- Linea’s new token fell 49% in value soon after launch.
- Over nine billion tokens were distributed through an airdrop to early users.
- The project plans to buy back and burn tokens using 80% of its surplus fees.
- Linea will not give governance rights to token holders, instead focusing on rewarding active users.
- The project was created by ConsenSys, managed by MetaMask‘s parent company and Ethereum co-founder Joe Lubin.
Linea released a new token on Wednesday by sending over nine billion tokens to early users in an airdrop. The token’s value dropped by 49% shortly after the launch, according to CoinGecko, with its market capitalization falling to $358 million.
Many recipients quickly sold their tokens after the distribution, adding downward pressure to the price. The project announced it will use 80% of blockchain surplus fees to buy back and burn Linea tokens, aiming to reduce supply and support long-term value.
“We are building for the long term, always Ethereum aligned,” said Declan Fox, product lead of Linea, in a statement. The team described the airdrop as part of their plan for sustainable growth. The remaining 20% of surplus fees will go to burning Ether, the main token of the Ethereum network.
The launch takes place amid low interest in new Ethereum Layer 2 tokens, which are designed to make transactions faster and cheaper. Similar tokens from networks like ZKsync, Scroll, and Manta have also faced declines after launch. For example, Arbitrum, another major Layer 2, has seen its token drop 61% since hitting an all-time high in January 2024.
Linea is using a different approach from rivals. Its token holders will not receive voting rights, but instead, tokens will be used as rewards for those who interact with apps and protocols on the network.
This strategy hopes to create a positive cycle where user activity drives token value. However, this depends on the token price remaining high enough to make participation worthwhile for users.
It is common for new tokens to experience sharp declines after launch. Other recent examples include pump.fun, whose token fell more than 64%, and Zora, whose token dropped 75% before later rebounding.
Linea has support from several influential crypto industry figures. The blockchain was created by Consensys, the company behind the popular MetaMask wallet. The firm is led by Ethereum co-founder Joe Lubin, who is also involved in Sharplink Gaming, a large Ethereum treasury company.
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