Introduction
Initia is an L1 blockchain that provides a holistic infrastructure for Layer 2 chains, enabling them to communicate with each other seamlessly. Initia introduces a new architecture and economy for a multichain protocol, along with core products that form the foundation of interwoven rollups.
Mission and problem solving
Currently, the cooperation between rollups is quite cumbersome, and transferring assets across different chains is not intuitive for users. Using various chains requires learning new protocols, setting up additional wallets, and using different tools, which is time-consuming and inconvenient. For developers, building appchains is more challenging and takes longer when they have to design and create the fundamental elements of their ecosystem. Additionally, isolated rollups struggle with liquidity fragmentation, a problem that is difficult to overcome without a unified base layer with a single point of aggregated liquidity serving all chains simultaneously. Initia is working on a solution to streamline the integration processes of appchains, ensuring that despite differences in their technical architecture, they all have equal access to essential components. With Initia, simple operations like swapping tokens and transferring them to another chain will be seamless, allowing developers to focus on developing their chain and core functionalities without excessive concern for basic protocols like bridges or DEXs with sufficient liquidity.
Architecture overview
Optimistic rollup framework
Initia, derived from the Cosmos ecosystem, represents a modular approach to network architecture design. Through its Optimistic Rollup framework built on the Cosmos SDK, which is VM-agnostic by default, Initia enables the development of various purpose-specific L2s, commonly known as appchains. These appchains represent different VM standards like EVM, WasmVM, and MoveVM, which significantly enhance network integration. Developers can choose between different smart contract languages and environments, easily tailoring technical requirements to their needs, thus benefiting from much greater flexibility and facing fewer technical limitations.
Another important feature of the Initia network design is its ability to smoothly transfer assets and any other kind of data using the Inter-Blockchain Communication protocol. It is a widely used blockchain interaction solution that makes messaging between the Cosmos chains possible. Therefore, Initia rollups are able to communicate with each other and users can bridge their assets in a fast and seamless way. It handles all types of protocol communication, from token transfers to atomic swaps and cross-rollup contract calls, in a more secure manner that doesn’t rely on numerous bridges and minimizes trust assumptions. With Inita’s design, the fungibility between rollups can be more independent from third-party service providers like bridge or oracle providers. The process of building an Initia rollup is quite similar to that of developing a Cosmos SDK-based chain that provides greater flexibility in designing and implementing specific desired properties as developers can use the toolkit to adapt their products to the framework. This approach has a proven track record of successful unique projects launched including dYdX V4, Osmosis and others, in which flexibility in developing particular features was essential. Initia with its modular design aims to empower optimistic rollups builders to overcome constraints faced when deploying their appchains using other available rollup frameworks.
Initia employs a Delegated Proof of Stake (DPoS) consensus mechanism, allowing multiple tokens to be staked in exchange for voting power. Staked tokens include either INIT tokens or governance-approved INIT-X LP tokens used in the Initia DEX. This solution, called Enshrined Liquidity, supports L1 liquidity while also increasing staking rewards, as a portion of the rewards comes from swap fees and the yield generated by the token. Additionally, this approach enhances network security by relying on a broader set of tokens, rather than just the INIT token, leading to greater diversification.
Initia layers
Initia L1 is a base blockchain responsible for consensus, security, governance, and network interoperability. It coordinates routing, liquidity access, and security among these chains, handling the economic mechanisms necessary for rollup interactions. Within the Initia ecosystem, there is a native DEX that utilizes weighted and stableswap pools, similar to Balancer, but specific tokens and trading pairs must be approved by governance. The Initia DEX aims to aggregate liquidity on L1, facilitate the effortless exchange and flow of tokens between rollups, and enhance the efficiency of yield generation from staking. In this model, liquidity that would traditionally be locked in staking is instead utilized for trading and generating additional profits.
An interesting feature implemented in Initia is the ability to convert assets into gas for L2 transactions in a single transaction via the InitiaDEX. Additionally, various governance-approved LP tokens used in the DEX can be used to pay for gas on L1. Users of Initia rollups who need certain tokens to cover gas fees can also acquire them through instant routing based on the API system that serves all Cosmos SDK chains. These solutions simplify the transaction process and improve the user experience, making navigation of the Initia ecosystem less complex.
Layer 2s, known as Minitias, are appchains that operate on the Initia L1. They are purpose-built and designed to offer higher throughput and scalability. Minitias are characterized by a short block time of 500ms and can process over 10,000 transactions per second. These chains function without their own native consensus mechanism, fully relying on Initia L1 for transaction settlement and security guarantees.
Project teams building Minitias can focus on developing desired functionalities by implementing elements offered by L1, such as fiat gateways, oracle interfaces, and frontend widgets. Additionally, token interchangeability between chains is ensured, and thanks to the Cross-Chain Transfer Protocol (CCTP), Minitias have access to the native USDC stablecoin. The fact that ecosystem users can use USDC for settlements positively impacts the user experience and liquidity access. The absence of wrapped token versions is advantageous for everyday network use and does not introduce an additional layer of risk.
Rollups security
The number of rollups integrated with Initia is theoretically unlimited, but the key issue is the security of assets held on them. This security is primarily guaranteed by the ability to verify data. In the case of Minitias, Celestia is used as the data availability layer, where data is published. This solution is not only more cost-effective but also more practical in use. If there is suspicion of fraudulent activity on L2, the L1 validator set, thanks to Celestia light nodes, can verify the data without needing to download entire blocks. In addition, the fact that Minitias builders don’t need their own validator sets significantly simplifies the rollup deployment process and greatly reduces the implementation time by minimizing the scope of responsibilities.
Initia DEX
InitiaDEX is an integral part of Initia L1 and handles key functions within the Omnitia ecosystem. Through the native DEX, token exchanges between L2s are streamlined, eliminating the need for external protocols as seen in many other projects. Aggregated liquidity in the DEX pools prevents fragmentation and provides Minitial equal access to liquidity.
The designs used in InitiaDEX liquidity pools are similar to those found in popular DEXs like Balancer. They include:
Weighted Pools - dedicated to trading differently priced assets;
StableSwaps - optimal for trading assets that are similarly priced, primarily designed for stablecoins to minimize slippage;
MinitSwap Pools - specifically created for tokens bridged via IBC.
InitiaDEX actively supports liquidity across all chains integrated with Initia and is tailored to the specific needs of the Omnitia ecosystem. The DEX facilitates developers in building new appchains and fosters integration between them. While the optimistic rollup framework involves a lengthy challenge period to ensure security, it negatively impacts user experience by prolonging the withdrawal process from L2 to L1. With Minitswap DEX, a specially designed solution for token bridging, Initia addresses this issue by enabling instant transfers between L2s and L1.
Incentivizing ecosystem participants
One of the most crucial factors for the long-term development of the ecosystem is the activity of all its participants. Each blockchain offers various forms of incentives to keep actors engaged in contribution to the project. To deal with this matter, Initia introduces the Vested Interest Program, designed to reward all participants while overcoming the challenges often associated with inefficient token incentivization. A portion of the INIT token supply will be allocated for distribution to whitelisted Minitias, as well as users and operators, over the years in the form of escrowed INIT tokens (esINIT). These are initially non-transferable tokens that can be vested by maintaining a certain score based on various activities or by converting escrowed tokens into a whitelisted staking position. Over time, esINIT rewards are converted into INIT tokens distributed to users depending on their activity. Another option is to convert all esINIT rewards into a staked INIT:LP position on InitiaDEX, which contributes to increased liquidity for the DEX.
Fundraising
In February 2024, Initia raised $7.5 million in a seed round led by Delphi Ventures and HackVC. Other investors in the round included Nascent, Figment Capital, Big Brain Holdings and A.Capital. This funding followed a pre-seed investment from Binance Labs, although the amount of that investment is not disclosed.
Final thoughts
Initia addresses the challenges faced by projects and developers to make appchains interoperability smooth and provide easy and fast token bridging. Utilizing Initia L1 as a base layer with built-in solutions makes the development and integration of appchains much simpler and less time-consuming. A well-functioning infrastructure can contribute to creating a collaborative rollup environment that offers a diverse ecosystem to users. While relying on a larger number of assets does carry risks, it also provides greater diversification and should positively impact network security. Additionally, establishing a DEX as the primary protocol for token exchange prevents liquidity fragmentation between chains and contributes to easier daily use of the network. User trading activities will also benefit from access to the native USDC stablecoin, which carries less risk compared to multiple versions of the token or new stablecoins with smaller market caps created specifically for a particular chain. Well-designed mechanisms and functioning protocols can ensure the stability of the ecosystem, but the potential success will depend on the ability to onboard Minitias developers and their users, making the incentivization program essential.
