Forward the Original Title‘Enshrined Liquidity: Maximizing L1 Capital Efficiency’

Crypto doesn’t need another cookie-cutter L1. What it needs is a purpose-built foundation that can actually deliver on the promise of a truly multichain network. That’s where Initia comes in—bringing the Multichain Garden of Eden to life.

Building a multichain network comes with a unique set of responsibilities that fundamentally reshape L1 architecture. Just look at Ethereum’s journey - they’ve had to completely rethink their architecture to support the rollup scaling roadmap. Fortunately, Initia has had the opportunity to learn from the old guard: Cosmos, Polkadot, and Ethereum. Their successes and challenges have deeply informed Initia’s design choices from day one.

As the orchestration layer for Interwoven Rollups, Initia’s L1 takes on three critical responsibilities among others:

Economic Security

When rollups deploy with the Interwoven Stack, they inherit more than just infrastructure – they get battle-tested security from the L1. This means economic security doesn’t just serve Initia but the entire cabal of Interwoven Rollups deployed on Initia. Furthermore, through MilkyWay’s Modular Restaking, rollups can boost their security by tapping into additional economic stake.

Reliable & Accessible Liquidity

History has shown that without a central liquidity hub, multichain networks fall flat on their face and suffer from severe liquidity fragmentation (terrible UX).

Even Ethereum, for all its liquidity, hasn’t solved this for L2s. Rollups on Ethereum are still bootstrapping liquidity from scratch despite sitting on top of the most liquid blockchain in crypto.

This is why Initia’s L1 is designed to be the Liquidity Hub for the Interwoven Economy—with mechanisms purposefully designed to foster deep liquidity for bluechips and streamline access to liquidity for rollups.

For example, Echelon’s Interwoven Rollup will rely on Initia DEX’s liquidity for liquidations, enabled through cross-chain somewhat-but-not-actually-atomic flashloans.

Economic Alignment

The sum should be greater than its parts – but that’s not what plays out in most multichain networks. Look at Ethereum, where the constant debate about L2 value accrual accentuates the misalignment.

Our Vested Interest Program (VIP) tackles this head-on, creating positive-sum economic alignment across the entire ecosystem. It gives Initia users a reason to care about the rollups, and the rollup users a reason to care about Initia.

Enshrined Liquidity (three birds, one stone)

Now, let’s talk about the secret sauce – Enshrined Liquidity. It’s one of the core mechanisms that ties everything together.

On the L1, Initia has its own native DEX—the Initia DEX—serving as the bedrock for liquidity throughout the Interwoven Economy and the main engine for routing cross-rollup swaps. Want to swap ETH on Echelon for USDC on Zaar? The Initia DEX and uniform interop standards make it possible.

But here’s where it gets interesting. The Native DEX creates a tough choice for users: do you use your INIT to provide liquidity and earn swap fees, OR do you stake it with validators for staking yield and voting power in Governance and VIP?

So…why not let them do both? 💡

Enter Enshrined Liquidity. When you provide liquidity to whitelisted pairs on the Initia DEX, you can stake those LP tokens with validators. This allows the users to contribute to economic security, earn staking yield, AND get voting power at the same time! Which is a level of capital efficiency that’s pretty unheard for an L1 native token.

Meet Jennie, who just got some INIT tokens and wants to LP it with some natively-bridged-over USDC. By staking her INIT/USDC LP tokens, she’s killing three birds with one stone:

• She now earns the swap fee from the LP.
• She also earns the staking yield for the INIT portion of her LP.
• Finally, Jennie also acquires voting power to participate in VIP.
• If she’s feeling a little devious…she can translate the voting power to more direct yield through bribing protocols like Cabal that acquire her voting power to be sold to the highest bidder 😈

But beyond these benefits, what’s really driving Enshrined Liquidity?

Capital Efficiency

Enshrined liquidity lets the same INIT do double duty. Y units of INIT now deliver as much value as 2Y units of INIT would have without Enshrined Liquidity.

It creates a beautiful flywheel. Higher capital efficiency → more attractive yields → more LPs → better security and deeper liquidity.

This is contrary to typical L1s where the staking inflation rewards only the native token—pure security budget. In Initia’s case, the staking inflation also incentivizes liquidity to contribute to security.

It’s a win-win!

Bolster Security

As mentioned in the section above, Enshrined Liquidity incentivizes LP assets as well along with the native token. This unlock in capital efficiency significantly increases the security surface area by letting the assets that would’ve otherwise been sitting idle in liquidity pools contribute to the network’s security.

Given that Initia’s economic security doesn’t just protect the Initia L1 but the entire network, including the Interwoven Rollups—it’s a big unlock.

Deep & Sticky liquidity

Traditional liquidity mining is expensive and the capital is mercenary.

Incentives go poof? Liquidity goes poof.

Enshrined Liquidity is essentially a perpetual liquidity mining flywheel baked into the chain’s DNA. The incentives are sustainable, and the liquidity more long-term.

The best part? This saves Interwoven Rollups a fortune. Instead of burning capital on liquidity mining programs, they can tap directly into Initia DEX’s deep liquidity pools.

INIT as the Binding Agent

Here’s the interesting part about Enshrined Liquidity—not just any pair can tap into this mechanism. To get whitelisted, a pair needs to:

• Get the green light from Initia’s Governance
• Have INIT as one of the tokens in the pair

It isn’t arbitrary gatekeeping, it’s game theory.

Think about what this means for Interwoven Rollups wanting to get their native token whitelisted. They need to either build up significant voting power themselves, or influence existing voters—ensuring economic alignment across the network.

There’s another benefit. By requiring INIT in every whitelisted pair, the L1 creates a rich network of trading routes all flowing through INIT. It’s definitely good for the tokenomics but also enhances the efficiency of cross-rollup swaps.

While the utility of the staking yield earned through Enshrined Liquidity is clear, there’s much more to say about the role voting power plays in the Interwoven Economy.

Why Voting Power Matters?

At Initia, economic alignment is front and center, the kind of alignment that benefits the entire Interwoven Economy.

This isn’t just theory—it has played out before. In Cosmos, individual chains grew their own economies with minimal connection to the Hub. Sure, IBC enabled communication, but where was the economic thread binding everything together? ATOM holders had no real stake in the success of individual chains, and chain users had no reason to care about the Hub. There was a sense of apathy on both sides.

Economic alignment is the primary reason VIP was built and why voting power matters!

The VIP Gauge Vote runs every two weeks where the decision makers, the ones with the voting power, decide which rollups get a boost of incentives. It’s a capital coordination game at scale. The best part? The decision-makers are the ones with the most skin in the game.

It’s beautiful. VIP creates a powerful feedback loop that binds the network of Interwoven Rollups together. Holders with voting power need to carefully evaluate which rollups deserve support, while rollups need to prove their worth to these voters. Here’s where it gets spicy—through protocols like Cabal, rollups can even offer direct rewards to voters, creating an additional layer of economic alignment. 🌶️

How do you acquire voting power? It’s pretty straightforward:

• Stake INIT
• Stake INIT/X LP tokens through Enshrined Liquidity.

The principle is simple: the more aligned you are with INIT’s success, the more say you have in the network’s direction. But wait—wouldn’t this create an oligarchy where whales control everything and small holders get ignored?

Don’t worry, Initia cares about the little fishes too. There’s a way to boost your voting power that levels the playing field…

Vote Lock — Power to the Committed 🔒

Here’s the truth, commitment should mean something. Not just in words, but in measurable influence, after all blockchains are meant to program money legos!

Think of it like this: commitment exists on a spectrum. Some users might want to test the waters, others are ready to dive deep into the network. Shouldn’t their influence reflect that? This is exactly what vote locking enables—measurable influence pro-rata to the commitment.

When you stake tokens whether directly or through Enshrined Liquidity, you have a choice: lock your position anywhere between 1 month to 4 years for a multiplier on your voting power. The longer you commit, the more influence you wield.

The voting buff is directly determined by how long a user decides to commit for: ((3 * months) / 48) + 1

• Lock for 1 month? That’s a 1.063x boost: ((3 * 1) / 48) + 1
• Commit for a year? That’s a 1.75x boost: ((3 * 12) / 48) + 1
• Go all in for 4 years? Enjoy the max 4x boost: ((3 * 48) / 48) + 1

It means that 25 INIT vote-locked for 4 years effectively packs the same voting power as 100 INIT simply staked. It’s our way of letting users truly express their commitment to Initia on-chain.

Let’s go back to our furry friend Jennie as an example. She’s sitting on 100 INIT and wants to optimize her position.

By staking 50 INIT directly and vote-locking the other 50 for 4 years, she cranks up her voting power to 250—way beyond the 100 she’d get from basic staking. Plus, she gets to maintain her own risk profile instead of going all-in on one strategy.

Vote Lock gives the power to the true believers while keeping things flexible enough for everyone to participate in their own way.

Conclusion

The right way to build a multichain world isn’t just through tech, but through value alignment—this is where previous attempts have fallen short, breeding apathy between the layers. At Initia, we’ve placed special emphasis on designing value flows and incentive flywheels that ensure every actor in the network has clear pathways to both contribute and be rewarded.

The interplay between Initia’s core mechanisms—Initia DEX, Enshrined Liquidity, Vote Lock, and VIP—creates a world where users naturally gravitate toward beneficial behaviors. The capital efficiency improvements lead to happier LPs and deeper liquidity pools, which in turn attracts more users seeking governance power. These effects cascade to the Interwoven Rollups, where users experience seamless cross-chain swaps and are actively rewarded through VIP for their continued usage of the rollups.

Want to dive deeper? Explore our documentation:

• Enshrined Liquidity Docs
• Vested Interest Program(VIP) Docs

These mechanisms are live on testnet today. I encourage you to experience them firsthand:

• Provide liquidity on the Initia DEX
• Stake your LP tokens with validators and max lock them!
• Participate in VIP gauge votes

Visit Initia Testnet Apps to start playing around and join the Discord to connect with other builders and users exploring Initia. The Multichain Garden of Eden is growing—come help tend to it.

Disclaimer：

1. This article is reprinted from [X](https://x.com/initia/status/1890252137868697751]. Forward the Original Title‘Enshrined Liquidity: Maximizing L1 Capital Efficiency’. All copyrights belong to the original author [@initia]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
2. Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
3. Translations of the article into other languages are done by the Gate Learn team. Unless mentioned, copying, distributing, or plagiarizing the translated articles is prohibited.