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Cosmos has been a pioneer in envisioning a multichain world where different blockchains can interact and communicate with each other. This vision was built around infrastructure such as the Cosmos SDK, a framework for building custom blockchains, and the IBC protocol, which facilitates interoperability between chains. This innovation laid the foundation for the Appchain thesis, where applications operate on their own blockchains, allowing for greater flexibility, sovereignty, and value capture. This initial Cosmos vision also inspired teams like Optimism, which applied similar ideas to create an ecosystem of Ethereum Layer 2s based on the OP stack.
Initia is an evolution of both the Cosmos and Ethereum/Optimism visions, introducing a new perspective on the Appchain and Multichain world, and presenting an Appchain 2.0 vision. Initia aims to offer applications all the benefits of a Layer 1 blockchain, such as flexibility, sovereignty and value capture, while overcoming challenges like technical complexities and poor user experience. Initia achieves this by providing a unified, intuitive, and interconnected platform of rollups, which will be explored further in this article.
As mentioned, Initia’s value proposition is to simplify and enhance the Multichain experience by creating a unified, interconnected ecosystem of rollups. This approach allows for seamless interaction across the various Initia Rollups (also called Interwoven Rollups, or just Rollups) and provides the benefits of Layer 1 blockchains without their associated drawbacks. Let’s take a closer look at the Initia architecture.
It is the core layer of the Initia ecosystem. The Layer 1 is based on the Cosmos SDK and uses CometBFT as its consensus mechanism. Initia uses Move for smart contracts, and its implementation of the Move Virtual Machine introduces a key innovation by tightly integrating it with the Cosmos SDK. This integration allows developers to directly call Cosmos SDK functions such as sending IBC transfers or performing interchain account actions within Move smart contracts.
IBC is the standard messaging protocol across the Cosmos ecosystem. By embedding it into the Move environment, Initia removes the need to create new Cosmos modules for these capabilities. Instead, some of this logic can now be handled within Move, allowing for more flexible and modular development.
At the Layer 1 level, Initia also includes the LayerZero module, which plays a critical role in enabling interoperability. This module acts as an endpoint, allowing communication with any other chain that supports LayerZero.
Initia Layer 1 has a system to protect assets and validate operations across its Rollups. Here’s how it works:
Initia introduces two key modules that work closely together: the DEX module and the Enshrined Liquidity module. The DEX module is a built-in decentralized exchange that allows users to trade using balancer-style pools and stableswap pools. By embedding this functionality directly into the chain, Initia provides native infrastructure for liquidity and trading without relying on external smart contracts.
Complementing this is the Enshrined Liquidity system. In Initia’s design, the native token, INIT, serves both as the governance asset and the staking token, then the stakers earn rewards generated through inflation. This inflationary payout represents the network’s security budget.
The challenge with this model is that a significant percentage of the token supply is locked into staking solely to secure the network, often without contributing to liquidity or broader ecosystem utility. Initia addresses this inefficiency by connecting staking and liquidity through the Enshrined Liquidity system, creating a more productive and aligned use of token capital.
With Enshrined Liquidity, users can stake whitelisted LP tokens on Initia from the built-in DEX module directly with validators. These LP tokens represent trading pairs such as INIT/USDC or INIT/ETH. Any trading pair on the DEX where INIT makes up more than 50% of the weight can be approved for Enshrined Liquidity via governance, and each pair can be assigned a specific reward weight.
For example, if the INIT/USDC pair is allocated 60% of the staking rewards and the INIT/ETH pair receives 40%, these LP tokens become the main way rewards are distributed. This system turns Initia’s Layer 1 into a deep liquidity hub that supports the entire ecosystem, including all Rollups built on top of it.
Interwoven Rollups are application-specific rollups built on top of Initia Layer 1. They are connected to the L1 through the OPinit Bridge, which enables seamless communication between the two layers via two Cosmos SDK modules: the OPhost Module, integrated into Initia L1, and the OPchild Module, embedded in each rollup. The OPhost Module manages rollup state, including sequencer information, and is responsible for creating, updating, and finalizing bridges and L2 output proposals. On the rollup side, the OPchild Module handles operator management, executes messages from Initia L1, and processes oracle price updates. Coordination between the two modules is handled by the OPinit Bot Executor, which ensures efficient and secure cross-layer operations. Unlike traditional Rollups, Interwoven Rollups can operate with anywhere from 1 to 100 sequencers. The Initia team recommends 1 to 5 for best performance, with the system capable of supporting up to 10,000 transactions per second with low latency.
Each rollup on Initia uses the Cosmos SDK for its application layer, but modules like staking and governance are usually excluded to streamline development. Governance is instead handled through smart contracts, removing the need for a native token. Each rollup supports fraud proofs: if a sequencer acts maliciously, validators can use Celestia data to confirm the issue and fork the chain if necessary.
One rollup on Initia can choose a different VM and has the choice between MoveVM, WasmVM, and EVM. This gives developers flexibility to choose the best stack for their use case. The LayerZero module is also implemented as a Cosmos SDK module instead of a Move smart contract, because relying solely on Move would limit compatibility. By embedding LayerZero messaging at the Cosmos SDK level, Initia ensures that all Rollups, regardless of their VM, support messaging from the moment they launch. This design enables smooth communication between Initia Layer 1, Rollups, and external chains.
Beyond its architecture, Initia simplifies go-to-market for Rollups by providing shared infrastructure like bridging, oracles, stablecoins, and wallet integrations. This reduces the operational load and helps Interwoven Rollups launch faster.
As previously mentioned, Initia provides native bridging support through the LayerZero module, which is integrated directly into every rollup. This enables seamless, out-of-the-box interoperability with all other LayerZero-enabled chains, including other Interwoven Rollups.
In parallel, IBC is also supported, allowing Cosmos-style communication and token transfers between chains, including Interwoven Rollups. However, there are key differences in how these systems operate. While LayerZero can be implemented directly across all Interwoven Rollups with no structural limitations, IBC has some trade-offs. Direct IBC connections between every Initia’s rollup would create complex dependencies that don’t scale well. In contrast, LayerZero supports omnichain fungible tokens, allowing tokens to be burned on one chain and minted on another for a smooth, unified experience.
To improve IBC usability, Initia uses its Layer 1 as a routing hub. When tokens are bridged in, they first arrive on the Initia Layer 1, which then sends them to the destination rollup. This approach ensures consistent token origin and avoids unnecessary wrapping. For example, moving a token from rollup-1 to rollup-2 goes through Layer 1, preventing duplication and maintaining liquidity. This is made possible by custom hooks on Layer 1 that can interact with contracts across all Rollups.
One of the key challenges with Ethereum Layer 2s is the poor user experience when withdrawing assets back to mainnet, which often involves a 7-day delay due to optimistic rollup security assumptions. Initia solves this with Minitswap, a mechanism that enables near-instant transfers between Rollups and the Initia Layer 1, typically completed in seconds.
While Initia’s OP bridge allows fast deposits from L1 to one rollup, withdrawals would normally face the same 7-day delay. IBC offers fast transfers in both directions, but without a withdrawal delay, it introduces security risks, especially if a rollup uses a single sequencer: a malicious sequencer could double-spend and instantly bridge assets out via IBC.
Minitswap avoids this by using a liquidity pool model. Instead of bridging, users swap tokens between L1 and rollup versions, enabling instant transfers. Pools consist of 50% INIT and are restricted to whitelisted Rollups.
To ensure safety and efficiency, the system includes:
Minitswap pools will be incentivized. Liquidity providers receive LP tokens that can be staked for rewards, integrating with Initia’s broader staking system.
The Initia Layer 1 uses Connect from Skip, a built-in oracle system powered by the Initia validator set. Validators fetch real-time price data from sources like CoinGecko and Binance, then reach consensus on these prices as part of block production. This data is embedded directly into each block and made natively available on-chain.
Developers on Initia can access reliable price feeds without needing external oracles. The same pricing data is also relayed to all Rollups, using the same structure as on Layer 1 and updated every 2 seconds. This setup is ideal for high-frequency applications like lending, trading, or derivatives, providing fast and consistent price data across the entire ecosystem.
Noble is a Cosmos based chain that offers native USDC with CCTP support. This creates a nice on-ramp for Initia. Users can send USDC from Ethereum or Solana to Noble, then transfer it via IBC to Initia Layer 1 and on to any rollup. The full process can be completed with a single transaction signed on the source chain, and this can be done using IBC Eureka.
The Vested Interest Program (VIP) is Initia’s incentive system designed to align rollup teams, users, and operators through long-term participation. It distributes INIT token rewards over time based on activity and commitment.
To qualify, Rollups must be approved by Initia Layer 1 governance. Once approved, rewards are based on factors like INIT locked and overall performance, and are shared with users and operators for actions like trading and providing liquidity.
The system is composed of two reward pools:
After calculating rewards for each rollup, they are further distributed to users according to a scoring system created by the rollup team.
Source: docs.initia.xyz
Rewards are issued as escrowed INIT tokens (esINIT), which are initially non-transferable. Participants can either convert these tokens into regular INIT tokens through a vesting process, which requires meeting certain performance criteria, or lock them in a staking position. This approach incentivizes meaningful contributions and ensures sustained engagement in the network’s growth and success.
Users can unlock $esINIT based on continued engagement. For example, if a user earns $1,000 in $esINIT in Epoch 1 (a two-week cycle) through activity such as trading, they must maintain similar engagement in Epoch 2 to:
Boosting efficiency with Enshrined Liquidity, users can also use their $esINIT into Enshrined Liquidity, which:
This approach makes reward distribution highly efficient and helps each rollup incentivize the exact behavior it values, while maintaining alignment with the overall Initia economy.
On Initia L1, block rewards are distributed to stakers who have staked INIT or whitelisted LP tokens with validators. However, not all staked tokens receive rewards equally, each token has a reward weight, which determines how much of the total block rewards it gets.
It works as follows:
Let’s say there are three whitelisted staking options:
Total Reward Weights = 50 + 30 + 20 = 100
If the total block rewards per block = 1000 INIT, then:
Rewards are proportionally split based on the assigned weights.
MilkyWay - a modular staking portal, from liquid staking to restaking marketplace and beyond.
Rena - the first TEE abstraction middleware supercharging verifiable AI use cases.
Echelon - a debt-driven Move app chain built on Initia. Echelon Chain is purpose built to be the debt engine of the interwoven modular economy.
Kamigotchi - onchain pet-idle rpg, by @asph0d37. On-chain game in the modular space
Contro - the chain for ultrafair DEXes powered by revolutionary GLOB p2p markets.
Blackwing - a modular blockchain that enables liquidation-free leverage trading for long-tail assets via a novel construct called Limitless Pools.
Rave - RAVE’s quanto perpetuals redefine not only perpetuals, but also tokens themselves by providing composable DeFi instruments.
Infinity Ground - revolutionizing AI entertainment with advanced models for mini-games, memes, and interactive stories.
Inertia - Inertia presents a new consolidated DeFi platform that integrates various assets from fragmented mainnets into one platform.
Civita - the first on-chain gamified social experiment for global domination.
Intergaze by Stargaze - the launchpad and marketplace for interwoven NFTs.
Battle for Blockchain - on-chain strategy game, set in the world of culinaris.
Lunch - the all-in-one finance app, focused on bridging Web2 to Web3.
Embr - igniting everlasting memes.
Zaar - the rollup where degeneracy comes to play.
Lazy Chain - Celestine Sloths Chain
Cabal - convex-like product built around Initia VIP
Owning both the Layer 1 and rollup systems under a unified architecture allows Initia to make coordinated trade-offs that are not possible in ecosystems like Ethereum’s rollup landscape. On Ethereum, independent and competing entities each bring their own infrastructure, incentives, and priorities. This fragmentation limits the ecosystem’s ability to fully realize network effects. As a result, many Rollups end up being parasitic, capturing value without meaningfully contributing to the base layer or broader ecosystem.
Initia takes a unified approach. All components, including Layer 1, data availability, messaging, and virtual machines, operate on a shared foundation. This alignment allows the INIT economy to grow as a whole rather than in isolated parts.
Initia works like a federal system. Rollups function as independent states with room to innovate, while Initia L1 provides shared infrastructure such as monetary policy (VIP), bridging, and governance. The system is designed so that everyone has a vested interest in the growth of Initia as a whole.
