What is Linear Finance?

Linear Finance is a delta-one asset protocol built on the Ethereum network. It enables web3 users to create, manage and carry out trades on synthetic assets, allowing them to access several financial assets without buying them directly.

These synthetic assets can represent oil, gold, cryptocurrencies, commodities, and spots. The protocol has a digital portfolio regularly improved to manage these assets effectively and efficiently.

The project’s governance model has also made it highly sought after in the crypto market, as it allows its users to actively participate in matters concerning the protocol’s growth and development. Linear Finance operates through four leading apps, Linear Buildr, Linear Exchange, Linear Vault, and Linear Swap.

History Of Linear Finance (LINA)

Linear Finance was developed by Kevin Tai and Drey Ng in September 2020, raising over $1.8 million in seed funding at launch from about 11 investors, which includes Alameda Research.

Tai, who serves as CEO, is an expert with over a decade of experience in collateralized debts and structure products, working for notable banks like Standard Chartered and Credit Suisse. He is a Harvard business school graduate who started his career in silicon valley, a region in California, USA, home to the headquarters of many of the household names in the tech industry and thousands of tech startups.

Drey serves as CTO and has a master’s degree in computer science, working with HSBC and Deutsche Bank in the trade finance sector before venturing into Blockchain, where he co-founded Liquefy, one of Asia’s largest security token offering companies.

In June 2021 PieDao, a decentralized autonomous organization that grows and develops DeFi products, partnered with Linear Finance to create a Synthetic DeFi token that will allow investors access to various DeFi tokens without holding the underlying asset.

How does Linear Finance Work? Linear Buildr, Linear Vault, Linear, Exchange, Linear Swap and Pledge Ratio

Linear Buildr

Image Source: Linear Finance

Linear Buildr is a decentralized app Linear Finance utilizes to manage collateral pools, where users can create and burn Liquids using Lina, the network’s native token as base collateral. Soon, the protocol hopes to expand the collateral base to other digital assets besides Lina. Also, stakes are rewarded with staking incentives and transaction fees.

Linear developers deployed this Dapp into their ecosystem in December 2021 after it passed through meticulous testing during the testnet session. Buildr was also designed to help users build the protocols stablecoin ℓUSD, which can be spent as fiat.

Linear Vault

Image Source: Linear Finance

The function of this Dapp on the protocol is to help users to generate high yields and to earn passive income through staking ℓUSD or liquidity pool tokens. Users earn rewards in ℓUSD, BUSD, and Lina. Also, some staking rewards come from the Linear exchange, where each transaction incurs a 0.25% fee. The rest are generated from token inflation on Linear Finance. Users who made their tokens available to the staking pool receive weekly interest, provided their pledge ratio is above the threshold.

Linear Exchange

Image Source: Linear Finance

The linear team launched the exchange in January 2021. The linear exchange serves as a transaction hub where users can spend ℓUSD on liquid versions of assets like commodities and cryptocurrencies, with zero slippage and unlimited liquidity. Unlike centralized exchanges with order books, it uses smart contracts, which allow users to trade directly with the help of a debt pool. The protocol also leverages other Blockchain to create liquids by cutting the bulk transaction cost and low scalability on the Ethereum network leading to increased transaction execution speed.

The Dapp also saves cost and time on transactions by switching from the legacy financial system for liquids S&P 500, which usually takes up days for settlement and wire transfer, to Bitcoin, which leverages Blockchain technology to handle such transactions in seconds. In addition, users can avoid the risk of frontrunning with the help of Oracle, which supplies price feed on the protocol by quickly refreshing underlying asset prices.

Linear Swap

Image Source: Linear Finance

The linear team built this Dapp to work in unison with the exchange, having cross-chain compatibility features. It was developed on the Ethereum network but integrated with Binance Smart Chain. In later years, they also plan to integrate It with Polkadot. Further, users with Linear based tokens can swap them to other Blockchain formats.

Pledge Ratio

The p-ratio, as it is also known, is the ratio between synthetic asset holdings created and the Linear USD token backing the assets. As a preventive measure, Linear Finance ensures stability even during periods of extreme volatility by overcollaterization. The p-ration is the level of the excess collateral needed for minting each synth asset. Currently, the protocol requires a pledge ratio of 500% to mint tokens.

Linear Finance Main Features: Linear DAO, PoS Staking and Binance Smart Chain Buildr

Linear DAO

The Linear Dao is a governance structure to control the decisions on the protocols ecosystem. DAO participants modify, create, remove, and update the protocol through voting. They also regulate transaction fees, execution of proposals, and inflation reward, controlling profits and loss in the protocol.

Among the Linear Dao are the Linear Council, selected among Lina holders, who are most heavily invested in the project and are interested in its growth. They oversee the DAO, ensuring it runs smoothly, and serve as the protocol’s gatekeeper. This four-man committee can vote out any proposal that might harm the project in the long run.

The linear community, comprised of all who hold and stake LINA, votes for members elected into the council, and they serve for 3 months. During this duration, they are mandated to vote on about 90% of all LPs approved by the community within 21 days if they fail to do this, it may result in replacement after the 3 months end.

The council members receive stipends as an incentive for their hard work and dedication. Finally, there is the Linear Protocol DAO, responsible for cash flow and control, ensuring that the community remains incentivized to keep supporting Linear so that it won’t run out of liquidity at any point in time.

PoS Staking

Linear Finance was built on the Ethereum network, which employs a proof of stake mechanism to achieve consensus. This mechanism helps it be scalable, fast, and reduce transaction costs. However, it also allows users to actively participate in the governance of the ecosystem by staking their tokens on the protocol staking pool, enabling them to vote and be voted for concerning all decisions that need to be implemented in the ecosystem. Further, they also earn passive income by minting ℓUSD, the protocol’s stablecoin, through staking LINA.

Binance Smart Chain Buildr

This is the second version of Linear Buildr 1.0, and it was released a month after its predecessor was built on the Ethereum network. However, version 2.0 was built on Binance Smart Chain to bypass high transaction fees in trading on the Ethereum network. Also, it features swap functionality enabling users to simultaneously swap linear assets between Ethereum and BSC, getting the best of the DeFi ecosystem on both protocols.

What is the LINA Token?

Lina, the native token of the Linear Finance protocol, is a standard ERC-20 token that serves the purpose of utility, governance, security, and rewards.

Lina is used for staking on the protocol, which helps validate transactions and secure the blockchain. Users who hold the token can earn rewards through yield farming and staking. Further, they have the right to present or vote on a proposal with the help of the unique governance model of the protocol. Also, the token can serve as means of exchange, and with the cross-chain compatibility features on the platform, users can swap the token on other blockchain networks.

Lina has a circulating supply of 5.5 billion, and a total supply of 10 billion tokens, its current market capitalization is about $83 billion.

Is Linear Finance (LINA) a Good Investment?

Linear Finance (LINA) has shown in all ways that it cares for its members by creating a DAO which will oversee governance, protecting not only the interest of the protocol but also its members so that nothing will harm the protocol in the future. They made provisions for Linear council members and Linear protocol DAO who control money usage and vote out a proposal that can be detrimental to the protocol and its members.

Moreover, the Linear Finance native token LINA has several use cases and is embedded with Cross compatibility features making it usable on a variety of Blockchains, there is also a possibility that its use cases will increase in the future, making it very valuable for long term traders and investors.

How To Own LINA

One of the ways to own LINA is to buy it from an exchange like Gate.io. The first step is to create an account, verify with KYC for protection, fund it, then head to the derivative market or spot on the exchange to purchase LINA.

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