That's the thing. [ycard="PSV-EN101"]Gearfried the Iron Knight[/ycard]'s effect can't activate in the first four portions of the Damage Step. So the next sub-step (which is 5) is where card effects that do not activate when a monster is sent to the Graveyard are activated and resolved now. This would include [ycard="PSV-EN101"]Gearfried the Iron Knight[/ycard]s' effect. Then after it activates and resolves, [ycard="SD5-EN036"]Blast with Chain[/ycard] then activates and resolves. Then you move to the last and final sub-step in the Damage Step. Which is where monsters that are considered to be destroyed are sent to their owner's respective Graveyards.