Consensys-founded Layer 2 unveils native ETH yield, burn mechanism ahead of LINEA token rollout

Linea, the Ethereum Layer 2 network founded by blockchain software technology company Consensys, has unveiled plans to introduce native yield on bridged ETH, a protocol-level ETH burn mechanism, a deflationary Ethereum-centric token design, and the formation of an Ethereum ecosystem fund, ahead of its highly anticipated LINEA token going live.

Designed to "establish the network as the home for ETH capital," ETH-native staking on bridged ETH is expected by October, with rewards reinvested into the Linea ecosystem, according to a statement shared with The Block. 

Some 20% of all Linea net transaction fees, paid in ETH, will also be burned, reducing the ETH supply and supporting Ethereum Layer 1 value accrual — becoming the first Layer 2 to commit to burning ETH at the protocol level, the team said. The remaining 80% of net transaction fees will be used to burn LINEA tokens, reducing the fixed supply and making the token deflationary in line with network activity.

Furthermore, 85% of the token supply will be allocated to the ecosystem, with 10% of which set aside for early users and 75% distributed gradually through an ecosystem fund. The remaining 15% of the LINEA supply will go to the Consensys treasury under a five-year lockup.

Ethereum-aligned consortium to manage the ecosystem fund

The ecosystem fund will be managed by the Linea Consortium, a group of leading Ethereum institutions including Consensys, Eigen Labs, ENS Labs, Status, and SharpLink, with more to be announced.

Ethereum co-founder and Consensys CEO Joseph Lubin is also the Chairman of SharpLink, an affiliate marketing and gaming software firm-turned Ethereum treasury company. The Nasdaq-listed firm, trading under the ticker SBET, currently holds about 438,017 ETH, worth $1.7 billion at current market prices, according to Arkham data. Consensys led a $425 million private placement for SharpLink in June.

"Institutions value platform stability and are always building for the long-term," SharpLink co-CEO Joseph Chalom said in the release. "Linea's commitment to Ethereum couldn't be more clear, and we think the platform's unique alignment with Ethereum will make it an important part of its future. We couldn't be more excited to join with fellow ecosystem stewards to advance the development of new programs that will make that happen."

The consortium will oversee the fund for at least ten years, launching on Ethereum's 10th anniversary on Wednesday to help support the next generation of applications and technology. Members will select, design, and manage programs that distribute resources to users, builders, liquidity providers, public goods, and research and development. The fund's goal is to ensure long-term, mission-aligned investment in Ethereum's growth and innovation.

"We are witnessing an architectural reset in global finance, where credibly neutral, decentralized, programmable infrastructure becomes table stakes for how value, identity, and coordination function across borders and institutions," Lubin added. "Ethereum is emerging as the trust foundation for this new economic architecture. Linea is the only Layer 2 with total Ethereum compatibility, and we wanted the economics to be as aligned and supportive as the technology. We're building for the long term, we’re creating infrastructure that institutions can trust and easily work with, and that the extended Ethereum community can own."

LINEA token launch

While a launch date for the LINEA token is yet to be announced, it is expected to go live soon. The forthcoming token is designed to mirror Ethereum's original distribution model while building on the core utility of ETH. With an ecosystem- and builder-focused allocation, the Linea token also aims to reinforce Ethereum alignment and "help set new standards for other projects," the team said.

"We've taken the time to listen to the community and design an approach that leans into our unique strengths and reflects Ethereum's core principles," Declan Fox, Head of Linea, said. "We wanted to serve as an example for the way Layer 2s are built and brought to market, and do it in a way that directly contributes to the strength and success of Ethereum and ETH."