Ethereum layer-2 network Blast is shutting down, a little over two years after its launch, as fading activity has left the blockchain unable to cover its operating costs. Once home to more than $2 billion in crypto assets, the network said it concluded that continuing operations no longer makes economic sense.

"Unfortunately, the economics of operating the chain no longer make sense," the project said Friday in an X post announcing the closure. "The ongoing costs of maintaining Blast exceed the revenue generated by the L2, and we do not see a credible path to making the chain economically sustainable."

Layer-2 networks like Blast are blockchains built on top of Ethereum to offer faster and cheaper transactions, typically earning revenue from the fees users pay to use them.

Activity on the network dried up after its speculative peak, with assets on the chain falling 98% from $2.2 billion in June 2024. The closure points to a consolidation underway across the blockchain industry as security costs rise and larger platforms such as Coinbase and Robinhood build networks of their own.

BLAST, the network's native token, fell 19% after the announcement, extending a steep decline since its debut. The token is now down about 98% from launch.

A Speculative Boom That Quickly Faded

Blast drew heavy interest from the start. Before the network even went live in 2024, users had deposited more than $1.1 billion, fueled in part by expectations of a token airdrop, CoinDesk reported at the time.

The chain's economics deteriorated quickly, however, as speculative capital moved elsewhere and on-chain activity faded. Total value locked peaked above $2 billion in June 2024 and has fallen to only $32 million, according to DeFiLlama. Revenue from network usage followed the same trajectory: Blast generated just $1,793 last month, down from a peak of about $3.5 million in June 2024, DeFiLlama data shows.

A Broader Shakeout Among Blockchains

Blast's demise points to a broader shakeout among blockchain networks. Running a chain means paying for development, infrastructure and security even after user activity dries up. A recent wave of crypto exploits has drawn additional attention to security spending, while AI tools may also make it easier for attackers to probe code for weaknesses.

Competition is getting tougher, too. Large consumer platforms with built-in distribution have launched their own Ethereum-based networks: crypto exchange Coinbase (COIN) rolled out Base and has turned its exchange users and developer ecosystem into a source of activity, while Robinhood (HOOD) launched its own Ethereum layer-2 network earlier this year, with massive early on-chain activity.

That leaves smaller chains fighting for developers, users and transaction fees in an increasingly crowded market. Blast's closure shows what may happen when the economics no longer add up.

Withdrawal Deadline

Users have until Oct. 26 to withdraw assets to Ethereum through Blast's interface, the team said in the X post, giving depositors just over three weeks to exit. After that, withdrawals will require interacting directly with the network's bridge contracts — a more technical process that means calling the contracts themselves rather than relying on a guided web interface.

Reporting by Krisztian Sandor and Aoyon Ashraf; originally published by CoinDesk.