Ethereum Developer Consensys Plots Token Issuance in Sign of Trump Thaw

As an analyst with a background in blockchain and a keen eye for regulatory developments, I find Consensys’ decision to issue the LINEA token for its layer-2 blockchain network, Linea, particularly intriguing. This move comes at a time when the reelection of Donald Trump has apparently lifted a regulatory “cloud” over the industry in the U.S., which could be beneficial for companies like Consensys, given their profile and influence.

According to CoinDesk, ConsenSys, the Ethereum development company, is about to launch its native token called “LINEA”, for Linea, their rollup blockchain.

ConsenSys, founded by Joe Lubin, one of the co-creators of Ethereum, is primarily recognized for being the firm behind MetaMask, a widely-used Ethereum digital wallet. Recently, they launched the Linea network as their effort to contend with an increasing number of layer-2 networks – these are blockchains designed to enhance Ethereum’s scalability by providing users with additional channels for faster and cheaper transactions.

As an analyst, I’m sharing insights based on information from Texas-based Consensys. They’ve announced that the LINEA token will serve as rewards for those actively participating and utilizing the Linea network. The specific distribution rules and timeline are yet to be revealed, but Consensys anticipates launching LINEA during the first quarter of the coming year.

Over the last two years, Ethereum’s secondary network system has thrived significantly, with platforms like Arbitrum, Optimism, and Base progressively handling more transactions than the primary Ethereum blockchain as a whole.

Linea aimed to stand out among early rollup networks by focusing on zero-knowledge technology – a type of cryptography that Ethereum developers anticipate will become the primary method for expanding the network in the future. However, its absence of a token has often been seen as a drawback, since other layer-2 platforms typically offer tokens as an incentive to attract users.

Regulatory ‘cloud’ lifted

The LINEA announcement emerged following the re-election of Donald Trump as the U.S. president, a time when ConsenSys, an American blockchain company, was under particularly close scrutiny during the industry clampdown by the Biden administration.

Among Ethereum users, MetaMask is almost universally used, leading some to worry that ConsenSys’ dominant position could attract scrutiny from regulatory bodies opposed to cryptocurrencies, who might seek vulnerabilities for network centralization.

It is generally believed that the incoming government will have a more positive stance towards the cryptocurrency sector. Participants at Ethereum’s Devcon conference in Bangkok, where Consensys announced its LINEA project, expressed optimism to CoinDesk about a potential second Trump term encouraging a more welcoming atmosphere for token issuance.

Lubin stated that the election had no impact on Consensys’ decision to unveil LINEA, yet he admitted that they had been working amidst prolonged uncertainty for quite some time.

In response to our apprehension about potential scrutiny from the SEC regarding tokenizations, we ceased such activities quite some time ago, according to Lubin.

An association and a DAO

As a researcher, I’m excited to say that the introduction of this token signifies a significant leap towards decentralizing the Linea ecosystem. This development follows in the footsteps of ConsenSys, who made a similar move several months ago to decentralize key components of their widely-used Infura data platform.

In addition to the LINEA token, ConsenSys has declared the establishment of the Linea Association, a non-profit organization responsible for disseminating the token and managing the development process of the Linea protocol.

In addition, Lubin mentioned that there will likely be a Decentralized Autonomous Organization (DAO) and several sub-DAOs for managing tasks. He also stated that the system will involve numerous tokens with a significant portion allocated for the community. However, he did not provide details on how many tokens would be distributed to Linea’s community or other network participants.

In the future, the DAO (Decentralized Autonomous Organization) is expected to distribute token rewards to contributors who make significant contributions to Linea. These contributions can come in the form of new ideas, products, users, and Total Value Locked (TVL) on Linea. This was mentioned by Lubin.

Avoiding ‘sybil’ attacks

Although tokens have shown effectiveness in recruitment, they haven’t consistently held up over extended periods. After making their public appearance, many tokens associated with Linea’s layer-2 competitors have experienced a significant drop since their initial prices.

Lubin stated his belief that LINEA will perform better than comparable Layer-2 tokens. This confidence stems from Linea’s user-verification system, which is specifically engineered to identify individual humans and prevent a single user from manipulating the network through multiple accounts. By doing so, it helps prevent “Sybil” attacks, where an individual accumulates tokens across various accounts.

In his statement, Nicolas Liochon, the leader of Linea at Consensys, mentioned that when they launched Linea, they implemented a ‘proof of humanity’ feature right away, and this was a crucial part of their scoring system for distributing LINEA tokens.

According to Lubin, other entities distributed tokens to numerous Sybils who showed no intention of contributing positively to the ecosystem and subsequently discarded the tokens. We are confident that we have implemented strategies aimed at significantly reducing the number of Sybils receiving LINEA tokens.