Ethereum Developer Consensys Plots Token Issuance in Sign of Trump Thaw

• Consensys, a leading Ethereum development firm, is ready to release a token for Linea, its layer-2 blockchain network.

• The plan comes after Donald Trump’s reelection has lifted a regulatory “cloud” over blockchain companies in the U.S.

• LINEA will be issued as rewards to active contributors and users of the rollup network, sometime in Q1.

Linea, the rollup blockchain built by Ethereum development firm Consensys, is on the brink of releasing its “LINEA” token, the company told CoinDesk.

Consensys was founded by Joe Lubin, one of the co-founders of Ethereum, and is today best-known as the company behind MetaMask, the most popular Ethereum wallet. The Linea network was released last year and represents Consensys’ attempt to compete with a growing fray of layer-2 networks — blockchains that help scale Ethereum by offering users an extra lane for transacting more quickly and cheaply.

According to Texas-based Consensys, the LINEA token will be issued as rewards to active contributors to, and users of, the Linea network. The exact distribution criteria and timeline have yet to be disclosed, but Consensys said it expects to release LINEA sometime in the first quarter of next year.

Ethereum’s layer-2 ecosystem has flourished over the past two years, with networks such as Arbitrum, Optimism and Base gradually outpacing the main Ethereum chain in terms of overall transaction volume.

Linea sought to differentiate itself from many early rollup networks by centering itself around zero-knowledge technology—a kind of cryptography that Ethereum developers expect to eventually become the dominant method for scaling the network. But its lack of a token has long been viewed as a disadvantage, as most other layer-2 platforms dangled the prospect of tokens in part as a way to attract users.

Regulatory ‘cloud’ lifted

The LINEA announcement comes just after Donald Trump’s re-election to the U.S. presidency. Consensys was one of the most closely watched U.S.-based blockchain companies during the Biden administration’s crackdown on the industry.

MetaMask is nearly ubiquitous among Ethereum users, and some feared that position would make Consensys a target of anti-crypto regulators looking for potential points of network centralization.

The incoming administration is widely expected to take a more favorable view of the crypto industry. Several teams at Ethereum’s Devcon conference in Bangkok, where Consensys unveiled its plans for LINEA, told CoinDesk they were optimistic a second Trump administration would foster a friendlier environment for issuing tokens.

Lubin said the election did not play a role in Consensys’ decision to finally announce LINEA, but he acknowledged that “we’ve been operating under a cloud of uncertainty for a long time.”

“To the extent that we were concerned that the SEC would come after us, years ago we stopped doing tokenizations,” said Lubin.

An association and a DAO

The token marks a major step toward decentralizing the Linea ecosystem. It comes months after Consensys made a similar move to decentralize core components of its widely-used Infura data platform.

Along with the LINEA token, Consensys has announced the formation of the Linea Association, a non-profit tasked with distributing the token and stewarding development of the Linea protocol.

Furthermore, “there’ll be a DAO [decentralized autonomous organization] and probably sub-DAOs to organize the work,” Lubin told CoinDesk. “It’ll be lots and lots of tokens, a high percentage of tokens, dedicated to the community.” Lubin would not specify how many tokens will be distributed to Linea’s community or to other network stakeholders.

The DAO will eventually be able to award token grants to Linea contributors. “As people land new innovations for Linea, land products and users and TVL [total value locked] on Linea, there will be programs to award those,” said Lubin.

Avoiding ‘sybil’ attacks

While tokens have proven a reliable recruitment tool, they haven’t always proven durable in the long run. Months after their public debuts, most of the tokens linked to Linea’s layer-2 competitors have fallen sharply below their initial price levels.

Lubin said he is convinced that LINEA will fare more favorably than similar Layer-2 tokens. In part, this comes down to Linea’s user-attestation system, which was designed to suss out individual humans to prevent any single person from spoofing the network across multiple different accounts, thereby accruing tokens to each of them via so-called “sybil” attacks.

“When we introduced Linea, very early on we introduced proof of humanity, and we put it as a main element of our point system,” said Nicolas Liochon, the head of Linea at Consensys. “Points” refers to the internal scores that Linea uses to track who should receive LINEA tokens.

Other tokens have “allocated tokens to many Sybils who had no interest in being productive members of the ecosystem and dumped tokens,” said Lubin. “We believe we’ve taken effective and prudent steps to drastically minimize the number of Sybils that will receive LINEA.”