Blockchain
Dots Drive Skyrocketing Blockchain Growth Consensys Line – DL News
- Cryptocurrencies deposited in Consensys’ Linea blockchain have grown by 50% in the last month.
- This growth has been fueled by a points program designed to attract DeFi users.
A campaign to boost DeFi activity on Consensys’ Linea blockchain has achieved early success, attracting more than $430 million in cryptocurrencies since the network launched nearly a month ago.
More than $1.2 billion has been invested in cryptocurrencies bridged a Linea, according to Ethereum research site L2BEAT. An increase from $792 million on May 14.
The campaign quickly made Linea one of the largest layer 2 blockchains on Ethereum. These blockchains are critical to the future of Ethereum, giving people a faster and cheaper way to use the original smart contract platform.
It’s also the latest campaign to demonstrate the power of “points,” cryptocurrency’s approach to airline miles-style rewards programs, despite user fatigue. By awarding points to certain users, Linea has managed to break through in an increasingly competitive market where dozens of competitors have gone online in the last year.
Linea is developed and operated by Consensys, the developer of the popular Ethereum wallet MetaMask. Consensys founder Joseph Lubin is one of the co-founders of Ethereum.
The surge
Layer 2 blockchains have long used grant programs to attract users and application developers.
More recently, some have taken a page out of the apps pipeline by awarding “points” to users who complete certain tasks, such as depositing cryptocurrency. Most users assume the points will be used to award tokens in the future airdrop.
Layer 2 blockchains Blast, Manta, and Scroll have all launched their own dot programs, sometimes drawing significant protests from users in the process.
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There’s a growing sense that points programs are exploitative, tying users in with the implicit promise of a big payday at an indeterminate future date. Additionally, cryptocurrency lawyers have started to do so reject against their proliferation, arguing the points is not a risk-free game or a means of evading regulators’ scrutiny of air launches.
Layer 2 Manta Pacific launched a points campaign in February, rewarding users who transferred assets onto the blockchain. But the rewards were disappointing and led many to withdraw their deposits at the first opportunity.
Scroll quickly canceled the points campaign amid criticism from users. But it returned in April with “Scroll Sessions,” rewarding users with “Scroll Marks” for bringing their cryptocurrency from Ethereum.
Some users have also complained when Linea announced its second points program, the “surge,” in March. In that announcement, Linea said it plans to use the new program to attract liquidity into its DeFi ecosystem.
“The overall user experience is strictly dictated by this factor,” the company said.
Its points, called LXP-L, would be allocated to liquidity providers on a daily basis decreasing basiswith the first to deposit cryptocurrencies on Linea-based applications earning more LXP-L than depositors arriving in subsequent months.
The increase would last for “volts” of six months or until $3 billion in cryptocurrencies had been transferred to Linea.
Despite a handful From complaints, complaintsthe increase appears to have worked.
Since May 16, the first day of the surge, Linea’s DeFi ecosystem has grown 138% to more than $665 million, according to data from DefiLlama.
A points program has fueled meteoric growth on the Ethereum L2 Line.
As of June 1, Linea accounted for more than 9% of all transactions on Ethereum and its larger layer-2 blockchains, according to data compiled by the pseudonymous Dutch analyst Marcov. On May 1, it accounted for just 3.5% of such transactions.
Linea will now have to try to retain these users. Incentive-based programs to attract users have a unpredictable record in cryptocurrency.
Furthermore, Linea designed criticism for briefly suspending transactions last week in order to protect users of Velocore, a decentralized exchange that suffered a $7 million cyberattack. The decision was the latest reminder that many cryptocurrency projects are still centrally controlled, despite pledges to hand over control to their users.
Linea says it is in phase 1 of a four-phase “decentralization road map”.
Aleks Gilbert is a DeFi correspondent at DL News. Do you have advice? Send him an email at aleks@dlnews.com.