Linea Airdrop Stumbles With Mainnet Outage

Hi! In today’s edition:

• ⚠️ Linea’s long-awaited airdrop suffers a rocky debut

• 🏦 Paxos adds PayPal & Venmo to its USDH proposal

• 🔧 Polygon patches consensus glitch after finality delays

• 🚀 Meet the Onchain5 — crypto’s Mag7 of adoption

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LINEA Airdrop Claims Fail Amid ‘Partial Outage’ on Mainnet

Consensys’ Ethereum layer 2 Linea launched its LINEA token on Tuesday, but the airdrop was far from seamless – a number of users reported issues with the claim process and failed transactions.

The network also saw a halt in block production for about 45 minutes before the LINEA airdrop, caused by performance degradation of the mainnet sequencer.

The airdrop still went live as planned after the issue was mitigated, with 749,000 wallets eligible to claim 9.36 billion LINEA tokens. But immediately after the Token Generation Event (TGE), the network saw a spike in gas as users were unable to claim their tokens.

The Linea team told users in their official Discord channel that Infura nodes were experiencing heavy loads in light of claim traffic. However, users who qualified to receive LINEA tokens on Binance Alpha received their tokens instantly.

“The LINEA tokens were sent to the claim contract 50 minutes late for airdrop users, while Binance users were already claiming and dumping instantly,” wrote X user 0xZackHQ.

Head of Linea Declan Fox responded to 0xZackHQ, saying that the delay was because the network was overloaded with transactions before the airdrop went live. 

“The majority of the launch went well. We activated over 15 exchange listings for a new token. And once you get punched in the ring, you need to react well, which we did,” said Fox.

As of 6 am ET, Linea’s status page showed the network had been subject to a “partial outage” spanning close to 10 hours.

Paxos Unveils USDH Proposal V2 With PayPal, Venmo Integrations 

Paxos has updated its USDH stablecoin proposal with detailed plans for integration into PayPal and Venmo, aiming for seamless on and off-ramps and direct support for peer-to-peer and merchant payments.

If executed, those integrations would make USDH broadly usable in mainstream global payments, representing a major bridge between DeFi and traditional payments.

“72 hours. Every comment read and concern addressed,” said Paxos in an X post, linking to the new version of its proposal for USDH.

The updated proposal includes $20 million in ecosystem incentives alongside a performance-based revenue model to align Paxos' interests with Hyperliquid’s growth.

Paxos said it will only receive fees once USDH crosses $1 billion in total value locked (TVL), and its share will be capped at 5% even above $5 billion TVL. Until the $1 billion TVL milestone, all revenue from USDH will be reinvested to grow the Hyperliquid ecosystem and its Assistance Fund.

Paxos is in competition with other major issuers including Agora, LayerZero, Native Markets, Ethena Labs and Sky for USDH, with a final validator decision expected after Sept. 14. 

Polygon Completes Hard Fork to Address Finality Issue

Polygon rolled out a hard fork to fix a finality bug that was causing a 10 to 15-minute delay in transaction finality on its Polygon PoS network.

The bug originated from a misconfiguration in the consensus mechanism's finality logic after a recent protocol upgrade, which extended the time transactions take to be confirmed irreversible.

Polygon first shipped hot fixes for the finality issue on its block production layer Bor and consensus layer Heimdall around five hours after identifying the problem.

The team implemented the hard fork at 11:00 am ET and said consensus finalization had been fully restored on Polygon PoS.

“The root cause today came from a faulty milestone proposal that pushed some Bor nodes onto divergent forks. This wasn’t accounted for, and it triggered short-term instability,” explained Polygon CEO Sandeep Nailwal.

“As we’ve seen before, there will be growing pains with any ambitious upgrade. But each one makes Polygon PoS stronger on our road to GigaGas throughput, making the chain more resilient for the long run.”

The Onchain5: These 5 Onramps Will Power Crypto’s Mainstream Moment

By Ryan Yi

Crypto is entering a new phase of adoption where distribution will matter the most. This means that centralized entities with strong brand loyalty will be the biggest players in bringing users onchain. Although this phase has barely started, it is already shaping up to have its own version of a Mag7, which I’ll call the Onchain5.

These companies need to have a few key characteristics: expansive distribution, a clear commitment to blockchain adoption, excellent UX, and clear use cases for digital assets.

So who made the cut for the Onchain5—and why are they poised to lead crypto’s next wave of growth?

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• 🧑‍⚖️ SEC boss Paul Atkins said crypto builders should be able to raise money directly on blockchains without legal chaos, as he backed lighter rules and confirmed most tokens don’t count as securities.

• 📱 Trump’s pick for CFTC chair, Brian Quintenz, went public with private texts showing a fallout with Tyler Winklevoss, accusing him of misrepresenting their dispute to Trump and stalling his Senate confirmation.

• 🛑 Scroll DAO halted its community voting system as it reworks its governance structure after several key team members resigned, leaving proposals in limbo and sparking concerns over centralization.

• ⏳ The SEC postponed decisions on Ethereum ETF staking and delayed verdicts on Solana and XRP funds, even as nearly 100 crypto ETF proposals from top firms remain in limbo.

• 📜 Senators Kirsten Gillibrand and Cynthia Lummis expressed confidence that the long-delayed crypto market structure bill could still pass before 2026, despite ongoing partisan budget debates and ethical reform demands from Democrats.

• 💸 Binance.US slashed trading fees to nearly zero across 20+ crypto pairs, including Ethereum and Solana, in an effort to revive user activity after volumes stayed dismal even months after its legal troubles were resolved.

• ⚠️ India is steering away from fully regulating crypto due to fears it could destabilize the financial system, choosing instead to keep tight controls and punitive taxes to discourage risky use.

• 🛠️ A glitch involving third-party providers caused 39 Ethereum validators tied to the SSV Network to be penalized, though the SSV protocol itself wasn’t at fault, its founder confirmed.

• 🤝 Binance teamed up with $1.6 trillion asset manager Franklin Templeton to develop blockchain-based investment products aimed at bringing faster settlements, easier access, and broader adoption of tokenized securities.

• 💰 Avalanche Foundation entered late-stage talks to raise $1 billion through two U.S.-based investment vehicles that would use the capital to buy discounted AVAX tokens directly from the foundation.

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