On July 29, the team at Linea, an Ethereum layer 2 (L2) network, announced a series of significant updates that promise to transform its integration with the ecosystem.  

New features include yield generation (a passive income mechanism), an ETH burning process, and the formation of an Ethereum- native consortium "to manage the largest (Ether) fund in the industry." 

ETH burning on L2: a milestone for Line and Ethereum

Linea explains that this chain will become the "first L2 to implement a protocol-level ETH burning mechanism." Twenty percent of all net transaction fees on this L2 will be burned.

This burning process involves the permanent removal of ETH from circulation, which will put deflationary pressure on the total ether supply. 

Burning ETH is not a new concept on Ethereum. Since the implementation of EIP-1559 in 2021, a fraction of transaction fees on the mainnet have been burned, betting on a deflationary dynamic that is not occurring. 

At the time of this writing, data indicates that the supply of Ether has outpaced the burn of that token by 0.12% since The Merge update, imposed in September 2022: 

  Ethereum is going through a mildly inflationary period. Source: Ultra Sound Money.

Over the past 30 days, the supply of ether has grown compared to the previously mentioned period, outpacing burning by 0.7%. 

With the burning of ETH online, if demand for this L2 and the use of ether increase, it could create a favorable environment for deflation of the Ethereum currency, as happened between January 2023 and February 2025. 

Other Linea proposals

Linea introduces yield on decentralized finance platforms for bridged ETH, where deposits generate staking rewards for liquidity providers (LPs).  

LPs are users who contribute assets to liquidity pools, facilitating transactions on DeFi platforms in exchange for a share of the fees generated. These providers accumulate staking returns along with the profits derived from DeFi activity on the network. 

Linea also created what it considers to be the largest Ethereum ecosystem fund, with 85% of the LINEA token allocated to the community (75% for development, 10% for early adopters) and 15% to Consensys, locked for five years.  

This fund will be managed by a consortium of organizations such as Consensys, Eigen Labs and ENS Domains, among others. 

Ethereum community responses to Linea's announcement

On-chain analysis site Grow the Pie claims that the online burning represents a "huge" step for the Ethereum ecosystem.

According to that source, Linea, launched in 2023, currently ranks sixth in terms of revenue among all Ethereum layer 2 networks (fifth all-time), having generated over $64 million (approximately 24,000 ETH) in total revenue. So far in July, it has accumulated over $130,000 (approximately 40 ETH) in revenue. 

For his part, Joseph Lubin, co-founder of Ethereum, concluded that "it was time to change the game for L2. The name of the game is Ethereum. Linea is 100% Ethereum." Along the same lines, Declan Fox, Linea developer, stated: “Linea is built to serve one purpose: to strengthen Ethereum.”