Dialogue with Initia Lianchuang: Influenced by Apple’s design concept, simplifying the user experience on the chain

Arrange & compile:Xiaobai Navigation CoderWorld

Guests:Stan Liu, Initia Lianchuang;Ezaan Mangalji, Initia

host:DeFi Dave,dinero_xyz On-chain managers;Kiet Fong, from thecoreloop

Podcast source:Flywheel DeFi

original title:Everything You Need To Know About Initia w/ Zon & Stan – Flywheel #120

Air Date:September 11, 2024

Background Information

• In this episode of the podcast, hosts Dave and Capital K invited Zon and Stan, two co-founders of Initia, to discuss their innovative work in the multi-chain world and modularity. Zon expressed his continued support for the show and mentioned that he and Dave had met at multiple conferences.

Personal Background

• Zon Sharing his background, he is a developer from Vancouver, Canada, with a degree in computer science and business. During the epidemic, he completed his studies at home, while being obsessed with DeFi projects and developing a keen interest in app chain theory.Zon Previously worked as an intelligence engineer at TerracontractA developer who has participated in the construction of multiple ecological projects, but due to the collapse of Terra, he and Stan started over again and eventually founded Initia.

• Stan Do Kuan introduced his experience. He is from China and South Korea and completed a mathematics degree in the United States. After graduation, he entered the field of quantitative trading and worked as a market maker in the crypto market. During this period, he became interested in DeFi and contacted Do Kuan through a college classmate, and eventually joined Terra as an engineering researcher.

Initia's philosophy

Founding Background

• Zon Looking back at the creation of Initia, they realized that it was not wise to continue to advance the previous project after experiencing the collapse of FTX.Zon Deciding to revisit the Ethereum ecosystem, Stan returned to quantitative finance, but soon found himself no longer able to adapt to traditional finance.

Observation and thinking

• The two noticed the development of Cosmos, and despite their experience in building Cosmos, they realized that Ethereum's DeFi experience was superior.Zon It is pointed out that although the Cosmos SDK provides flexible building tools, the complexity of building a Cosmos chain is daunting, including the need to run a Layer 1, manage a validator set, and deal with IBC relay issues.

Multi-chain solution

• In contrast, Rollups on Ethereum have become popular, although these solutions were not originally designed to scale Ethereum.Zon They believe that the problems of fragmented liquidity and choice overload will only intensify as multiple interoperability solutions and decentralized layers emerge.BlockchainScaling should take a multi-chain approach, so they decided to leverage their expertise in Cosmos and Ethereum to build a complete Layer 1+, Layer 2 system to address these pain points and realize an ideal multi-chain ecosystem.

Building a permissionless interwoven ecosystem

Design philosophy

• Stan Explained the design philosophy of Initia, emphasizing that their initial concept was to take into account the mobility of users between different applications. While many heavy Ethereum users are able to easily move assets on the main chain, the situation becomes complicated when using Layer 2 solutions.

User Experience Challenges

• For ordinary DeFi users, cross-chain operations may not be too difficult, but for those who are not very familiar with the ecosystem, the situation is completely different.Stan It is pointed out that many users may not know the specific location of each bridge and may even need to consult tools such as Defi Lama to obtain information. Although the bridging process may seem like a small problem, it is actually very challenging, especially when it involves differentTokenWhen using standard and bridged modes, for example, when using different bridge protocols (such as Optimistic Bridge or CCTP), users may face variousTokenStandard confusion.

The basis of the solution

• These user experience pain points prompted them to decide to build Initia's ecosystem to simplify cross-chain operations and improve the overall user experience. They hope to enable users to interact more easily between different DeFi applications by providing a permissionless interwoven ecosystem.

Initia influenced by Apple design

Design philosophy

• Zon Discussed the design philosophy of Initia, mentioning that they were influenced by Apple's design philosophy. He compared Rollups on Ethereum to Android, pointing out that this architecture provides infrastructure, but users face many choices in choosing service providers, bridges, oracles, etc. In contrast, Initia took a firmer stance in design and clarified the direction of the system's evolution.

System Architecture

• In Initia's Layer 1 and Layer 2 framework, many components are solidified within the system. For example, bridging only uses IBC and Layer 0, and data availability (DA) relies on Celestia. They designed a local system for oracles and pass their information to all Layer 2s to ensure that the user experience is consistent across all Layer 2s, simplifying user interactions.

Economic Mechanism

• Stan They further explained the economic mechanisms they considered when building the ecosystem. They hope to eliminate the debate about whether Layer 2 is harmful to Layer 1 by making Layer 1 and Layer 2 applications interrelated. They believe that all applications should develop in a direction consistent with Layer 1 to bring value to users and the ecosystem.

Reflection and Improvement

• Kiet He agreed with this view and said that Initia has made improvements on many basic systems, absorbed the advantages of existing technologies and made them more advantageous. He looks forward to further exploring the design and implementation of Initia.

Initia's three core pillars

Architecture Layer

Zon The architectural layers of Initia are introduced, emphasizing that it consists of three main pillars: architecture, product, and economics.

• Layer 1：Initia's Layer 1 is a chain based on the Cosmos SDK, using the Move virtual machine (VM). Its features include:

  • Access the coordination layer, handling all Layer 2SafetyRewards, interoperability, and routing.

  • Solidification fluidity: Building decentralization on the chainexchange(DEX), users can directly stake XLP tokens with validators to ensure the networkSafetyand provide liquidity.

  • As a multi-chain router, it supports token exchange between different Rollups.

Interleaved Stack

• Optimistic Rollup Framework: Initia's Interweaving Stack is a complete Optimistic Rollup solution with Optimistic bridging, fraud proofs, rollbacks, and challenge mechanisms, with functionality similar to Optimism's Bedrock, but built on the Cosmos SDK.

Layer 2 Stack

• Fully functional universe SDK Base Chain：Each Layer 2 is an independent Cosmos SDK base chain, allowing users to customize transaction sorting, fee types, and transaction processing methods.

• Virtual MachinesIrrelevant：Supports EVM, Move VM and WASM VM, users can choose the smart one that best suits their applicationcontractenvironment.

• Data availability：Each Layer 2 publishes data availability (DA) to Celestia by default and submits the proof data to Initia’s Layer 1.

Settlement Layer

• Zon To explain further, Initia’s Layer 1 is the settlement layer, where all fund withdrawals through the Optimistic bridge are processed. Initia also implements a state synchronization function that can read data from Celestia and create a forked instance of the chain when a fraud proof challenge occurs.

Built-in liquidity, initUSDC pool, and fees

Kiet Asked how Initia’s enshrined liquidity can act as both a router and a bridge.

• Stan Explained that when users transfer USDC between different Initia, they do not need to go through cumbersome steps. Specifically:

  • Users on Minisia AXiaobai NavigationThe USDC on Minisia B is the same as the USDC on Minisia B. Both are native USDC, avoiding the problem of liquidity fragmentation.

  • All token transfers must be performed through Layer 1 (L1), which ensures that the USDC standard remains consistent between different Minisias.

User Experience

Kiet Further clarification of the operation process for users after obtaining USDC:

1. Users enter the Initia ecosystem through L1 and use decentralizedexchange(DEX) to obtain USDC.

2. The user moves USDC from L1 to the desired Layer 2 (L2), such as Minisia A.

3. After completing the transaction, if the user wants to return, he needs to transfer USDC from Minisia A to Minisia B via L1 bridge.

4. Throughout the process, the user's operation is abstracted, the system will automatically handle the transfer of tokens, and the user only needs to choose from one L2 移动到另一个 L2.

Fee Structure

• Regarding Initia’s fee strategy in the USDC pool,Zon express:

  • Initia plans to set lower fees to attract users to its USDC pool.

  • Part of the transaction fees will be returned to stakers to incentivize user participation.

  • The main source of income comes from staking rewards similar to traditional Layer 1.

• This design aims to ensure that Initia's liquidity pool has an advantage over the competition and becomes the user's first choice.

Rollback mechanism and fraud proof

The concept of fraud proof

• Zon Explains the rollback mechanism and fraud proof working principle of Optimistic Rollup:

  • Fraud Proof: In Optimistic Rollup, the system assumes that all operations are normal and all sequencers are honest. However, if a sequencer submits a malicious transaction (for example, a front-end transaction or improperly adjusts the balance), there will be a 7-day challenge window when the user tries to withdraw funds to Layer 1 (L1).

  • Within this challenge window, any honest participant can submit a fraud proof pointing out the malicious behavior of the sequence processor and preventing the withdrawal operation.

The role of the rollback mechanism

• rollback：If a fraud proof is successfully submitted within the challenge window, the system will need to roll back the state of the chain to reset to aSafetyThe rollback mechanism is used as the finalSafetyProtection ensures that the system can be restored to normal state when malicious behavior occurs.

• Zon It is emphasized that fraud proofs and rollback mechanisms complement each other. Fraud proofs provide a mechanism to identify and prevent malicious behavior, while rollbacks ensure that the system can be restored to the original state when problems occur.SafetyThis design enhances the security and reliability of Optimistic Rollup.

Use MinitiaSwap to achieve instant cross-chain

The concept of MinitiaSwap

• Zon Introduced the design concept of MinitiaSwap, which aims to solve the time problem required for cross-chain transfers. He emphasized that the traditional bridging process usually takes 7 days, which is contrary to the goal of creating a connected world. Therefore, MinitiaSwap allows users to instantly bridge between Optimistic Rollup tokens, and although there may be some losses, such losses are limited.

Bridging mechanism

• Stan The specific process of bridging is further explained:

1. Optimistic bridging: When a user transfers tokens from L1 to L2, they are actually sending tokens through the Optimistic bridge. At this time, the tokens on L1 are still locked, and the corresponding tokens are re-minted on L2.

2. Extraction process: Under normal circumstances, the withdrawal operation needs to wait for 7 days. During this period, if someone submits a fraud proof, the system will roll back the status.

3. immediatebridging：To solve the 7-day waiting time, MinitiaSwap uses two bridge solutions: Cosmos native IBC and Optimistic bridge. Users can transfer tokens to L2 through Optimistic bridge, and then quickly transfer them back to L1 through IBC.

Token Handling

• After transferring tokens through the Optimistic bridge, users receive a token that is different from the original token (e.g., wrapped USDC).

• To achieve efficient liquidity, MinitiaSwap created a trading pair that enables users to exchange between different tokens.

Liquidity Management

• Stan It is also mentioned that MinitiaSwap has a time or quantity limit to ensure that the losses of liquidity providers are controllable. Specifically:

  • There is a limit to the amount of USDC swaps allowed at any given time.

  • If a large number of users try to swap back to native USDC, the exchange rate may drop.

  • Conversely, if users are willing to wait 7 days, they may get a better exchange rate.

• Kiet Thanks to MinitiaSwap for the explanation, noting that different tokens, while technically different, are treated the same in the swap pool because they all need to go through the same 7-day withdrawal process.

• Stan It added that liquidity providers played an important role in this process, ensuring the feasibility of fast swaps while keeping losses manageable.

Building on L1 and L2

• Dave 提出了关于在 L1 上构建的可能性的问题，询问 Zon 是否期望开发者在 L1 上进行构建。Zon 回应说，尽管可以在 L1 上构建智能contract，但他们鼓励团队在 L2 上独立构建。这种做法的好处包括：

  • Optimize the experience: Building on L2 can optimize the user experience and ensure there is no congestion.

  • System scalability: Pushing execution to each independent L2 can effectively scale the system.

Views on SVM

• Dave They also mentioned that they support EVM, Move, and Wasm, but did not mention SVM. Zon was asked why. Zon expressed his opinion:

  • Market demand: If the market demand for SVM increases, they will consider supporting it.

  • Solana’s appeal: Developers usually choose SVM because of their love for the Solana ecosystem, not because SVM is a next-generation smart contract framework.

Integration with Cosmos SDK

• Zon The importance of building different virtual machines (VMs) was further explained, emphasizing the good integration with the Cosmos SDK:

  • Historical issues: In the past, there were problems with Ethermint and other EVM implementations on Cosmos, mainly because the bridge between ERC20 tokens and Cosmos native tokens was not smooth enough, resulting in a poor user experience.

  • Seamless interaction：When building the new VM, they ensured that tokens can be converted seamlessly. For example, users can transfer ERC20 tokens through IBC and convert them naturally into Cosmos tokens; if they are sent to Move layer 2, they will be converted into Move tradable assets; similarly, if Move tokens are sent to the Cosmosm chain, they will also be automatically converted into Cosmosm 20 tokens.

Attract and incubate application chains

• Dave I was curious about the application chain being built and its incubation process. Zon answered questions about how they incubate projects and emphasized some of their beliefs in application chains:

1. Avoid duplication of projects:Zon Pointed out that in the past, some L1s often claimed to have a large number of projects (such as 50) when they were launched, but many of them were just forks of UNV2 or small hacker projects that ultimately did not continue to develop. This approach is considered a failure.

2. Support local projects: He mentioned that bringing in projects from existing ecosystems and “normalizing” them often leads to “cannibalization” of the native ecosystem. For example, projects like PancakeSwap and SushiSwap, while bringing in users and TVL, did not bring success to native projects. Therefore, Zon believes that it is crucial to support native application projects.

3. Find unique projects:Zon Emphasized that their goal is to find teams that want to build unique, novel and interesting projects and provide them with resource support, including marketing, financial incentives and product development.

Specific project cases

• Zon Introduced some of the projects they are incubating:

  • Blackwing：This project allows permanent trading of any token on any chain. Users can trade between different liquidity pairs, simplifying the complexity of cross-chain transactions.

  • Milky Way：This is the first LST project based on Tia and Celestia, and is building a re-staking center to enhance economic security.

  • Sevisha: A chain-based "Monopoly" game where players can buy land and strategically cooperate or compete with other players.

  • Kamagachi: A cute idle RPG game that has been launched on Tesla.

  • Control：This project has developed a mechanism called "Gradual Limit Order Book" that aims to solve the front-end problem in prediction markets. By slowing down the time element in the market, it ensures that bets in the right direction can achieve positive results.

Innovation in prediction markets

• Zon He explained in detail how Contro works, highlighting how the project avoids front-running through a slow-motion order book mechanism. He pointed out that this mechanism allows multiple users to place bets at similar times, ensuring that they can share part of the profits without having to worry about being front-runners.exchangeInfluence.

Collaborative interweaving of projects and users

• Kiet The question was raised as to whether the initial project was permissionless.Stan Explaining that the initial implementation is indeed permissionless, allowing users to freely build projects on L1. He noted:

  • Free to build: Users can create their own L2 on L1 for high customization.

  • Support interesting projects: They want to attract interesting projects that can serve as pillars of the ecosystem, rather than simply copying projects (like Uniswap's V2 fork). For example, the early Arbitrum ecosystem thrived due to specific projects such as GMX.

Support and resource allocation

• Zon Further adding that while they support any project built on Initia, during the Genesis phase they want to attract new and interesting projects to provide a reason to attract users when the mainnet is launched. Their goals are:Marketing and resource support,Provide these projects with marketing and other resources to help them grow.

Strategies to attract users

• How to attract users?Zon The answer is:

  • Individual support and overall strategy: They work with each application chain individually, providing support to attract users and increase TVL (total locked value).

  • Network Effects：Each new application chain can bring network effects and promote the flow of users and assets. Through this interwoven ecosystem, users can easily collaborate with each other instead of competing with each other.

Ecosystem collaboration

• Zon He emphasized the uniqueness of the Initia ecosystem, where projects care about each other and work together to promote the growth of the entire ecosystem. He believes that unlike the isolated competition in the past, Initia's projects can work more closely together and grow together.

The origin of the concept of “interweaving”

• Dave Asked about the origin of the name "interwoven",Zon Explaining that this term is a great fit for describing their tech stack and ecosystem:

  • Technical Connections：Whenever a new chain is launched, they are connected to other chains, whether through Layer 0, IBC, CCPP or Oracle data. This connection allows users to easily access from any chain.

  • Ecosystem collaboration:Zon It is emphasized that each project in the ecosystem tends to cooperate to jointly promote overall growth and form a good "interwoven" environment.

Possibility of setting permissions

• Regarding the question of whether it is possible to set permissions for specific applications to ensure the security of the chain.Stan The answer is:

  • Semi-privileged or full-privileged：Through the Cosmos SDK, users can implement semi-authorized or fully authorized settings. For example, Osmosis does not allow arbitrary deployment of applications to maintain the consistency of on-chain applications.

  • Custom settings: As the operator of Initia, you can control which tokens can be transferred through the bridge, allowing specific tokens (such as USDC or the native token of this chain) and rejecting other tokens (such as Ethereum or Solana).

Project Progress and Funding

• Zon It was also mentioned that there are currently 12 projects built on the Interweave technology stack, and these projects are mostly local projects, with a cumulative financing of more than US$13.5 million.Zon He believes this reflects the market adaptability and demand for the system. He pointed out:

  • The potential of the ecosystem: Although Initia itself has not raised much funding, the successful financing of these projects shows the attractiveness of the ecosystem, and Initia's investment level is comparable to other ecosystems that have raised hundreds of millions of dollars.

CommunityConsistency and long-term success

• Zon Indicates that currentlyCommunityHe said that over the past year, many high-valuation, low-liquidity infrastructure projects performed well at launch but then quickly declined.

• Zon They stressed that they wanted to do the opposite of these projects and take the following strategies:

  • Communityparticipate：Enable community members to participate in projects at prices close to those of institutional investors, thereby achieving common growth.

  • Wealth Effect：As the ecosystem develops, it creates a wealth effect and benefits all participants in the long run.

The key to long-term success

• Dave Emphasizing the importance of wealth creation as key to the long-term success of any ecosystem, he noted:

  • Shared success：A successful chain is one where all participants make profits together, rather than a few people making profits early and then selling, causing the ecosystem to collapse.

  • A lasting vision：Successful projects require long-term planning and confidence in the success of the project. Zon believes that although starting with a high valuation is attractive, it is often accompanied by risks.

Oppose short-term behavior

• Zon He expressed dissatisfaction with short-term behavior, pointing out that some projects have a lot of money and incentives when they start, but soon lose their value due to poor management. He hopes to avoid this by adhering to a long-term development strategy.

• Zon They said they were willing to compete in "hard mode" and pursue long-term success rather than short-term quick returns.

Initia's Comprehensive Product Suite

Product Architecture

• Kiet Mentioned Zon’s previous discussion of architecture, product, and economics, emphasizing that he wanted to get into the economics part, but also wanted to talk about product first.

• Zon Introduced Initia’s comprehensive product suite, especially their block explorer and other features, calling it a “god-given” tool, especially for its convenience when using Cosmos.

Main Product Features

Zon Several main product features of Initia are listed:

1. Initial Application: This is a “super app” where users can perform all Initia-related operations, including liquidity management and exploring all existing smart contracts.

2. walletWidgets: Allows users to convert any EVM wallet、Cosmos 钱包或应用内钱包直接连接到任何智能合约，即使它们位于不同的虚拟机中。这种灵活性使得用户可以方便地使用自己喜欢的钱包（如 Rabbi）。

3. bridgingWidgets：It aggregates the flows between all smart contracts and with external chains, simplifying the user's operating experience. Users do not need to switch between different front ends, but can easily bridge through one interface.

4. Block Explorer: Zon mentioned that they recently acquired Seller Tone, which is the best block explorer in Cosmos and supports multiple block explorers (such as Say, Scan and Osmosis, etc.). It provides powerful functions, allowing users to easily interact with smart contracts, verify smart contract codes, and view transactions and balances.

User Experience

• Zon Emphasized that Initia's goal is to simplify the user experience as much as possible. For example, the bridge widget can not only perform bridge operations, but also token swaps, using liquidity to optimize the transaction process.

• Kiet He also agreed with this, praising Initia for having a comprehensive product suite that is very helpful to both developers and end users. He noted that Initia also reflects this focus on both aspects in its documentation.

VIP Program: Rewarding Engagement and Loyalty

Importance of community engagement

• Stan Introduced Initia's VIP program (Vested Interest Program), emphasizing that the program aims to enhance the community's participation and support for the ecosystem. He mentioned that in Web 3.0, many things are highly financialized, which actually helps build the community. Therefore, they hope to introduce this mechanism into the hands of users.

Structure of the VIP Program

The core of the VIP program is to provide rewards to users who use the Initia ecosystem. Specifically:

• Token Allocation：On Layer 1, a portion of Initia’s token supply is specifically allocated to users who use different applications. For example, when a user is active on a specific platform (such as a lending protocol), they can receive rewards based on key performance indicators (KPIs) set by the Initia operator.

• Reward Form: These rewards are issued in the form of "es in it" or "escrow in it", and these tokens are initially non-transferable or non-sellable. Users need to remain active over a 26-week period to unlock these tokens in a linear manner.

• KPIs and incentive mechanisms: Users’ rewards are tied to their activity on a particular platform. For example, if users remain active on a certain app, they can unlock more tokens. This way, users are incentivized to continue participating, driving growth in the ecosystem.

Eliminate the middleman

• Stan Emphasize that the program aims to eliminate the middlemen in traditional grant programs and ensure that all rewards go directly to end users instead of being swallowed by the team or the treasury. Application developers can also benefit from it because they attract users and create economic value for the ecosystem.

Alignment of incentives

• Zon He added that the VIP program not only focuses on user participation, but also takes into account the contributions of application developers. Applications can collect a certain percentage of rewards (such as 5% or 10%) like validators, thereby aligning with the incentives of users. This approach ensures the alignment of interests of all parties and promotes the healthy development of the ecosystem.

Token Allocation and Governance

• In terms of token distribution, Initia has set 26 cycles, and each cycle distributes rewards based on the following two factors:

1. Init Balance on Layer 2: This helps incentivize users to find new use cases.

2. Governancevote：Every two weeks, users holding Init can vote on the distribution of rewards to ensure the effectiveness of governance.

• This mechanism not only incentivizes users to continue participating, but also encourages them to pay attention to the dynamics of the ecosystem.

The uniqueness of the economic system

• Kiet The two main reward pools of the VIP program are summarized: **Balancing Pool** and **Weight Pool**. The Balancing Pool distributes rewards based on the Init balance of each application, while the Weight Pool distributes rewards through governance voting. This design avoids the unfair phenomenon of only rewarding large stakers in the traditional POS system, ensuring wider user participation.

Innovation and User Experience

• Dave It is mentioned that when users are looking for new applications, they often want to experience fresh and interesting features. Initia makes users more willing to participate by providing diverse applications and smooth user experience.

• Zon It was further emphasized that Initia does not intend to rebuild the entire ecosystem, but rather leverage existing excellent technologies (such as Cosmos SDK and IBC) and integrate them together to simplify the application development process.

Memes and communication strategies

• Dave Mentioned that he was curious about Initia's strategy for using memes on social media, especially their collaboration with the legendary Hersh.Stan He said that the use of Meme is not only for fun, but also to keep the team and the community in active interaction. He believes that regularly publishing interesting content can make users feel fresh and not tired.

The importance of community interaction

• Stan Emphasize that community and marketing arecryptocurrencyIn addition to providing interesting products, attracting users to Initia is also an important part of their daily work. They hope to interact with the community and understand user feedback, so as to continuously improve the product in order to achieve common success.

Recommended Guests

• Before the discussion ends,Dave Ask a quick question about who they would like to have as a guest on the show.Stan Mentioned that he wanted to invite accounts that are active on social media but not well-known, such as "alignment bros", because their opinions are often interesting. Zon expressed his hope to see some teams that are building, and excellent builders like DCF God, because they have outstanding performance in both Web 2 and Web 3.

The article comes from the Internet:Dialogue with Initia Lianchuang: Influenced by Apple’s design concept, simplifying the user experience on the chain

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