Blast to Shut Down as Network Costs Outpace Layer 2 Revenue

Blast has announced plans to shut down its Layer 2 network, giving users until Oct. 26, 2026, to withdraw through its normal interface.

Blast, in an Oct. 2 announcement on X, asked users to move their assets to Ethereum mainnet, including any balances held in the Blast PWA. According to the team’s notice, withdrawals through the usual interface will remain available until Oct. 26, after a temporary suspension needed to process its Lido holdings.

For users who miss the interface deadline, the announcement says assets will remain accessible through direct interaction with Blast’s bridge contracts on Ethereum Layer 1. The team said it would publish instructions for that process before the deadline.

Blast withdrawals will pause before the delay falls to 24 hours

Under the shutdown plan, the team will first begin withdrawing the Lido assets held by Blast, a process it expects to take approximately one week. During that period, the announcement says user withdrawals will be temporarily unavailable.

Alongside that process, the team plans to reduce the withdrawal delay to 24 hours. According to the notice, however, implementing the shorter delay will not make withdrawals available while the Lido withdrawal process is still underway.

Once that process finishes, the team says withdrawals will resume with the new 24-hour waiting period. Its request covers both assets held on the network and balances in the Blast PWA, with Ethereum mainnet named as the destination.

The announcement distinguishes the deadline for using the normal interface from the ability to recover assets afterward. Under the team’s stated arrangements, Oct. 26 ends the ordinary interface route, while subsequent withdrawals will require users to interact with the Ethereum bridge contracts directly.

In the same notice, the team strongly encouraged users to complete their withdrawals before Oct. 26 and committed to publishing detailed contract withdrawal instructions before then.

Operating costs have overtaken Blast’s revenue

Explaining its decision, the team said Blast had been launched with the intention of building a chain that could support itself financially while serving users and developers. According to the announcement, the ongoing expense of maintaining the network now exceeds the revenue generated by its Layer 2 operations.

The team said it could see “no credible path” to making the chain economically sustainable.

“As a result, we’ve made the difficult decision to wind Blast down.”

Addressing users and developers who had built on or supported the network, the announcement said the team’s priority was to make the shutdown process as smooth and safe as possible.

Earlier reporting described Blast as a network built by Blur founder Pacman and backed by Paradigm. In May 2025, crypto.news reported that Blast had ended its Safe integration, citing concerns about third-party risk and usability as it prepared its own multisignature wallet solution.

At the time, the team said users who had accessed their multisignature wallets through Safe’s interface could use BrahmaFi’s hosted interface or host their own. In that earlier announcement, Blast also described plans to build multisignature functionality directly into Blast Mobile to provide wallet access within its platform.

U.S. holders face separate tax rules for transfers and exchanges

For American holders moving assets between accounts they own, the Internal Revenue Service states that transferring digital assets between a taxpayer’s own wallets, addresses, or accounts is generally a non-taxable event. The agency identifies an exception for digital assets used, or withheld, to pay for the services that carry out the transfer.

In its guidance on payments for services, the IRS says spending digital assets constitutes a disposal and can generate a capital gain or loss. According to the agency, that treatment applies regardless of whether the payment also qualifies as a digital asset transaction cost.

For transactions involving an exchange rather than a transfer of the same assets between owned accounts, the IRS says exchanging digital assets for other property, including assets that differ materially in kind or extent, can generate a capital gain or loss. The agency’s guidance treats those exchanges separately from transfers between a taxpayer’s own wallets.

Blast projects previously reported departures and revenue pressure

Within the Blast ecosystem, Fantasy Top announced its own closure earlier this year. A May 21 report covered the Fantasy Top shutdown, with the trading card game’s team saying it would refund every pre-seed and seed investor dollar for dollar.

According to that report, Fantasy Top said it had funded operations itself for two and a half years without using investor money. The team also reported returning about $20 million to its community through ETH, BLAST, and rewards distributed to players and participating personalities.

Describing the project’s revenue history, the Fantasy Top team said approximately 70% of lifetime revenue arrived during its first month on mainnet. The report also cited DeFiLlama figures showing a $4.25 million seed round backed by Dragonfly Capital and Manifold, alongside $7.05 million in cumulative fees on Blast.

An earlier departure involved Pacmoon, then described as Blast’s largest meme coin by market capitalization. An August 2024 report detailed Pacmoon’s move to Solana, following complaints from team member Lamboland about a lack of support for native tokens and their communities on Blast.

Under the migration plan reported at the time, Pacmoon would adopt the ARMY name on Solana. Its team instructed existing holders to burn PAC tokens before an Aug. 14 deadline to qualify for the ARMY airdrop.