Can Etherex be the first to issue coin before Linea?

No lock-up position for ve(3,3)? Five-minute quick read on the upgraded version of the Linea native liquidity hub, Nile Etherex.

Written by: KarenZ, Foresight News

As Linea is set to announce the LINEA tokenomics and governance details at the end of this month, its DEX Nile within the ecosystem is also welcoming an important upgrade.

The Linea mainnet has always lacked a trading layer that can support full-chain liquidity while returning value to the community. The upgraded version of NILE—Etherex aims to fill the gaps in Linea's ecosystem regarding exit mechanisms, efficient liquidity aggregation, and incentive mechanism design.

Etherex adopts a brand new x(3,3) model, which is more flexible than ve (3,3), and removes the lock-up position requirement. Through dynamic incentives and exit penalties, it ensures that the value of the protocol flows to the most active participants.

This article will analyze the core mechanisms, token economics, and innovations of Etherex.

From Nile to Etherex

Etherex is a decentralized exchange launched on July 29, 2025, in collaboration with Linea, ConsenSys, and NILE. Partners include Astera, Foxy, eFrogs, MYX, MetaMask, Alchemix, Frax, Zerolend, and Turtle.

According to the Etherex team, as early as 2014, when the Ethereum mainnet had not yet been launched, Ethereum builders such as Vitalik Buterin and Joseph Lubin held a vision of a decentralized exchange. They hoped to create a truly trustless, secure, and reliable decentralized trading platform that would allow users to trade freely on-chain without relying on centralized entities. EtherEX was born out of this vision; although this idea was not realized later, today's Etherex pays tribute to this early vision and innovates based on it. In the eyes of Etherex, Etherex is not just a DEX with a new label but the "ultimate delivery" of the EtherEX vision from 2014.

From a practical perspective, Etherex is an upgraded version of Nile on Linea. As the native liquidity hub of Linea, Etherex undertakes three core functions: directional incentive allocation, LINEA token liquidity hosting, and guiding the issuance of valuable tokens to trading pools that benefit the overall health of the ecosystem.

What is Etherex?

The core of Etherex lies in its innovative x (3,3) model, which is an evolution of the traditional metaDEX model, addressing the previous challenges of aligning incentive mechanisms.

Traditional metaDEX has verified the possibility of large-scale applications and sustainable profits, but has always relied on artificial restrictions such as "mandatory lock-up" to maintain user participation - users must lock their tokens for years to participate fairly in the ecosystem, forming a participation model driven by "obligation" rather than "value."

x (3,3) The model changes this logic: it does not rely on mandatory Lock-up Position, but rather encourages users to stay in the ecosystem through organic incentives — the system rewards active participants and naturally concentrates value in the hands of the users who contribute the most. Users can participate without Lock-up Position, and the design of the exit mechanism ensures that only those who truly recognize the value of the protocol will remain, forming an actively self-selecting community.

How does Etherex operate?

As mentioned earlier, Etherex's breakthrough lies in transforming "mandatory participation" into "active retention and contribution," with the core goal of providing native depth liquidity for Linea, optimizing incentives, and achieving a seamless user experience.

How does the three-token system achieve incentive alignment?

Before exploring the operating mechanism of Etherex, it is necessary to understand Etherex's three-token system.

Etherex adopts an innovative three-token system, designed to achieve precise alignment of incentive mechanisms while maintaining flexibility. Although the specific details have not been fully disclosed, the core logic is already clearly visible:

• xREX: Governance token, active stakers of xREX have voting rights to decide the allocation of liquidity pool issuance, and can also obtain 100% of transaction fees, Exit Rebase rewards, and additional rewards provided by the protocol.
• REX33: The liquidity staking token of xREX, equipped with automatic voting and yield compounding functions. It addresses the liquidity problem of governance tokens, with an initial ratio of REX33:xREX at 1:1. As transaction fees, voting incentives, and Rebase rewards accumulate, the ratio will grow in favor of REX33. Additionally, Etherex will ensure through an arbitrage mechanism that REX33 does not fall below the redemption floor price of xREX, providing users with a low-friction way to participate.
• REX: The protocol's native token, distributed to the liquidity pool through minting, is a core tool for incentivizing liquidity providers. The amount of minting is determined by votes from xREX holders, ensuring that resources flow to the most valuable liquidity pools.

Etherex's operating mechanism

1. Positive Cycle of Exit Mechanism

There are two ways for users to exit xREX: one is direct redemption (Exit Rebase), which incurs a 50% penalty, and the penalty tokens are distributed entirely to existing xREX holders; the other is to trade on the open market through REX33 (the liquidity staking version of xREX). This not only addresses the token dilution issue but also incentivizes users to participate long-term, forming a "survival of the fittest" ecosystem.

2. Weekly Epoch: xREX holders vote to decide which liquidity pools the next week's REX issuance will flow to

Every Thursday at 08:00, xREX holders vote to decide which liquidity pools will receive the increased REX issuance for the next week. The voting weight depends on the amount of xREX held and participation, with pools receiving more emissions based on higher votes.

3. Dynamic Fees and Profit Distribution

Etherex automatically adjusts transaction fees (0.05%-5%) based on market volatility and trading volume, and allocates 100% of the protocol fees to xREX holders. Trading pairs generate fees, attracting more votes and token releases, which in turn leads to deeper Liquidity, driving higher trading volume and fees, creating a positive feedback loop.

4、Concentrated Liquidity (CL) Optimization

• LP can customize price ranges to provide Liquidity and maximize capital efficiency.
• By incentivizing LPs to optimize their liquidity range through Competitive Farming, the quality of trade execution is enhanced.

5. MEV Protection and Value Reflow

Built-in MEV capture module (such as REX33 AMO) distributes arbitrage profits to voters.

Etherex Token Economics

Etherex will launch the token REX on August 6. The initial total supply of REX is 350 million tokens, with a maximum supply cap of 1 billion tokens. The specific allocation is as follows:

• 25% allocated to Linea/Consensys (80% xREX, 20% for REX. Existing veNILE holders can migrate 1:1 to xREX, but must meet: a minimum of 100 veNILE, with a maximum lock-up period of 4 years. Snapshot time: July 26, 11:59 AM Beijing time).
• 25% allocated to veNILE migrators (100% for xREX).
• 25% allocated to the protocol treasury.
• 15% for Liquidity Treasury support.
• 5% for centralized exchanges and market makers.
• 5% allocated to ecosystem partners.

Apart from the tokens allocated to the LP treasury support and the CEX listing / market makers being REX, most token allocations are in the form of xREX.

As mentioned earlier, xREX holders vote to decide the allocation of the REX increase for the next week to which Liquidity pools. Below is an approximation of the weekly emission of Etherex (the white curve in the figure) compared to the total supply over the first 500 Epochs (approximately 10 years) (the yellow curve in the figure). During Epoch 0, 3.5 million tokens were released, from Epoch 1 to 4, each Epoch first increases by 20% and then by 10%, and after Epoch 5, each Epoch decreases by 1%.

Why is Etherex a Key Piece of the Linea Ecosystem?

The emergence of Etherex has brought several core values to the Linea ecosystem:

First, it addresses the fundamental issue of liquidity incentives through the x (3,3) model – transforming "forced participation" into "value-driven participation," allowing liquidity to naturally flow to the most efficient areas, while protecting the interests of long-term participants through the exit Rebase mechanism.

Secondly, Etherex greatly lowers the participation threshold for users and liquidity providers through deep integration with MetaMask and a no lock-up position design, injecting a broader user base into the Linea ecosystem.

In addition, as the native liquidity hub of Linea, Etherex achieves value synergy with the Ethereum ecosystem — its incentive mechanism design not only serves the short-term growth of Linea but also focuses on the long-term goal of Ethereum becoming a key component of the economy.

It is also worth emphasizing that the Ethereum treasury company SharpLink currently holds over 360,000 ETH, with Ethereum co-founder and Consensys CEO Joseph Lubin serving as the chairman of the board of SharpLink Gaming. Community users speculate that SharpLink will place part of its ETH holdings in Etherex.

Etherex, with its innovative x (3,3) model, coordinated token economics, and seamless user experience, may become the core engine driving the explosion of the Linea ecosystem, but time will tell.