Linea Token economy unveiled: ETH native yields and dual burn, will the L2 landscape undergo a major change?

On July 29, the Ethereum L2 network Linea announced several plans and mentioned token distribution ahead of its Token Generation Event (TGE), attracting significant market attention. These include introducing native yields for Ethereum through bridging, launching a Burn Mechanism at the protocol layer for Ethereum, designing a deflationary Token centered around Ethereum, and establishing an Ethereum ecosystem fund. These initiatives aim to position Linea as the "ETH capital base" and achieve a direct connection between network usage and value growth through an innovative tokenomics model.

1. Core of Linea Tokenomics: Dual Burn Mechanism and Ethereum-Centric

Linea officially announced the LINEA tokenomics: a total supply of 72,009,990,000 (approximately 7.2 billion) tokens, which is equivalent to 1,000 times the initial circulating supply of ETH, and its distribution method echoes the genesis distribution method of Ethereum.

ETH as the only Gas token: The Linea network uses ETH to pay gas fees, which reinforces ETH's core position in the Linea ecosystem.

Dual Burn Mechanism: After deducting L1 costs, 20% of ETH Gas fees will be burned, thereby reducing the supply of ETH and enhancing its monetary premium. The remaining 80% of Gas fees will be used to repurchase and burn LINEA Tokens, achieving a direct connection between network usage and value growth.

No internal distribution and token governance: LINEA does not serve as a gas token and does not have governance functions. This is different from many L2 tokens, aiming to prevent excessive interference from token holders in protocol development and to concentrate governance power within the Linea alliance.

ETH Capital Base: The bridge for Ethereum's native staking feature is expected to launch in October, with staking rewards reinvested into the Linea ecosystem, further attracting ETH inflow.

2. Token Allocation Details: Ecosystem Fund Leads, Early Contributors Receive Airdrop

(Source: Linea)

Linea states that 85% of the token supply will be allocated to the ecosystem, with 10% reserved for early users and 75% distributed gradually through the ecosystem fund. The remaining 15% of LINEA tokens will be locked for five years and belong to the Consensys treasury.

The specific allocation is as follows:

Ecosystem Fund (75%): Managed by the Linea Alliance, which consists of leading Ethereum organizations such as Consensys, Eigen Labs, ENS Labs, Status, and SharpLink, with more institutions expected to join later. The Ecosystem Fund will operate as a non-profit entity, supporting liquidity, developer incentives, R&D, and public infrastructure in phases; about 25% of the funding allocation will be used to support the ecosystem's launch in the first 12-18 months, with the remaining 50% of funds gradually released over 10 years. This funding will be used to finance protocol development, shared infrastructure, open-source tools, and establish strategic partnerships with developers aligned with the goals.

Early Contributors (10%): Of which 9% is allocated for user airdrops, and 1% is for key ecosystem projects, all of which will support the financial protocol following the TGE deployment. Relevant qualification standards and checkers will be announced before the TGE, and the snapshot filtering has been completed and the witching process has been conducted. This airdrop does not involve CEX listings, InfoFi, or other dilutions, and the team and investors will not receive allocations.

Consensys Vault (15%): These tokens will be locked for five years and cannot be transferred until the full vesting period expires.

The expected circulation of TGE is about 22% of the total amount, approximately 1.58 billion LINEA, which is 1000 times the initial circulation of ETH. Although the issuance date of LINEA Token has not been announced, it is expected to go online soon. The upcoming Token will mimic the original distribution model of Ethereum while being built on the core utility of ETH.

Conclusion:

The tokenomics model announced by Linea showcases its ambitions in the Ethereum L2 space. By using ETH as the gas token, implementing a dual burn mechanism, and establishing an Ethereum ecosystem fund, Linea aims to create a capital hub centered around ETH. This strategy is expected to not only attract more users and developers but also inject new vitality into the long-term development of the Ethereum ecosystem.