What is Initia?
Are monolithic blockchains or modular blockchains the answer to scalability? If the future is modular, Initia is holistically rebuilding the modular, multichain approach to solve scalability.
Initia is a new, delegated Proof-of-Stake, Cosmos SDK Layer 1 blockchain ecosystem. Their goal is to enable developers to easily and frictionlessly deploy L2 optimistic rollups. Initia Layer 1 (L1) is their “Orchestration Layer”, coordinating security, consensus, liquidity, governance and interoperability. The Orchestration layer is a support framework for flexible, simple tools for developers to deploy unique, sovereign and scalable optimistic rollups Layer 2s called “Interwoven Rollups” or “Full-Stack Apps”. Interwoven Rollups are formerly known as Minitias.
Initia Architecture Overview from Initia Docs
Solving Developer and User Experience Fragmentation
Initia’s goal: solve developer, and user experience fragmentation with their VM-Agnostic Optimistic Rollup framework (OPInit Stack). Initia’s seamless “Interwoven Rollup” ecosystem, abstracts away fragmentation in toolsets and developer experience during Interwoven Rollups development. Developers can solely focus on product improvements. In essence:
Easily and flexibly deploy scalable, modular and interoperable rollups.
Unique to Initia is their Enshrined Liquidity mechanism paired with their InitiaDEX or native decentralized exchange. Individual INIT tokens or governance whitelisted tokens paired with INIT, are staked to validators to create a liquidity hub across the L1 chain. This facilitates seamless swaps across the L1 and L2 routers through the battletested Inter-blockchain Communication Protocol (IBC). This design solves bridging risk and liquidity issues across the Initia ecosystem. Users can swap or move their funds across Cosmos, Initia or any Interwoven Rollup frictionlessly, and with deep liquidity.
What Problems Does Initia Solve?
If blockchains need to scale to hundreds or thousands of application-specific rollups, how do we deploy them securely, safely, flexibly and interoperably?
Initia believes that Fragmentation is a significant challenge for developers and users. Initia’s solution: “A support framework for flexible, simple ways to deploy unique, sovereign and scalable rollups (Interwoven Rollups)”
Enshrined Liquidity, the InitiaDEX and Minitswap DEX solve the traditional issue of liquidity fragmentation between the L1 and its Optimistic rollups. Optimistic rollups can “isolate” liquidity, as by design, withdrawing or bridging from an optimistic rollup to the L1 has a 7 day challenge period for finality.
Initia innovates by enabling staking of INIT tokens and notably, governance whitelisted INIT-Token X Liquidity Pool pair tokens from InitiaDEX to validators. These tokens gain voting power, enhance rewards for liquidity providers, boost liquidity across L1/L2s, and facilitate seamless interaction and swaps through the Initia/Minitswap DEX across the Initia Ecosystem.
Through the Minitswap DEX and IBC, users can freely, quickly and efficiently bridge tokens back to Initia L1, or another Interwoven Rollups without waiting for the 7-day optimistic challenge period to expire.
How Does Initia Solve the Infrastructure Fragmentation Issue?
Interwoven Rollup developers are free to choose different combinations of the tech stack shown below, as their toolset on Initia:
Source: Initia Docs “Minitia (Layer 2)”
Initia L1 addresses infrastructure challenges commonly faced in modular systems, such as fiat on/offboarding, exchange support, and data management, as these services are natively offered by the L1. This significantly reduces the overhead for Interwoven Rollups developers. In addition, developers are no longer restricted to specific Virtual Machines (VMs) toolsets. Initia’s interoperability supports EVM, WasmVM, MoveVM, Solidity and WebAssembly out-of-the-box.
The CosmosSDK allows for customizable optimistic rollups for Interwoven Rollups, known as the “OPInit Stack Module”. With built-in fraud proofs and rollbacks, Interwoven Rollups developers can retrofit different types of components for use and market focus. Optimistic rollup scalability exponentially increases via a separate transaction execution framework (parallelized transactions). Transactions on Interwoven Rollups are sequenced and settled in bulk to the L1 for settlement and Celestia for data availability, providing a transparent and secure environment for operation and verification.
Interwoven Rollups:
Milkyway Zone: Modular Restaking Hub
MilkyWay is the first and largest liquid staking and restaking protocol in the modular ecosystem.
Civitia:
On-chain, continuous, real-time, global and financialized monopoly-like game with economic theory.
Enables liquidation free leverage trading for long tail assets via a novel construct called Limitless Pools.
Kamigotchi
Onchain virtual world and battleRPG.
Full list of Interwoven Rollups found at the bottom of this page: https://app.testnet.initia.xyz/
How Does Enshrined Liquidity Solve Liquidity Fragmentation?
Enshrined Liquidity is Initia’s unique approach to solve liquidity fragmentation. INIT tokens and whitelisted INIT-X Liquidity Pool paired tokens from InitiaDEX are directly staked with validators.
Key features include:
- Efficient allocation of assets by mobilizing productive assets (LP tokens)
- Enhances economic security by diversifying stakable assets
- Enhances staking rewards for LP stakers through swap fees, rewards from tokens within the LP pair, and long exposure to additional tokens
- Significantly boost liquidity on the L1, which is accessible to both L1 applications and Interwoven Rollups
- Inter-Interwoven Rollups routing, allowing users to swap Token X on 1 chain for Token Y on any other Interwoven Rollups or the L1
- Flexible gas usage, tokens within whitelisted LPs can be used for transaction fees on Initia
Initia’s Vested Interest Program (VIP) and Network Tokenomics
A core issue for any blockchain ecosystem is aligning economic incentives of all participants.
Per Initia’s documentation, these include:
- Misalignment of incentives for dApps or Interwoven Rollups that create high levels of on-chain activity and value
- Economic underutilization of the native token
- Inefficient and ineffective distribution of grants and incentives to foster long-term value creation and economic alignment.
Initia’s novel incentive alignment program is the Vested Interest Program, or VIP. VIP is Initia’s long-term plan, to structurally align all ecosystem stakeholders around INIT value-creation.
All ecosystem participant’s rewards are in the form of escrowed INIT tokens (esINIT). esINIT is initially non-transferrable, and vests differently depending on whether the receiver is a user or Interwoven Rollup operator. Validators, users, applications and developers are therefore incentivized to actively participate, integrate and align with INIT’s long-term success, to maximize their vesting esINIT rewards. This creates a direct incentive for Interwoven Rollups to expand opportunities for Initia stakeholders. for Initia stakeholders and integrate INIT into their applications. Interwoven Rollups rewards and user rewards from esINIT are directly correlated to the economic success of INIT.
Further reading: VIP Rewards Architecture, VIP Gauge Voting and VIP Scoring
Staking Rewards and No Staking for Investor Locked Tokens:
Per founder Zon’s X account: “Locked and unvested [INIT] tokens will not be stake-able on Initia”. These include any insider, investor or team allocations of INIT tokens. This is an extension of the VIP program and aligning long-term economic incentives for all stakeholders around the INIT token.
To earn staking rewards for INIT, only unlocked INIT qualifies. All rewards are in $esINIT and vest according to the VIP program. Staking rewards rates are a function of total inflation rates, swap fees, rewards and total staked INIT. As relatively less INIT is eligible (locked tokens are ineligible) to earn these rewards, the initial reward rate for staking INIT could be quite high. Assuming 50% of the liquid INIT is staked at launch, initial staking reward rates could be as high as 50% annually.
Initia Team and Fundraising
Initia was founded by Zon and Stan Liu. Both worked at Terraform Labs (Terra) until 2022, Zon as a smart contract developer, and Stan in MEV research.
Initia’s pre-seed round was led by YZiLabs (formerly Binance Labs) in October of 2023. They subsequently raised a seed round of $7.5MM in February of 2024 from top venture investors including @Delphi_Digital, @hack_vc and participation from @FigmentCapital, followed by a Series A raise of $14MM in September of 2024 led by Theory VC. Angel investors across different raises include: @cobie, @dcfgod @SplitCapital, @nickwh8te (Celestia co-founder), @SmokeyTheBera (Berachain founder).
Shortly after Initia’s Series A, they also raised a $2.5M community round through Echo. Notably, the community round valuation was priced at nearly a 30% discount to the Series A, reinforcing Initia’s commitment to giving a broad user base the ability to gain exposure at comparable prices to institutional investors. The Echo round sold out within 2 hours, with about 800 participants.
How is Figment involved in Initia?
Figment has participated in both of Initia’s testnets and will support mainnet staking on launch day. If you are interested in staking Initia to earn rewards, Figment offers a host of services aimed at delivering safe and reliable staking rewards for your assets. Connect with us here for a demo.
Our 700+ institutional clients rely on Figment to provide best-in-class staking services including seamless and easy integrations, detailed rewards reporting, insights, double sign slashing, and downtime penalty coverage. Figment’s team has extensive Initia knowledge and is happy to discuss chain specifics such as rewards and staking mechanics. Meet with us to learn more about Initia staking.
