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Initia: Powering the Next Evolution of App-Chains?
Jake Kennis
main

Given the year-to-date increase in crypto market volatility and gloomy price action, we take time to pause and dive deeper into new projects tackling key fundamental issues in the space. Let’s focus on one of the key projects on our radar, Initia, which we believe is firmly positioned to bring forth the original app-chain vision. Let’s dive in.

Executive Summary

  • Initia's technological edge lies in its modular setup, offering app-chains out-of-the-box tools such as enshrined liquidity, interoperability, scalability, and security. It boasts 500ms block times and up to 10k TPS, catering to the growing need for vertically integrated tech stacks as applications scale. Initia provides a streamlined framework for this, backed by a clear and strategic roadmap.
  • The team has a solid track record within the broader Cosmos ecosystem and have gained backing from leading VCs, including Hack VC, Delphi, and Theory Ventures, with their latest Series A round valuing the project at $350 million.
  • Initia addresses key end-user pain points, particularly the fragmented UX across liquidity and interoperability of applications on different chains. This focus on enhancing the user experience sets it apart from existing solutions.
  • While there is no token at the moment, the mainnet is rumored to launch as early as March 2025. Numerous apps and chains are live on the testnet, with many projects spanning AI, gaming, and DeFi sectors actively raising funds. Engaging with the testnet now provides valuable insight into the UX and could potentially position users for a future airdrop.
  • The primary risk lies in strong technology failing to attract users, a challenge faced by the Cosmos ecosystem at large. However, Initia directly addresses UX fragmentation across multiple chains, backed by a strategic roadmap, a promising testnet ecosystem, a capable team, and key network effects. These factors make Initia a project worth keeping on the radar.

What is Initia?

Initia combines a layer 1 (L1) with integrated layer 2 rollups (L2s), creating a modular ecosystem of interconnected chains. This approach aims to remove the complexity of dealing with many separate blockchains. The Initia L1 is the base layer that coordinates security, liquidity, routing, and interoperability across numerous app-specific L2s. For context, this would be the equivalent of L2s on Ethereum being able to tap into the liquidity effects of the underlying L1, while being interoperable with one another by default. This includes seamless token transfers, swaps or even multiple gas tokens used between L2s. Initia leverages Celestia’s data availability layer (DA) to store rollup data off-chain, enhancing scalability without burdening the main chain. Each L2 on Initia is an optimistic rollup (using Initia’s custom OPinit stack) that can run in different execution environments – whether EVM, Move VM, and a few others – all while inheriting the shared infrastructure, liquidity, interoperability, and security of the Initia network.

Initia provides out-of-the-box tooling for every rollup, with built-in features like a block explorer, a wallet, native bridging, and support for native stablecoins. Developers can also use whatever programming framework suits their app (Solidity, Move, CosmWasm, etc.) while tapping into the same base services and cross-chain interoperability. The goal is a unified user experience: users wouldn’t need dozens of wallets or deal with many wrapped tokens when moving across chains.

In short, given the premise that many apps that become sufficiently large will want their own vertically integrated tech stack, Initia provides a neat framework to do this. We have seen this strong theme in action with the likes of Unichain, or even Pump-dot-fun building their own in-house DEXes and even Solana’s network extensions - apps want to vertically integrate to provide a superior product/experience or capture more value. We believe Initia can be one of the key platforms to help provide apps the infrastructure to do so without the headache of creating and bootstrapping entire L1s.

How is Initia Differentiating?

Initia
Source: Initia

Most blockchains today mainly focus on either improving a single monolithic L1 (i.e making one chain faster or more scalable), or allowing many separate app-chains without strong integration (i.e the current Cosmos ecosystem) or via clusters of L2s that are interoperable but only within a specific L2 framework (i.e Superchain). Initia takes a unique path by fusing an L1 with an ecosystem of L2s under one network. Unlike traditional L1s, Initia bakes an app-chain platform directly into its architecture. Unlike standalone Cosmos zones that each run independently, L2s on Initia share a common infrastructure and can interoperate more easily - in other words, interoperability is an out-of-the-box feature. This architecture gives Initia some notable advantages out of the gate:

  • Flexibility and Composability: Initia’s tech stack allows novel chain-level features that other platforms can’t easily implement. For example, the team has built enshrined protocols into the network, most notably a native DEX and staking mechanism available to all L2s to align incentives across the ecosystem. This built-in functionality means new rollups can launch with ready-made liquidity and oracle solutions rather than reinventing the wheel. Additionally, the Initia blockchain is a layer 1 that can interoperate with other chains via IBC, such as Berachain, Celestia, and others.
  • Multi-VM Support: Developers aren’t limited to Solidity or one language. Initia supports EVM smart contracts, Move-based applications, and CosmWasm contracts, giving projects choices in their technology stacks. This open environment can attract a wider array of use cases – from DeFi protocols ported from Ethereum to gaming or social apps that might prefer Move or other VMs. All these different apps can live under one network umbrella and be interoperable and scalable by default - no longer do teams have to choose one rollup framework over another with constant tradeoffs across interoperability and vendor lock-in; simply build what kind of L2 you want.
  • Unified User Experience: By providing a rich suite of tools (cross-chain interoperability, one-click bridging between rollups, unified wallet login, etc.), Initia lowers the barrier for users to interact with multiple chains. The end goal is many scalable L2s that feel like one coherent ecosystem.
  • Protocol Alignment and Incentives: Initia builds upon many base primitives that the L2s will have access to, such as enshrined liquidity and the ability to direct incentives via the Initia governance token through voting (like Curve bribes). In general, the L2s that launch on Initia can benefit from the shared tech and liquidity stack of the base layer. Think Berachain-like properties but for chains instead of apps.

With claims of 500ms block times and 10,000+ TPS capability, L2s can tap into significant scalability gains with significant network effects, assuming a few apps/chains gain traction on Initia.

Why Market Participants Should Pay Attention

Initia presents a combination of strong fundamentals in the evolving modular blockchain landscape. Here are a few key reasons why Initia stands out:

  • Backed by a Strong Team/Investors: Initia’s team has been building since 2022, and their expertise attracted significant early backing. Binance Labs incubated Initia in its pre-seed stage. In the fall of 2024, the project closed $14 million in a Series A funding round led by Theory Ventures with participation from Delphi Ventures and Hack VC. Other participants include Nascent, Figment, and a_capital, as well as prominent angels such as Cobie, DCF God, and Smokey the Bera.
  • Innovative Architecture Tackling a Big Problem: Initia is addressing one of the most significant pain points in crypto today: fragmentation across chains. As discussed, users and liquidity are spread thin over many bespoke and fragmented chains, wallets, and interfaces. By offering a unifying multi-chain solution, Initia addresses the rollup fragmentation issue that users and applications face today. If Initia makes it easier for dApps to launch their chains and for users to access them seamlessly, it could capture substantial value by becoming the go-to hub for a rollup-centric world. In a world with most apps that attract enough usage demanding their own chain (i.e., Hyperliquid, Uniswap, Maker, Athena, etc.), there are a lot of tailwinds for a platform that can alleviate many of the pain points they face today, mainly, fragmentation of liquidity and interoperability, amongst others.

  • Competitive Moats and Technical Advantages: Its technology stack allows for custom optimizations at the chain level (like the enshrined DeFi primitives mentioned earlier). It’s also building with Cosmos SDK and integrating with Celestia, allowing much more scalability and control at all stack levels for L2s. Initia is positioned at the intersection of two exciting sectors: modular/IBC ecosystems and Ethereum rollup ecosystems. Few projects bridge these worlds as directly as they do. Moreover, supporting multiple VMs gives Initia access to developer communities from different ecosystems. If successful, developers and users might prefer launching on Initia’s ready-made framework rather than reinventing multichain connectivity elsewhere.

  • Under-the-Radar Opportunity: Broader market conditions are quite risk off with BTC range bound and altcoins continuing to perform very poorly; thus alts and the idea of “another chain”, is likely not on everyones radar. The project is still in testnet with no token trading at the time of writing; however, there is some speculation that mainnet is expected as soon as March 2025. The thesis for Initia is that as rollups and app-chains grow, a platform that facilitates and aggregates them, like Initia, can potentially capture outsized value relative to betting on any individual L2.

In summary, Initia checks many boxes: an experienced team, strong backers, and differentiated technology that solves a real market need.

Enshrined Protocol Features

The enshrined protocol features aim to provide a solid framework for L2s to build on. Most notably, they have a DEX that supports weighted pools, stableswaps, and minitswap pools (i.e., tokens sent via IBC). This is quite similar to Berachain’s liquidity mechanism, but it does differ on a few key features that we are excited about, mainly:

  • LPs involving the INIT token can be staked to increase the capital efficiency of the native token. INIT holders who want to LP can earn more yield on INIT paired tokens via the underlying INIT in the LP token being staked and earning staking yield. In other words, INIT holders can simultaneously earn LP and staking rewards.
    • INIT and their INIT LP tokens can also redirect INIT emissions (as opposed to validators).
  • Incentives to rollups are wide-ranging and can be used for any purpose, not just to liquidity pools with potential mercenary capital.
  • Incentives are vested as esINIT and cannot be sold immediately, supporting long-term alignment.

On top of the enshrined DEX, Initia allows many other core features to be built directly into the core protocol. Most notably, for rollups, the L1 validator set provides shared security for all the rollups. This security system provides fraud-proof verification and rollbacks utilizing Initia’s validators. It also has a shared DA layer that validators use to construct fraud proofs, along with other features that enable people to verify transaction data.

Testnet Applications

Many apps/chains live on testnet revolve around gaming, AI, and core DeFi applications such as lending and yield optimizers. To name a few, below are some of the top projects building and raising funds for Initia as of recent:

Conclusion
Initia directly tackles a very key problem facing rollups and app-chains today. Of course, there remains risk, most notably it needs to garner traction and liquidity to kickstart network effects for the entire ecosystem. We saw Dymension lose a lot of momentum given the lack of traction it received. Still, Initia already has a promising testnet with a focus on gaming and many of the key DeFi pillars. The main difference between Dymension and Initia is that the former uses sovereign rollups, whereas Initia uses optimistic rollups. We believe the team, along with the strong backing, tooling, and core features, that Initia is well positioned to help fulfill the app-chain vision.
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Disclosure: The authors of this content and members of Nansen may be participating or invested in some of the protocols or tokens mentioned herein. The foregoing statement acts as a disclosure of potential conflicts of interest and is not a recommendation to purchase or invest in any token or participate in any protocol. Nansen does not recommend any particular course of action in relation to any token or protocol. The content herein is meant purely for educational and informational purposes only and should not be relied upon as financial, investment, legal, tax or any other professional or other advice. None of the content and information herein is presented to induce or to attempt to induce any reader or other person to buy, sell or hold any token or participate in any protocol or enter into, or offer to enter into, any agreement for or with a view to buying or selling any token or participating in any protocol. Statements made herein (including statements of opinion, if any) are wholly generic and not tailored to take into account the personal needs and unique circumstances of any reader or any other person. Readers are strongly urged to exercise caution and have regard to their own personal needs and circumstances before making any decision to buy or sell any token or participate in any protocol. Observations and views expressed herein may be changed by Nansen at any time without notice. Nansen accepts no liability whatsoever for any losses or liabilities arising from the use of or reliance on any of this content.