying rather than fading.
Spot ether ETFs drew $832M, less than half of August’s $1.85B but still their second-largest month since August 2025.
October opened with $102.7M flowing into bitcoin ETFs, while ether ETFs shed $55.4M.
Bitcoin rose 3.1% to $86,626 and ether gained 1% to $2,735 over 24 hours.
The Crypto Fear & Greed Index sits at 69, signaling greed without reaching extreme levels.
Traders are watching the Oct. 8 jobless claims report, inflation data, and Fed commentary for shifts in rate expectations.
**Our Take: **The real signal is the divergence, as institutions keep adding bitcoin while ether demand halves, suggesting this recovery is a BTC trade rather than a broad crypto rotation.
State of play: Six months after a $295.4M exploit attributed to North Korea, Velocity, formerly Drift, has opened recovery claims, but users redeeming today get back about one cent per dollar lost while $147.5M in pledged partner funds has yet to arrive.
Users receive one DFX per USDT lost and can redeem it, sell it on the secondary market, or hold it for future funding.
Redeeming burns DFX and forfeits future payouts, while holders benefit as later deposits are split among fewer tokens.
The pool holds 3.11M USDT in protocol assets, topped up by 60% to 90% of net revenue, which totaled just 31 USDT on day one.
Three attacker wallets still hold 107,165 ETH worth nearly $286M, after a fourth moved 23,094 ETH through Tornado Cash in July.
About $9.2M has been frozen, but it needs a law enforcement order before reaching the recovery pool.
Our take: Opening claims before Tether’s money lands turns recovery into a patience test, where desperate users sell at a cent and secondary buyers capture the upside if the pledges ever arrive.
QUICK BITES
Paradigm-backed Layer 2 Blastto wind down.Payments firm OpenPaydtargetsyear-end Nasdaq listing.Bank groupsuesUS regulator over granting crypto trust charters.Russia’s Finance Ministrypayswages in digital rubles for first time.Zcash’s 25-second blocksgo liveon public testnet ahead of schedule.OKX, ICE joint ventureseeksto launch tokenized US stock trading venue.Crypto job postingstriple to over 1,200in September, but applications fall.Driftopensexploit recovery claims with initial payouts of just over 1% of losses.
NOTEWORTHY READS & MEME
Paul Klay’s𝕏readon why crypto VCs are going bankrupt.Mark Ajzenstadt’s𝕏readon the slow death of the enterprise.Gabriel Shapiro’s𝕏readon he Only Two Places Issuers Will Natively Tokenize.
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