In this blog series we tackle the investment and technology thesis for one our partners at Lavender.Five Nodes so that you don't have to. It is a overview that will assume industry knowledge from the reader so we can move through material quickly. However, we provide extensive guidance along the way. Grab a cup of Coffee, set the timer to 5 minutes and learn about the network that is making modular feel integrated - Initia
The overview
Initia is built by a team of veteran Cosmos and Defi builders with a simple goal in mind, enable the creation of application specific blockchains without the complexity of the Cosmos SDK or the fragmentation of an Ethereum L2. These app-chains dubbed "Minitias" are Optimistic L2s using the OPINIT techstack, the Cosmos-SDK and Celestia as DA and are interoperable with one another out-of-the box! Slap on an embedded Oracle, IBC, Layer0 integration, native USDC, three different VM choics (EVM, Move, CosmWasm), Fiat onboarding and a core of 3 Initia specific features and you have a rockstar of an ecosystem. Initia also has their own explorer (even acquiring the team that built it), own wallet (but also supports Keplr, Rabby etc) but most of all had the craziest and most complete testnet so far. Let's dive into the assumptions you should deem to be true to be bullish Initia and talk about the execution so far.
The assumptions
- Building a Cosmos chain is flexible but tedious and costly
- Layer 2s are great scaling and sovereignty tooling but sacrifice interoperability
- The future is multichain as products want their own blockspace and custom integrations
- IBC is still great as a native security messaging protocol and will expand eventually
- Offering developers tools they want is the most important to grow an ecosystem
- Chains and Devs need to be a bit degen to be successful
- Fast consistent problem-driven iteration of a product trumps long (scientific) development
- Jennie = cute dog
The execution
Backed by Binance Labs, Delphi ventures, BigBrain, HackVC and many others it is clear that they have grabbed a lot of attention, so much that even the Minitias are seeing double digit million dollar seed valuations with names like Polychain and Longhash. The founders Stan and Zon have been on every podcast you can imagine and get appreciation from some of the brightest in the space whether it be Skip, Berachain or Blockworks. This respect is clearly well earned judging from the Initia public testnet. The Initiation saw thousands of people participate over 12 weeks to upgrade and feed their own on-chain tamagotchi - "Jennie" is now in the heart of Many. And such a sleek testnet and experience speaks about the team which is well-connected, (slightly) degen, building fast, iterative and most importantly, incredibly fun to work with.
1. opINIT + Minitias
Initia itself is a CosmosSDK Layer 1 and so are the rollups on top of it. Using the OPinit stack developers can setup an Optimistic L2 by deploying the sequencer and relayers and filing in some genesis parameters. The Minitias Come with three different VM choices which are completely integrated into the CosmosSDK so that they become highly flexible. Minitias can add modules, use vote extensions, use IBC and alter their base code as they please - integration into the wider ecosystem is promised out-of-the box.
2. Enshrined liquidity
The baselayer for all minitias comes with an AMM with some special features. Besides a market for tokens bridged to the L2 (see #MinitSwap) the dex on the L1 allows staking of LP tokens into the native dPOS mechanism of Tendermint. This means that from the very beginning liquidity providers and users of Initia itself can be aligned with the protocol. Additionally, Minitia developers have an easy place to list and market their token and have their own users also participate in staking on the L1. Attaching additional utility to Liquidity tokens (in Berachain dubbed Proof Of Liquidity) is just one of the mechanisms that helps INIT become money and the entire ecosystem feel as an integrated ecosystem.
3. Vested Interest Program
INIT stakers and InitaDex LP token stakers can use their governance rights to direct and parameterize incentives for the users and developers of a Minitia. The VIP (Vested Interest Program) disperses INIT based on the # of bridged tokens into a Rollup (indicating usage) and other metrics chosen by the Minitia team. This combination together with weight choices by INIT stakers creates alignment between the baselayer and users across the ecosystem. Want to incentivize more usage on your minitia? Just convince the community.
4. MinitSwap
In the Initia ecosystem, Minitias have simultaneous access to two types of "enshrined" bridges - the optimistic bridge and IBC, each with different security assumptions. Minitswap acts as a virtual omni-pool DEX, creating a market for tokens bridged to the L2 and the native versions on the Initia base layer. In essence Minitswap allows a price to exist for the time delay and security assumption of an optimistic sequencer. Users can withdraw and wait 7 days or swap for a small discount to the native asset directly. Meanwhile, arbitragers and active Init L1 participants can generate yield by participating in the market to balance the interests. This IBC enabled AMM is what connects not just contracts and state but also value on all the L2s and makes Initia truly Interwoven.
5. Ecosystem Tools
Unlike building an Eth L2 the Minitias don't have to set aside massive integration costs and convince parties like Chainlink, LayerZero and Circle to deploy on their chain. Initia is supported by a Native price-oracle through Skip:connect, build the Cosmos LayerZero module and hosts Native USDC through Noble. All of these things are automatically accessible to all L2s as they too are CosmosSDK chains and share an IBC relay with the Initia L1. Now also add a dedicated explorer, top-notch wallet support, account abstraction tools and fiat onboarding and an Initia Rollup has everything it could ever want just within reach.
Cosmos and Ethereum both scale through App-chains and additional blockspace but fragmentation has always hindered Cosmos and is now slowly having the same effect on Ethereum. Modular ecosystems need to feel integrated or unalignment breaks an ecosystem in smaller and smaller pieces. Initia has created a combination of tech-stacks that solves this issue from its very core. Add a top notch team and founders, ample community hype, a sleek testnet, crypto native yet professional branding and the best backers in Crypto - We too see an Interwoven future.
You can learn more about Initia by watching our video overview on Youtube
