Author: KarenZ, Foresight News
This article was first published on July 29
Original title: (Can Etherex be the first shot before Linea issues tokens?)
With Linea announcing LINEA token economics and governance details at the end of July, its DEX Nile also welcomes an important upgrade.
The Linea mainnet has always lacked a trading layer that can carry full-chain liquidity while returning value to the community. The upgraded version of NILE — Etherex — aims to fill the gaps in the Linea ecosystem regarding exit mechanisms, efficient liquidity aggregation, and incentive mechanism design.
Etherex adopts a brand new x(3,3) model, which is more flexible than ve(3,3) and removes the locking requirement, ensuring that the protocol's value flows to the most active participants through dynamic incentives and exit penalty mechanisms.
This article will analyze the core mechanisms of Etherex, its token economics, and its innovations.
From Nile to Etherex
Etherex is a decentralized exchange launched in cooperation with Linea, ConsenSys, and NILE, officially going live on July 29, 2025. Partners include Astera, Foxy, eFrogs, MYX, MetaMask, Alchemix, Frax, Zerolend, and Turtle.
According to the Etherex team, as early as 2014, before the Ethereum mainnet was launched, Ethereum builders like Vitalik Buterin and Joseph Lubin harbored a vision of a decentralized exchange, hoping to create a truly trustless and secure decentralized trading platform that allows users to trade freely on-chain without relying on centralized entities. EtherEX was born out of this vision; although this concept was not realized later, today's Etherex pays tribute to this early vision and innovates on that basis. In Etherex's view, Etherex is not a DEX that simply repackages old ideas, but the 'ultimate delivery' of the EtherEX vision from 2014.
From a practical perspective, Etherex is an upgraded version of Nile on Linea. As the native liquidity hub of Linea, Etherex fulfills three core functions: targeted incentive distribution, LINEA token liquidity support, and guiding valuable token minting to trading pools beneficial for the overall ecosystem's health.
What is Etherex?
The core of Etherex lies in its innovative x(3,3) model, which is an evolution of the traditional metaDEX model, addressing previous challenges in aligning incentive mechanisms.
Traditional metaDEX has validated the possibility of large-scale applications and sustainable profits but has always relied on 'mandatory locking' and other artificial restrictions to maintain user participation — users must lock tokens for years to participate fairly in the ecosystem, forming a participation model driven by 'obligation' rather than 'value'.
The x(3,3) model changes this logic: it does not rely on mandatory locking but instead uses organic incentives to encourage users to actively stay in the ecosystem — the system rewards active participants and naturally concentrates value in the hands of the most contributing users. Users can participate without locking, and the design of the exit mechanism ensures that only participants who truly recognize the protocol's value will remain, forming a self-selecting active community.
How does Etherex operate?
As mentioned earlier, Etherex's breakthrough lies in transforming 'mandatory participation' into 'active retention and contribution', with the core goal of providing native deep liquidity for Linea, optimizing incentives, and achieving a seamless user experience.
How does the tri-token system achieve incentive alignment?
Before exploring Etherex's operating mechanism, it is necessary to understand Etherex's tri-token system.
Etherex employs an innovative tri-token system, designed to achieve precise alignment of incentive mechanisms while maintaining flexibility. Although specific details have not been fully disclosed, the core logic is already clear:
xREX: Governance token, active stakers of xREX have voting rights to determine the minting distribution of liquidity pools, while also receiving 100% of transaction fees, Exit Rebase rewards, and additional rewards provided by the protocol.
REX33: A liquidity staking token for xREX, with automatic voting and yield compounding functions. It addresses the liquidity challenge of governance tokens; the initial ratio of REX33:xREX is 1:1, and with the accumulation of rewards such as transaction fees, voting incentives, and Rebase, the ratio will increase in favor of REX33. Additionally, Etherex will ensure that REX33 does not fall below the redemption floor price of xREX through arbitrage mechanisms, providing users with a low-friction participation method.
REX: The protocol's base token, distributed to liquidity pools through minting, is the core tool for incentivizing liquidity providers. The amount of minting is determined by xREX holders' votes to ensure resources flow to the most valuable liquidity pools.
The operating mechanism of Etherex
1. Positive cycle of exit mechanisms
Users can exit xREX in two ways: one is direct redemption (Exit Rebase), which incurs a 50% penalty, with the penalty tokens distributed entirely to existing xREX holders; the other is trading on the open market through REX33 (the liquidity staking version of xREX). This solves the token dilution issue while incentivizing long-term user participation, forming an ecosystem of 'survival of the fittest'.
2. Weekly Epoch: xREX holders vote to determine which liquidity pools will receive the next week's REX minting distribution
Every Thursday at 08:00, xREX holders vote to determine which liquidity pools will receive the next week's REX minting distribution. Voting weight depends on the amount of xREX held and participation level; the higher the votes, the more emission the pool receives.
3. Dynamic fees and profit distribution
Etherex automatically adjusts transaction fees (0.05%-5%) based on market volatility and trading volume, and allocates 100% of protocol fees to xREX holders. Trading pairs generate fees, attracting more votes and token releases, thereby bringing deeper liquidity, driving higher trading volumes and fees, forming a positive feedback loop.
4. Concentrated liquidity (CL) optimization
LP can customize the price range to provide liquidity and maximize capital efficiency.
Through competitive mining (Competitive Farming), incentivize LPs to optimize liquidity ranges and improve trade execution quality.
5. MEV protection and value return
Built-in MEV capture module (such as REX33 AMO), distributing arbitrage profits to voters.
Etherex Token Economics
Etherex will launch the token REX on August 6. The initial total supply of REX is 350 million tokens, with a maximum supply cap of 1 billion tokens. The specific allocation is as follows:
25% allocated to Linea/Consensys (80% xREX, 20% REX. Existing veNILE holders can migrate to xREX, but must meet: a minimum of 100 veNILE, 4-year lock period. Snapshot time: July 26, 11:59 AM Beijing time).
25% allocated to veNILE migrants (100% xREX).
25% allocated to the protocol treasury.
15% for LP treasury support.
5% for centralized exchanges and market makers.
5% allocated to ecosystem partners.
Apart from the tokens allocated to LP treasury support and CEX listing/market makers being REX, most token distribution forms are xREX.
As mentioned earlier, xREX holders vote to decide which liquidity pools will receive the next week's REX minting distribution. Below is the approximate value of Etherex's weekly emission (white curve in the chart) compared to the total supply of the previous 500 epochs (yellow curve in the chart). During Epoch 0, 3.5 million tokens were released. From Epochs 1 to 4, each epoch first increased by 20%, then by 10%. After Epoch 5, each epoch will decay by 1%.
Why is Etherex a key puzzle piece in the Linea ecosystem?
The emergence of Etherex brings several core values to the Linea ecosystem:
First, it resolves the fundamental issue of liquidity incentives through the x(3,3) model — transforming 'mandatory participation' into 'value-driven participation', allowing liquidity to naturally flow to the most efficient areas while protecting the interests of long-term participants through the exit Rebase mechanism.
Secondly, Etherex greatly reduces the participation threshold for users and liquidity providers through deep integration with MetaMask and a no-lock design, injecting a broader user base into the Linea ecosystem.
Additionally, as the native liquidity hub of Linea, Etherex realizes value synergy with the Ethereum ecosystem — its incentive mechanism design not only serves Linea's short-term growth but also aims at the long-term goal of Ethereum becoming a key component of the economy.
It is also worth noting that SharpLink, the Ethereum treasury company, currently holds over 360,000 ETH, with Ethereum co-founder and Consensys CEO Joseph Lubin serving as the chairman of the SharpLink Gaming board. Community users speculate that SharpLink will place part of its ETH holdings into Etherex.
Whether Etherex, with its innovative x(3,3) model, coordinated token economics, and seamless user experience, can become the core engine driving the Linea ecosystem's explosion remains to be seen.
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