We take Linea as a case study and break it down into 10 dimensions: what it does, token economics, financing situation, TVL, on-chain ecosystem, project actions, user numbers, revenue, code, and market capitalization.
For each dimension, I will tell you where to check, what indicators to look at, and how to interpret them. After reading, you will be able to evaluate a blockchain on your own.
What does it do?
When we get a project, we first look at what it does. Generally, we check the official website; for example, Linea. Open the Linea official website to get a brief understanding. Linea is built on Ethereum, which is their slogan. They are a layer two network based on Ethereum, aiming to strengthen Ethereum and its entire ETH economic system.
Just looking at this statement, we should consider several questions. First, we understand that this is a layer two chain project on Ethereum. Second, there are already many similar projects on the market, such as Arbitrum, Optimism, Base, Polygon, zk, Stark, etc. What advantages does Linea have? Third, Linea is on Ethereum; why say it this way? Moreover, your goal is not to strengthen your own chain but to enhance Ethereum, which is something we have never heard before.
With these questions in mind, let's continue. There are already so many star protocols built on it, including MetaMask, which is their own, as well as Aave, 1inch, Chainlink, Circle, etc. Finally, we also see Sharplink, which is the second-largest institutional holder on Ethereum and is also their own. Yes, MetaMask, Linea, and Sharplink are all in the ConsenSys ecosystem, and the boss is Joseph Lubin. We discussed ConsenSys in a previous issue; you can check it out.
Continuing, the best chain is Ethereum, dedicated to promoting value back to the Ethereum mainnet, making ETH the most important digital asset globally. We know that one reason Ethereum was previously undervalued is that too many layer two chains have siphoned off liquidity, projects, and profits, turning Ethereum into a feudal lord while other layer two chains are like vassal lords. Apart from paying a small amount of L1 on-chain costs, layer two chains hardly provide any benefits back to the Ethereum mainnet.
So how would Lubin, a strong supporter of Ethereum and a co-founder of Ethereum, design Linea? Let's look further. Every transaction will burn ETH, thereby increasing the value of Ethereum. We know that on-chain activities require gas fees, and generally, layer two chains use ETH for gas fees. The main income of public chains comes from gas fee revenue. Linea allocates gas fee income with an 80/20 split: 20% of ETH is directly burned, and 80% is used to buy back and burn Linea. The supply of ETH continues to decrease, which can support its scarcity and long-term value. This is not something seen in other layer two public chains.
Another point is that when we bridge ETH to Linea, it will help us perform native staking on the Ethereum chain, and the staking interest will roll back to liquidity providers, effectively adding another source of income from "staking interest." At the same time, this also provides momentum for Linea's DeFi ecosystem, which is also not found in other layer two chains. These two initiatives are aimed at promoting the return of value to the Ethereum mainnet, making ETH the most important digital asset globally.
Next, let's look at their token economics. We will discuss it as we go along. The token distribution is mainly divided into two parts: 85% goes to the ecosystem, and 15% goes to the ConsenSys treasury. Of the 85%, 10% is allocated to early builders, including 9% for airdrops and 1% for strategic builders. This part has been fully released, with a total of 22% released during the TGE phase, meaning the current circulating supply is about 22%. So, 85-22, the ecosystem share is roughly 63% remaining. This portion of the tokens is jointly managed by the Linea Alliance, which includes Eigen Labs, ENS Labs, SharpLink, etc., and will jointly decide on the use of the tokens over the next ten years. The 15% allocated to the ConsenSys treasury will be locked for five years. This is roughly the token economics; now let's verify if what they said matches the actual situation.
Open the Linea blockchain explorer and enter the Linea token contract address. We can see its token supply and the number of holding addresses, which is over 390,000. Here’s a knowledge point that many may not understand: these 390,000 addresses are the on-chain addresses holding Linea, excluding centralized exchange account addresses. If you hold Linea on a centralized exchange, it does not count towards the on-chain holding address number. Click on the holders; this shows all the holding addresses arranged. The first one accounts for 64%, which should be the ecosystem share. The second one accounts for 15%, which belongs to the ConsenSys treasury share. The remaining 20% or so is the current circulating share, which is generally consistent.
What are the characteristics of this token economics? First, there are no insider shares; there are no allocations for teams, employees, or VCs, which means there is no expectation of short-term selling pressure on the tokens. Second, it is highly skewed towards the ecosystem, with 85% of the ecosystem fund being released gradually over ten years, indicating a readiness for long-term investment. Third, the treasury share is small and strongly locked, with 15% allocated to the ConsenSys treasury, locked for five years and non-transferable. This means that the current governance and strategic funds are secured, and there is no treasury selling pressure in the short to medium term. Fourth, the initial circulation at TGE is "clean," with about 22% in circulation at TGE, mainly from airdrops + ecosystem activation + market-making/liquidity, excluding team/VC unlocks. The benefit of this is that the early trading structure is healthier, and prices mainly reflect real usage and market demand. Fifth, there is no siphoning off profits; 20% of gas income is burned as ETH, and 80% is used to buy back and burn LINEA, allowing the use value to flow back to ETH and LINEA, rather than turning transaction fees into long-term withdrawals for teams or a few individuals. Sixth, multiple institutions jointly manage the ecosystem fund, allowing for more market-oriented/diversified resource allocation.
In contrast, other layer two chain projects typically have basic token distributions of about 20% for the team, around 20% for investors, and a DAO treasury, which can lead to a large amount of insider shares and the potential for large holders to sell at any time. Additionally, their gas income is not used to buy back ETH or their own tokens.
We have discussed token economics quite a bit; next, let's look at their financial strength and financing situation. Open Rootdata, search for Linea, and the parent company ConsenSys has raised over $700 million, with a valuation of $7 billion. They have MetaMask (the little fox wallet) with 30 million monthly active users, and tools like Infura and Truffle used by hundreds of thousands of developers, so funding, team, and technology should not be an issue.
Next, let's look at their TVL data, which indicates how much money is stored on this chain. If money is willing to stay on the chain, it shows that users and institutions have a certain level of confidence in its security and usability. Open Defillama, select public chains, and we see that Linea ranks 12th in TVL, with a total locked value of $1.5 billion. The two layer two chains ahead of it are Base and Arbitrum.
In terms of the number of protocols, Base has 730, Arbitrum has 974, while Linea only has 186. I think there are a few reasons for this: one is the different stages of development; Base and Arbitrum developed earlier, while Linea has just started. Another reason is the different technologies they use; Base and Arbitrum use optimistic rollups, which are relatively mature, while Linea uses zk-rollup technology, which is still developing and not yet mature, but may have better prospects, although the ZK family has already lost two major players, one ZK and one Stark.
Let's take a look at the ecosystem on its chain. With a total TVL of $1.5 billion, AAVE accounts for $1 billion, and there are no other well-known DEXs, such as Ethereum's Uniswap, Solana's Jupiter, or BSC's Pancake. There are also no recently popular perp DEXs or decentralized contract exchanges, like Hyperliquid, which supports the ranking of the tenth public chain. There is also no public chain user acquisition tool like meme; for example, Solana's meme genes and the recently popular BSC memes can bring a large number of users and funds to public chains. Therefore, the current development of the Linea chain ecosystem is quite average.
Don't worry; it may have its own ideas. Let's look at its project actions to see how it plans to ignite this chain. It aims to provide enterprise-level infrastructure for global finance, focusing on "institutional usability" narratives, backed by ConsenSys's wallet/node/development tools and experience with major banks (Mastercard, Visa, JPM, etc.) for endorsement. It targets four scenarios: asset tokenization, payments, trading, and on-chain settlement—these correspond to the landing paths that institutions are most concerned about.
This is not just talk; we see that SWIFT has officially announced a partnership with ConsenSys to co-build a "shared digital ledger" for 24/7 cross-border payments and tokenized settlements. Subsequently, ConsenSys CEO Joe Lubin also publicly confirmed that this platform will run on the Ethereum layer two Linea. This means that SWIFT's blockchain infrastructure has chosen Linea as its execution layer, which is a strong endorsement for Linea's institutional-level applications and compliance narrative.
Next, let's look at user numbers. For public chain projects, user numbers are generally measured by two indicators: the number of public chain token holding addresses and the total number of addresses on the chain. For Linea, we open the Linea blockchain explorer and can see that the number of token holding addresses is over 390,000, while the total number of addresses on the chain is over 10 million. The total address count reflects the breadth of the entire ecosystem, indicating how many addresses have interacted with the Linea mainnet since the genesis block (including transfers, contract interactions, minting, approvals, etc.). The number of holding addresses refers to the quantity of addresses with a current balance > 0 (usually referring to on-chain native tokens), which better reflects the actual retained active users.
This is a comparison I compiled of the number of token holding addresses and total addresses on the chain for Linea, Arbitrum, Optimism, and Base. Base has not issued tokens, so I used the number of addresses holding USDC on the Base chain as a substitute. Comparatively, Linea has fewer holding addresses.
But don't forget that Linea has a killer feature: MetaMask. MetaMask has announced an upcoming chain-wide reward program, with over $30 million in LINEA token rewards to be distributed in the first season. It's worth noting that MetaMask is not short of users, with 30 million monthly active users. This will significantly increase the number of holding addresses for Linea.
In addition to user numbers, let's look at its revenue situation. On-chain data can be checked on blockchain explorers, and we can also use third-party tools. We generally use Token Terminal; open Token Terminal, search for Linea, and we can see various indicators, circulating market cap, fully diluted market cap, token trading volume, growth of token holders, changes in circulating supply, changes in bridging deposits, etc. Looking at its revenue, total income is around $6,600. Observing the revenue changes, apart from the noticeable income when it first launched, the current income is relatively poor. Compared to other layer two chains, it ranks fifth, with Base having the highest income of $150 million, followed by Arbitrum at $120 million and Optimism at $90 million.
Next, let's briefly look at the code situation. However, for large projects like this, we generally don't need to look at the code. Normally, what we want to check, it can certainly meet, such as code openness, code activity, code audits, and how many stars it has, these should not be an issue. We can open the GitHub code repository, search for the project name, and directly check what we can see. If we can't understand it, we can link it directly to AI and let AI help us analyze it.
Finally, let's compare the market capitalization of several layer two chains. ARB has a market cap of $2.2 billion, with a fully diluted market cap of $4 billion; OP has a market cap of $1.2 billion, with a fully diluted market cap of $3 billion; ZK has a market cap of $400 million, with a fully diluted market cap of $1.1 billion. Linea has a market cap of $400 million, with a fully diluted market cap of $1.8 billion. It is worth mentioning that ARB's highest fully diluted market cap is $24 billion, OP's is $20 billion, ZK's is $6.9 billion, and Stark's highest fully diluted market cap is $44 billion, currently at $1.5 billion. Thus, it seems that the only layer two chain that has not harmed users is Linea.
In conclusion, this analysis is merely a case study and does not serve as a recommendation. Please do your own research and exercise caution.
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