Overview
Orbit Protocol launched on Blast in early 2024 as one of the chain's first lending protocols. Blast differentiated itself from other L2s by offering native yield on ETH (~4% from staking) and stablecoins (~5% from T-bills) — assets bridged to Blast automatically earn yield. Orbit built on top of this by creating lending markets where the native yield passes through to lenders, who additionally earn borrowing interest.
This creates an attractive proposition: depositing ETH on Orbit earns Blast's native ~4% staking yield plus lending APY from borrowers, potentially exceeding 5-8% total. Borrowers also benefit from Blast's native yield on their borrowed stablecoins. The dual-yield model drove rapid TVL growth during Blast's launch period.
Orbit supports ETH, USDB (Blast's native stablecoin), WETH, and various Blast ecosystem tokens. The protocol was one of the largest recipients of Blast developer airdrops, reflecting its importance to the ecosystem.
Smart Contracts
Orbit's contracts implement lending pool mechanics adapted for Blast's native yield feature. The key technical challenge is properly accounting for auto-rebasing assets — ETH and USDB on Blast automatically accrue yield, and the lending contract must correctly track this yield alongside interest from borrowing. This adds complexity beyond standard lending protocols. The contracts handle supply/borrow accounting, liquidation, and integration with Blast's rebasing token standards. As a relatively new protocol on a new chain, the contracts have limited battle-testing compared to Ethereum mainnet lending protocols.
Security
Orbit has been audited, though the audit history is less extensive than established protocols. The rebasing token integration is a novel attack surface that standard lending audits may not fully cover — improper handling of auto-rebasing assets could lead to accounting errors, allowing users to withdraw more than deposited or creating bad debt scenarios. No major exploits have occurred. Blast's chain-level security is its own concern — the L2 launched with a multisig-controlled bridge and limited decentralization, introducing trust assumptions that affect all Blast DeFi protocols.
Risk Management
Risk management must account for the additional complexity of Blast's native yield and rebasing assets. Standard lending parameters (collateral factors, liquidation thresholds) are implemented. The risk of bad debt is elevated during market stress if liquidation infrastructure on Blast is insufficient — Blast has fewer liquidation bots and less competitive liquidation markets than Ethereum. The USDB stablecoin's reliance on T-bill backing introduces its own risk profile distinct from standard stablecoins. Risk management appears adequate for normal conditions but relatively untested under severe market stress.
Adoption
Orbit has attracted meaningful TVL on Blast — hundreds of millions at peak, though TVL fluctuates with Blast incentive cycles. The protocol was one of the leading DeFi applications during Blast's initial growth phase. User adoption has been driven primarily by the dual-yield opportunity and Blast airdrop farming. The key concern is how much adoption is organic vs. incentive-driven. Post-Blast airdrop, TVL and user activity may decline significantly if the yield premium narrows. Integration with the Blast DeFi ecosystem (Thruster, SynFutures, etc.) provides some composability benefits.
Tokenomics
Orbit's token provides governance and staking utility. The protocol received Blast developer airdrops which it distributed to users, creating additional incentive layers. Revenue comes from standard lending interest spreads plus any protocol fee on the native yield passthrough. The tokenomics face the typical challenge of small-chain lending protocols — limited fundamental revenue to justify token valuations, with much of the speculative interest tied to Blast ecosystem momentum. Sustainability of the token's value depends on sustained protocol usage and revenue generation.
Risk Factors
- Blast Chain Risk: Heavy dependence on Blast L2, which has centralization concerns (multisig bridge, single sequencer) and uncertain long-term viability.
- Native Yield Complexity: Rebasing token accounting adds novel attack surfaces not present in standard lending protocols.
- Incentive Dependency: Significant TVL may be Blast airdrop-driven rather than organic lending demand.
- USDB Risk: Blast's native stablecoin depends on off-chain T-bill backing with trust assumptions.
- Liquidation Infrastructure: Thin liquidation bot ecosystem on Blast could lead to bad debt during rapid price movements.
- Post-Incentive Cliff: When Blast incentives end or decline, TVL and usage may drop significantly.
- Competition: If Aave deploys on Blast, Orbit's market share would face serious pressure.
Conclusion
Orbit Protocol is an interesting case study in chain-specific DeFi design — it leverages Blast's unique native yield feature to offer compelling dual-yield lending that isn't possible on other L2s. The product-market fit within the Blast ecosystem is real. However, the protocol's fate is inextricably tied to Blast's success, and Blast faces its own significant questions around decentralization, sustainable adoption, and long-term viability. The native yield complexity adds smart contract risk that standard lending audits may not fully capture. For Blast-committed users, Orbit provides a useful service. For the broader market, it represents a concentrated bet on a specific L2's future, with all the risk that entails.