Since the emergence of Celestia last year, another blockbuster project in the Cosmos ecosystem, Initia, is about to welcome its TGE. Recently, the discussion heat on Twitter has been rising. In fact, Cosmos has always been in a rather awkward position; while numerous large projects in the ecosystem are emerging and thriving, its ATOM has remained stagnant without empowerment, and many ecological projects have market values higher than its own.
Initia has raised a total of 25 million USD from Binance and HackVC, with individual investors including Berachain founder Smokey, LayerZero founder Bryan, Curve founder Michael, Ethena founder Guy Young, and others. Its structure is quite similar to Movement, as it integrates core roles from different ecological camps and is a core candidate for Binance amid fierce competition in the second half of the year.
@initia is essentially a one-click chain issuance platform. This field is already quite competitive and not novel, but Initia has still managed to create some unique capabilities, especially in optimizing many issues currently faced by Ethereum's L1+L2 setup at the native layer, along with a very unique economic model system. First, Initia's structure is divided into L1+L2, collectively called the Omnitia platform. L1 is used for coordinating network security, consensus, governance, interoperability, liquidity, and cross-chain messaging, while L2 is based on this to issue application chains that solve high performance, scalability, and throughput, which can run directly on virtual machines like EVM, MoveVM, and WasmVM.
Thus, just from the division of labor between L1 and L2, some advantages can be seen. L1 is not solely for network consensus and security but directly addresses Ethereum's most troublesome issues like liquidity fragmentation and poor interoperability at the native level. In fact, Initia can be better compared to the entire OP SuperChain system rather than Ethereum's L1+L2 system. Additionally, its L2 can directly support multiple virtual machines, which is still quite appealing to many projects.
Initia is built on the Cosmos CDK, so inter-chain communication uses IBC and TBA, forming a fully Optimistic framework. Its structure is illustrated in the following diagram. The chains of the Cosmos ecosystem itself use IBC and Axelar for integration, while other chains like BSC, Ethereum, and Arb use Axelar for integration. Above this is Initia's L1 layer, which features the previously mentioned integration of multiple VMs and communication modules. Notably, it integrates a native Dex within L1, which will serve as the liquidity pool for the entire Initia system, including its L2, thereby eliminating the need for each L2 to replicate Dex for liquidity, which would lead to major liquidity fragmentation issues, enabling seamless trading of assets across the ecosystem. Additionally, due to its native characteristics, Mintswap can facilitate instant deposits and withdrawals between L1 and L2 without a 7-day challenge period.
Moving up to L2, one can see that it intentionally weakens the concept of 'nodes', calling them Submitters instead of Validators. This aims to ensure that L2 truly focuses on executing transaction submissions. Each batch of transactions will be stored in Celestia, so L2 does not possess its own separate consensus mechanism. As mentioned earlier, Initia emphasizes practicality, so it has integrated components like Dex, native bridges, and oracles within L1 to allow L2 to be ready for use without needing to replicate efforts, concentrating resources on applications.
Therefore, Initia's entire system is quite large, with two main features: natively solving liquidity fragmentation issues and being compatible with various VMs, essentially possessing native chain abstraction.
In addition to the technical integration of L1 and L2, it has also proposed an economic model called the VIP incentive framework, where VIP refers to all L2s based on Initia. The biggest criticism of Ethereum's L2s, aside from liquidity fragmentation, is that they haven't contributed enough value to L1, seeming more like bloodsuckers. This issue is even more apparent in Cosmos, where the ecosystem is bustling but ATOM really lacks empowerment. Thus, Initia's idea is to ensure that its native token $init serves as the foundational asset unifying all L2s within the ecosystem and must not be decoupled, appearing in as many users' wallets as possible. However, there arises a problem: what if the L2s do not cooperate? This cannot be achieved through coercive means but rather through an incentive-compatible economic model to achieve a win-win situation. Overall, I think Initia aims to create a system similar to the Euro within the European Union.
10% of the total token supply will be allocated to VIP as rewards. The rewards are divided into two indicators: first, the number of use cases generated by L2 for the token, and second, the voting weight allocated to each L2 by L1, similar to the mechanism of Curve. Therefore, in order to receive more tokens, L2s will strive to create more use cases for the token. If you wish to go it alone, you will unfortunately be kicked out of VIP and not allowed to freeload. Thus, it can be seen that the entire Initia is quite right-leaning, using both soft and hard means to get L2s to supply blood to L1 rather than suck it, forming a sharp contrast with Ethereum's left-leaning approach. However, at the same time, L2s that hope to use their own tokens as gas may not likely choose Initia, which involves trade-offs.
After the token distribution, there will be a more complex mechanism for unlocking to ensure long-term incentives for L2s and projects that add value to the token. This is too complicated, with a bunch of formulas that I didn't understand, so I won't elaborate.
Currently, it has not launched its mainnet, but it already has 13 projects in its ecosystem, covering DeFi, gaming, social, etc., among which InfinityGround was selected for Binance's MVB, so it has resources for cold starts.
