On November 4th, the Linea network officially activated the industry's first dual-currency burning mechanism. This innovative design allows each transaction to simultaneously reduce the market supply of ETH and LINEA tokens. As of November 8th, the price of LINEA tokens was $0.0132, with a market capitalization of approximately $209 million. In the days following the activation of the burning mechanism, a total of $62,333 worth of ETH and $231,025 worth of LINEA tokens have been burned.
The operation principle of this mechanism is truly ingenious: the Gas fees collected by the network are priced in ETH. After deducting operating costs, 20% of the net profit is used to directly burn ETH, while the remaining 80% is used to repurchase and burn LINEA tokens. This 1:4 burning ratio design not only strengthens the economic connection between Linea and the Ethereum mainnet but also directly converts network activity into deflationary pressure on both types of tokens.
From market data, Linea's current TVL reaches $615 million, with an average daily DEX trading volume of $42.94 million, which means that considerable trading fees are converted into burning power every day. Compared to other L2 networks that solely rely on inflation token incentives, Linea's dual-burning design achieves a true value return.
From a technical perspective, this mechanism has traced all transactions since the TGE on September 11, ensuring fairness. The burning process is completely transparent, and the community can track burning data in real time through Dune Analytics. So far, the network has processed over 1.3 million transactions, involving about 750,000 independent addresses, providing a stable fee source for the burning mechanism.
From an investment perspective, the long-term impact of the dual-burning mechanism will amplify as the network grows. Currently, Linea has about 80,000 daily active addresses, which still has significant room for growth compared to the peak of 750,000. Once user activity rebounds, the burning rate will grow exponentially. Particularly considering the upcoming unlocking of 2.88 billion LINEA tokens (approximately $38 million), the burning mechanism will, to some extent, hedge supply pressure and maintain token price stability.
The prosperity of the DeFi ecosystem provides a solid foundation for the burning mechanism. Aave's TVL on Linea reaches $452 million, generating daily fees of $48,000, contributing a considerable share to the burning. Liquid staking protocols like Renzo and KernelDAO have TVLs of $263 million and $134 million, respectively, continuously generating trading fees. The existence of these blue-chip DeFi protocols ensures the sustainability of the burning mechanism.
The community's response to the burning mechanism is generally positive. Crypto analyst Shawn referred to it as a "clean deflationary token economics approach," emphasizing the mechanism's advantage in creating scarcity without relying on hype. FoxyLinea.eth even described LINEA as an "undervalued" project, believing that its design, which associates fees with ETH burning and lacks insiders, is highly innovative.
Looking ahead, with the advancement of the Exponent reward program and the deployment of more dApps, network activity is expected to significantly increase. This 3-month incentive program will reward applications that expand their user base the fastest, directly driving trading volume growth. MetaMask's $30 million LINEA distribution plan will also continue through the Ignition event until next year, providing long-term support for the burning mechanism. On the institutional side, SharpLink Gaming's decision to deploy $200 million in ETH funds demonstrates the recognition of Linea's economic model by large investors.
The success of the dual-token burning mechanism not only establishes a value capture mechanism for LINEA tokens but also pioneers the deep integration of L2 networks with the Ethereum mainnet economy. With the influx of more institutional funds and the improvement of the DeFi ecosystem, the long-term value of this innovative design will gradually emerge, creating sustainable value growth momentum for holders.
