Initia: Incentively Aligned Appchains - Ezaan Mangalji, Anil Lulla & Jose Maria Macedo. Ep. 599

Transcript

that's interesting to to note is that app chains at least in the in the broadest sense of sort of like an appsp specific execution environment are winning like in the first cycle there was sort of Ronin and Flow and Steen in this cycle there was DYDX hyperlquid it's clear that there's product market fit for large projects doing like app specific environments um most of them are going for L2s nowadays rather than L1's and I think that makes a lot of sense which is also why initial design makes so much sense. Allowing teams to build entire Cosmos SDK chains in whatever VM they want as rollups on Initia and have instant access to basically everything they need from

explorers liquidity integrations rewards kind of all the participants of a world that's so fragmented in terms of, you know, L2s that care about themselves and their growth, users on the L1 stakers, like how do we align and all these people and we've basically built a very robust economic framework that lets us do that which is called initia VIP. Welcome to episode of the show which talks about the technologies, projects and people driving decentralization and the blockchain revolution. I'm Brian Crane and today I'm speaking with ZH who is the co-founder of Inisha and we are joined today by two very special uh guests guest hosts. So Jose Mazedo who's the

co-founder of Deli and he runs at Deli Labs part and then Anil who is uh the CEO and founder of Deli. So Inisha is a layer one blockchain that's designed around uh deploying customized interconnected or interwoven as they call it rollups. Uh they've just launched. Uh so really excited to dive into Inisha today. So just before we get started, we would like to share a few words from our sponsors this week.

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voice matters. Join the Nosis community in the Nosis DAO forum today. Deploy on the EVM compatible Nosis chain or secure the network with just one GNO and affordable hardware. Start your decentralization journey today at nosis.io. IO. Cool. Well, thanks so much for coming on, guys. This is this is going to be fun and uh it's kind of a different format than we usually do, but I think it's it will be a good one. So, maybe we can just do some introduction. Let's just go around. Maybe Z, do you want to start? Sure. Howdy, fellas. I'm Zan. As uh Brian initially said, I'm one of the co-founders of Initia. Um

uh we just launched. It was pretty awesome. Um, I think we launched the initial L1 plus around 10 layer 2s all on different VMs all at the same time. It might be the largest orchestrated multi-chain launch ever probably. I don't think people usually launch multiple changes at the same time. So, this is probably the only one that happened, but also I guess the largest. Um, yeah, I'm sure we'll dive further into it, but pass it over to Inal. Yeah, so I'm one of the co-founders of Deli. We've been early supporters of ZH and the Initia team for a while now. Um, so was super excited about this launch and yeah, excited to be here to talk about Initia. I'm sure Jose and I will

talk about our whole like, you know, app chain thesis, the failure with it, and then how we kind of ended up, you know, diving down in this rabbit hole. Yeah, I'm I'm Jose. I uh split my time between Deli Labs and Deli Ventures. Adventures actually led this initial investment and known ZH for for a few years now. Um, and yeah, hoping Z can make app chains finally work and avenge our aven I think all of us on this call have been bullish Cosmos. Um, which isn't which isn't ideal hasn't been ideal. So hoping hoping Z can run it back and make make app chains finally

work. Inshallah brother. Yeah. Uh maybe Z you so you were building on terror before. I'm curious what were what was your experience building on Terra and how did that led to you starting Inisha? Yeah. So I I wasn't just building on Terra before that. I worked at Terara as a smart contract dev. It was like my first time getting into uh smart contracting um and building in crypto. Before that, I was just a regular software engineer. I played a lot with Ethereum, but never actually built contracts there. And so, Cosmosome um and Terra were my first time, you

know, actually doing that. Um it was a lot of fun. I thought it was really interesting. Cosmos was cool. I got to learn Rust for the first time. um all these new principles when it comes to building smart contracts and the craziest one is just that stuff doesn't execute automatically, right? Like something has to poke a smart contract to move and that was just like a crazy paradigm shift in my mind and as a opposed to building in web 2. And so um that was a lot of fun. I got to build some really cool applications and then I left Terraform to build my own project um with my current co-founder Stan and it was an options project that was basically um hooked into Ankor along

with we had a lot of the ecosystem teams ready with integrations and is really exciting because Terra as a chain was like one of the most vibrant ecosystems out of any blockchain that existed at the Um, obviously a lot of it was fueled by Ankor, which we know was super unsustainable, but it was like this crazy run that was happening in Cosmos. And Tero really was all of Cosmos. Um, and I think it was somewhat propping up the app chain thesis to a big extent because we're like, hey, look, this one app chain really succeeded, but um, none of the others really also succeeded in their own merits. And so once Terara

collapsed, um I think that with it a lot of the app chains and Cosmos just crumbled. Um and obviously the project that I was building there didn't make any sense anymore. And so we scrapped that uh returned money back to our investors who funded us back then. And then basically a few months later um we're thinking about what to build next because me and Stan still want to do something. Um, and we started basically thinking about Initia and rebuilding the app chain thesis with a much heavier guiding hand, one where you shape its creation, the first few app chains and how everything comes to play rather than leaving it all up to an open source

system. Um, yeah, that was kind of the the beginnings of that. And when I was working on Terra is when I first met Jose and Anne Neil. Um I think at the time they were on the labs team working on Astroport. Um and that's actually how I met my co-founder Stan. He was designing uh building UNIV V3 or concentrated liquidity pools for Astroport and I was uh supposed to help build it. Um so thanks Jose. You're welcome.

So yeah, let's talk about the app chain thesis uh more generally. I mean I guess if you sort of zoom out right then the thing that everyone competes for the most in crypto I would say is like application developers right and application developers have a lot of different options today you could build maybe on e mainet but you know fees are high so that's probably not the preferred choice for most people but you have things like salana and base uh you know that at the top right where you can just build your smart contract on there or you could say you build your own L1.

Right? So, uh that has maybe struggled a bit but it's still happening quite a lot. Right? people still build their own L1 whether it's like you know a kind of totally new L1 or whether it's maybe Cosmos chains or you know some other people competing trying to compete there maybe like Avalanche and and some others trying to go in or there's rollups right and then rollups again there's many options right you could uh deploy on an existing rollup or do your own roll up and you do your own roll up you can do it on Ethereum you could do maybe uh some sovereign roll up on Celestia, right? Or you could build on Inisha, right? Like interval and roll up. How maybe for any of you guys, how do you guys see the

sort of pros and cons here and the state of the app chain thesis? So yeah, I think that the the trade-offs and I think one thing that's interesting to to note is that app chains at least in the in the broadest sense of of sort of like an appsp specific execution environment are like winning, you know, we've seen it and and across all cycles, right? Like in the first cycle there was sort of Ronin and Flow and Steppen. In this cycle there was DDX, Hyperlid, Blast, Abstract, Converge. Now like it's clear that there's product market fit for large projects doing like app specific environments. Um most of them

are going for L2s nowadays rather than L1's. And I think that makes a lot of sense which is also why initial design makes so much sense. And I think the the main reason that people do this is because sovereignty and customizability matter, right? Developers want to control the ground they build on. Um they want to be able to build fully vertically integrated experiences. They don't want to necessarily compete for block space, face like uncertain costs. They might want to customize parts of their stack. They might even want to be able to like roll back state if they need to, right, without relying on an L1 having to do that if there's a hack or something like that. So I think there's a lot of reasons for going into an app specific environment and I think that thesis is winning. The thing that didn't

win was like Cosmos, right? or or I guess like Cosmos SDK has done has done well has done okay but Cosmos or like Atom as a token and and sort of the tokens in that ecosystem haven't really done well and to me um Cosmos just sort of misunderstood the role of an of of like the that a hub needs to provide to app chains right and I think part of it is because it was conceived 10 years ago before anyone was even talking about L2s and most of the design decisions were made optimizing for sovereign chains rather than rollups. Um, but the second thing and most important I think is that it sort of misunderstood what projects want from uh like their hub, right? From from a hub, like the realities of what

they want. Like they thought, oh, all they need is like this optional security. Um, but actually that that's like not at all the the the stuff that's most pressing. Like the the hardest things about doing an app chains and the biggest trade-offs in launching one versus launching on an existing chain is simple stuff like wallet integrations like you have to do your own wallet integrations. You have to do if you if you integrate with a centralized exchange they need to integrate with your chain. It's way way harder to get that done. Uh block explorers like there's no block explorer even some of the like biggest chains today. I mean Salana block explorer is notoriously crap, right? You don't have canonical bridged assets with with liquidity, right? So you won't have stable coins.

you're going to have like this this alphabet soup of stable coins with different with different prefixes. Um, and then there's like the intangibles which is the the business development and ecosystem development which is actually like one of the most important parts, right? If you're a hype project on Salana, you get a lot of benefit from that. Like there's a bunch of people that go farm your airdrop. people are active on like Solana Foundation tweets you um people will be active on your discord just because you have that ecosystem behind you of everyone that owns Soul and wants your project to succeed because it's good for Soul and all of this was missing from from Cosmos like there was no there was no unified way to bet on Cosmos like it never happened right um and at the same time

every time you launched a new chain you faced all these issues and so there was just it was just very costly to build an app chain um and this doesn't even both for the fact of like bootstrapping validators, having to to pay out inflation, fragmenting UX. Um, and so Inisha just sort of from my perspective really reinvented like rethought from first principles. What does what what do you want from a hub? Assuming we go into this sort of rollup ccentric um app specific world, what do these rollups actually want from a hub? and then they sort of rebuild it from the ground up.

Uh thinking about all these things and like solving kind of all the problems. Uh and I I've just I've just rambled for a while. So maybe Zon, you want to come in and say how you guys did that or Sure. Yeah. I think um Jose's right. Right. Like there totally are two ways that crypto scales, right? We we all know it's either the fast chain or the app chains. Um and everybody's working on the fast chain camp. I don't know what's actually going to win in the long run, but I can, you know, put my horse in the race for the app chain thesis because um it seems like it's the natural evolution, right? It's an application's final destination is what we call initia. And it's because apps

will want to capture their value and potentially make customizations that lead them to winning one specific vertical because they've altered something that lets them edge out competition on that sector. And that's the way we've kind of seen things play out over time. you know, you have perplexes on every chain, then one actually takes it seriously, builds their own chain, and they just win, right? And this is going to happen along other verticals as well. So, I think the optchain thesis will play out.

Now, it's about how do we make this very easy? Um, what do teams need? How do we get more of them to build? And I think Inisha is just designed in the right way to provide these teams everything they need. But if you look at some of the other options, they're just still so infeasible, right? Like building a Cosmos layer 1, you get the flexibility, but it's still goddamn hard. Building a roll up on Ethereum, very easy, right? you have so many RAS solutions, but you fragment all the infrastructure because these RAS solutions give you like 10DA options and 15 uh interrupt solutions and all these oracles and you need shared standards across a multi-chain

world for UX to properly work and then uh you have no customizability like OP stack, arbitrum orbit, these things are great but you can't like for example reorder transactions you can't use a different type of virtual machine. The choices that do matter for developers day in and day out are things that you can't edit, but you get to change the DA layer. Like those are not what's actually interesting. So at Inisha, we've kind of combined uh the best models by using some of the hindsight in history that we've been through as builders in Cosmos as well as big users on Ethereum, allowing teams to build entire Cosmos SDK chains in whatever VM

they want as rollups on Initia and have instant access to basically everything they need from explorers, liquidity, integrations, um rewards, and and ensuring that we have a very tight hand on what the product UX looks like. So what does it actually look and feel like for end users interacting with 15 different rollups and do we control those touch points so that over time we can get to a world where it feels like one and the initia team can envision that and build that ourselves. And then lastly, like how do we ensure that value is retained and how do we align kind of all the participants of a world that's so

fragmented in terms of you know L2s that care about themselves and their growth users on the L1 stakers like how do we align all these people and we've basically built a very robust economic framework that lets us do that which is called initia VIP. Um, and what that does is it essentially just distributes rewards to users um that are using applications. Simple as that. And as a layer 2, to get more rewards, you have to build use cases for the native in it token and basically care and have a reason to care about it. And that's either you build a demand sync or integrate the native token on your chain or you try and influence holders on the

layer one to vote for you. And so in this way we kind of make sure that everybody still cares about in it. Um I like to use an example that initia is like the federal government. Um and roll-ups are like states within the US where everyone has their own sovereignty but they still care about the ultimate growth of the entire country as a whole. Um and I think having this federated stance will allow us to build this app chain future um correctly at first and then in the future we can think about how to properly decentralize the control of everything.

Yeah, I think like one of my favorite you know things that you guys have focused on your approach is you know the target customer in the immediate near term is has been like definitely devs right building especially with the flexibility that you have um you know supporting EVM move VM um devs can you know build using solidity move uh web assembly right like kind of anything but I think what's really cool about it is I think at the end of the day the end user is going to also like reap all these benefits, right? Um and kind of curious like you know would love to kind of get more into you know how the launch went.

You guys just launched recently. Um what you know how did it go? I know you guys launch with you know like I guess like 10 uh you know minutitas like you know curious which ones are you maybe not most excited about but which ones are you like most surprised about coming to market this fast and which ones do you think are necessary for like users who are going to start bridging the initia like how's that experience and what what can they do right now um or in the near term you know launch is never as smooth as you see as you think it's going to go um everything always has some problems, but I would say things went relatively smoothly, at least on the L1 side. Um, I think one of the things we've seen in

the past is just when an airdrop happens, chains always break because you have like hundreds of thousands of users just trying to spam transactions within the same like 2 seconds. And so we built a really nice batching system that essentially just batches requests and then we do one transaction that sends like a hundred people their airdrop at one time instead of each of those being its own transaction. And so that really um helped make sure that the launch went smooth. And then in terms of layer 2's um you know we we did our best to have all 10 and their frontends live before the public launch. Um, but I think it was actually around all 10 chains were

live, but maybe only around five of them had their front ends up. But over the weeks since launch, all of those have come online now. So, we're in a good place. And we have, I think, five or six more rollups that will go live over the next month. So, that's pretty exciting. And, um, there's quite a few things that people have been doing on the chain. The first and foremost is we have this system called inrine liquidity. We use our inflation to basically build a hub of liquidity on the L1 that's accessible, but you also stake that with validators. And so I think there is like a $15 million in it USDC pool on the layer 1 that has uh a pretty good APY.

Obviously NFA, don't ape into that pool if you don't want to. Um but that has been pretty awesome to see just that growing in people um actually using the system and then the first VIP distributions happen within the next 3 days. I think that is one of the most exciting things to have been watching because there's a gauge vote on the underlying layer 1 where stakers vote which rollups they want to receive rewards um through the VIP system and watching that evolve uh has been really interesting. So right now you basically have um people playing some games behind the scenes with these whale stakers to try and incentivize them to you know

vote for their roll up to allocate them more rewards and you kind of see a little bit of dominance moving towards like the DeFi applications um for these because they obviously are trying to sustain larger amounts of TVL. But what's interesting still is that even if you are not a DeFi application and you still get some of the votes here, that is probably hugely advantageous for you and your users because you're not trying to maintain 20, 40, 50 million TVL in a lending market. You're trying to give a little bit of boost for doing actions in a game and VIP basically just helps you bootstrap that. I think one of the things about bribing behind the scenes

is that it's a little bit sus. If you don't know the right people, it's going to be hard to get the gauge vote up. But that is why I'm excited about platforms like Cabal which kind of make this transparent. Uh I think you guys are investors in Cabal. But it basically allows anyone to, you know, provide incentives to voters uh to vote for them inside this gauge vote. Um, and that'll be good once it becomes fully transparent. But the the economy has been pretty exciting. Um, I think like so one of the ones that I point to is Kamagotchi. They're a fully onchain game. Just probably the most cracked game that I've ever seen get built that

is all onchain. And it makes perfect sense for them to be their own rollup. Um, because they capture the value from their sequencer. I think in the past 4 days alone, the sequencer has minted like 15k worth just off of transaction fees. Like that's that's already a very awesome sign, right? There are paths to being profitable as a rollup because you aren't distributing these fees back to a set of validators. You're just keeping these rewards. And you know, 15K in 4 days is like probably enough to sustain your runway for a small team of people and it only increases as um your game

becomes more exciting or you get more users. Um so that's pretty cool to see. And then they also held a public sale. Their token is backed by Baseline. I think they raised over like two or three million in that public sale um all on chain. That's pretty awesome for a young healthy economy. And then uh a couple of other cool projects that you might want to look at are Echelon and Inertia. They're basically just lending markets, but Echelon has I think maybe like 300 mil TVL across Optos. Um and now on Initia, they have an early lending market for init USDC, TIA, some of these other

assets. Yeah, it's I mean, what have you guys been seeing? Have you tried any of these roll-ups yet? Not yet. Mainly just liquidity providing on on L1. Thank you. Honest work. Yes, sir. I've seen some of these NFTts uh going crazy, too. Um yeah, the Stargaze team, they deployed a rollup called Intergaze, which is basically just Stargaze, but as a rollup, which is pretty cool because they are definitely one of the last remaining builder teams in Cosmos. Um and they have just been launching a few collections like twzies, raccoons, annos, those have been fun.

Yeah. I mean regarding the launch right maybe one thing briefly to mention uh since we have this group together. I mean we of course one right we've been working with initia for a while and and now worked also with deli right to launch the first deli valator. So maybe an Neil like what was the thinking for you behind uh behind doing a validator for Initia? Yeah, to be honest, Brian's been annoying me for a while to do uh you know to have deli do its first validator on you know some chains, right? And to be honest, uh, one thing that we always discussed internally was like we wanted to make sure, um, you know, we we feel like it's kind of like, uh, a big responsibility of us like, you know, tying our brand or kind of like using our brand to kind of like have

this vote in confidence. Um, so we honestly didn't really think about it till, uh, you know, we really started, uh, getting excited about the initial launch and, you know, I think we kind of chatted with Brian and said, "Hey, is this possible?" and, you know, didn't even realize how closely you guys were working together. I think it made a lot of sense. Um, I think our team's super excited about that. It's gone like, uh, you know, really well since we first uh, started. It's like a whole different validator business that we've launched. Um, so, you know, maybe we'll do more, but I think for now we're we're pretty excited to, you know, see how this one goes. And to be honest, I think Deli as a whole, the way that we kind of um, have like operated and learned in the space is like, you know, rolling our

sleeves up and getting our hands dirty. And I think the validator side of crypto has been some uh you know side of business that you know obviously with people like Brian and our network we've been able to learn a lot from but I think like actually getting our hands dirty and getting involved uh helps us just understand it way better. And I think initial was a chain that we wanted to kind of um support and kind of get like as close to as possible. Yeah. Let's talk about the the whole economic model because that feels like one of the most interesting parts. I mean I think we on on a high level right like proof of stake chains have basically so far right used their native inflation to incentivize people to stake and you know secure the chain and you

know that makes sense right but of course if you think of like the success of a chain people just staking and securing it like it's not enough right and and and especially you know liquidity is such a crucial thing And you know, we've seen barer chain do something very interesting there with proof of liquidity uh which is you know we we'll see how it works in the long run but it's definitely I mean for us as a as a validator it's been you know very challenging but very interesting right to like really understand how to optimize this and how to generate higher rewards. Um now you guys have done this like enshrined liquidity. How how have

you thought about designing this uh and maybe also in reference to the barer chain model like where do you want to differ here in terms of how it works? Yeah, I think the the justification here is you know chains are interesting because of their apps. That's why users come and use them. So, what can we do to ensure and help apps win? And what else does an ecosystem need, right? Where should inflation really be going in a network? And it's not to staking. Why is that?

Well, if you're staking inflation and your security budget is the vast majority of your inflation and like one of the highest rewarding things to do, um, you're directly cannibalizing your own ecosystem. if I'm getting, you know, 10 20% stake tokens with the L1, which is probably like the most secure and safe thing I can do with my tokens, and a lending market is paying 6%. I'm never going to go lend my tokens there because I'm just going to stake them. And so I think using that security budget and inflation in a way that actually adds value is hugely advantageous and probably the way that most new chains

are going to move towards in the future. Um you can get to a level of security that is safe enough by using tokens that would otherwise not be able to be used. So for example, in our case, we allow investors to stake their tokens um for around the base inflation rate, which is around 2 to 3% APY, so relatively low. The rewards are locked and vested over the same 4-year vesting schedule, so you know, you're not going to be cheated on. And now we have built up a layer of security and economic stake that is enough that we need. So instead of using 40% of the supplier to pay to

these stakers, let's use it to do something meaningful. And we basically do two things. One is Enshrine liquidity and the other is VIP. So Enshrine liquidity is built basically just to incentivize uh the Initia L1 to be a liquidity hub for all of the roll-ups on Initia. you know these one of the interesting things about initia is that no team is building a general purpose layer 2 right we think that is like a losing fight um every layer 2 on Ethereum is a general purpose layer 2 and the difference between them is the color of their apps or their branding really just not interesting we want people to build app chains focus on one

thing go try and win on that vertical and because of that you're probably not building a DEX on your chain um or you're probably not trying to build liquidity on your chain or you don't want to do that. And so the initial layer 1 acts as the base hub of liquidity for everyone. And so we repurpose a lot of the inflation for at 25% of the entire supply for staking basically LP tokens with validators. This allows us to just build a hub of liquidity for major assets. And because of how interwoven roll-ups work, it's all accessible from L2s. So right now it's just in it USDC. Um we might add other pairs soon probably in it SUSD

from Athena. And then if there is enough demand for assets like Ether BTC, we'll build like for that as well using the same inflation. Then the second part of inflation, another 25% of the supply is basically to VIP and this is allocated to users of layer 2 applications. As mentioned earlier, um layer 2 get rewards based on how much in it they have plus a gauge vote on the layer 1. And then on each of these layer 2s, the teams set metrics on chain on what users should be doing to receive these rewards. So if I'm Echelon for example um I need to lend in it um and lend USDC and for that reasons uh those

onchain metrics count for my VIP scoring and I'll get in it rewards based on that and these rewards aren't just distributed upfront and they're vested as escroed in it and basically the way to unlock these rewards is by maintaining your engagement over time. So it's uh essentially a programmatic airdrop system where every two weeks users are being air dropped rewards and they have to keep using these chains to unlock these rewards. And is this a vested uh interest program that's happening on the L1 or it's happening on the L2s? So it's based on L2 activity but you get these rewards on the L1 directly to a user.

So, you know, it can't be a team can't just um give it all to themselves and then take some of that. They can set an operator commission just like a validator. Yeah, I think the the launch has been pretty cool. You know, we have probably around these 10 rollups around 30 to 40 million TVL and all of that is natural. Um, I think one of the things I've seen from a lot of chain launches this past cycle is, uh, TVL deals before launch. So that right when you launch the chain, you basically have like few hundred million or even billions of dollars of TVL. Um, but this is an incredible waste of money almost always,

right? the vast majority of this uh TVL has no mandate. So, it's just sitting on the chain or it's in a form that is entirely useless, right? Like um not to throw Ether under the bus. Amazing team. We have We on the initial L1, but like a Weath ETH pair uh is probably not going to do much for advancing your economy on chain, but maybe a stable pair with a native token or, you know, an uh an ETH USDC pair might. And so, a lot of the liquidity is basically just a way to show on DeFi Lama that you have larger numbers. And you pay for that in tokens that were usually at some sort of seed

valuation rather than the currently trading price. And these tokens are kind of phantom tokens. Props to teams like Bear Chain which did this at least publicly so everyone knew how much and rewards were being emitted for these pre-tv farms. But there's other teams that essentially just promise investors lock tokens at a discount to bring TVL on the chain. and these tokens just will suddenly appear in the circulating supply because they actually came from something like the foundation. And um I think that's a pretty unhealthy habit that the industry has gotten into and I'm hoping that we can do things a bit more cleanly um going forward with Inisha.

Yeah, it's a big thing. You guys have done I think done things the clean way every turn like whether going out to community round at the same or like lower round actually than the than the last VC round. The way you've launched the float being transparent about it and stuff. Um launching at a lower valuation. I think all these things you guys have done things the right way. Let's see if it pays off. Hope it pays off. I think like one thing I we kind of spoke about this a lot leading up and when we're advising teams on this is the like there's a reason everyone does things the wrong way right or like the the wrong way like there are a lot of benefits to launching at a higher

valuation with a scammy float like all all the stuff that you see I think I guess most egregiously in like the movement type situations there are like benefits to doing that um and I I hope that like I think initia is probably the the highest this quality project that's done things the the right way. Um there there are a few others but you know and I'm hoping it can like start a trend cuz yeah it's it's it's cool to see. Yeah, I mean I think this this is definitely sort of ties into well there's a little bit of a crisis in the industry I would say at this point right where we have all of these new tokens launching and people trying to manipulate uh the price the FTV the

TVL and you know it works until it doesn't work and and then I think we have seen now the that just retail I think it worked in the past right because oh looks great and then retail users would buy it and it would kind of sort of sustain and maybe you could sort of fake it till you make it type thing. But then I think um users have woken up to that, right? And they're like, well, these these things are like down only and like I'm not going to buy it, right? And so we see basically almost all the new launches struggling, right? and and and just going down and and not being able to sustain it and everyone worried about the unlocks that are coming. So I

think different ways are needed. So it's very cool that you guys uh are going that direction. Yeah, I think what matters is just how long do you expect to be working on this project and what is your time horizon. the incentives are just totally not set up for you to be a long-termist in crypto. Like by no means possible, right? And um I know I just think that you know it can be huge. I love my team. I love the people that we're working with. Um and I hope to be working on this for years to come. And so if you have that mindset, I think, you know, starting somewhere reasonable

and growing with your ecosystem and with the project only makes sense. But we'll see what happens. Yeah. Yeah. I I think like even even the most long-term teams and that we work with on the venture side or even the consulting side of Deli like you know once you have a token live because of the short attention span that you know the community and like a lot of um you know people just within crypto has there's just so much pressure um I I think like we've really loved how long term you and Stan have been thinking about initia and like you know just the amount of time you put into even the launch like I'm curious you know one year after mainet like what's like a single stat that will tell you in this shit's like working or not like what like for you guys like what are you guys

thinking about um um you know long term obviously not you know price or anything like that but I'm curious what you think about yeah I think uh number of rollups is a great thing um but I think it's very easy to be number of rollups doesn't actually matter what matters is probably more so like there's a well-known ecosystem with over a hundred rollups Yeah. Yeah. Exactly. Um I think all that really matters is a few applications. So rather it should be metrics like revenue generated by rollups, right? Stuff like the fees that are actually generated. Are these teams making money? Like how profitable are

these roll-ups users that are cross-pollinating? that'll really show if you know this interwoven thesis is working out where you have all these app chains that users can move between very easily and then um probably TVL is just a standard metric to to look at across the rollups um but I think the biggest one is really just revenue one question I have it feels like initia and the app chain thesis generally is like a bet on crypto innovation right that that hasn't happened yet because I don't know if you agree with this but to some extent like if sort of Anatoli and some of the Salana people are right that the only

use cases are minting and trading tokens then then I think Salana or something like it is is probably the right design right like a monolith with with shared state like all the D5 applications share state and stuff is probably the right design so I think to to believe in the app chain thesis and an initiate you sort of have to be bullish uh long term like crypto innovation. Uh, and I'm curious how yeah how you feel about that and also also the other two like yeah how do you guys feel about that? Are there are you bullish at this point or and are like what applications like pockets are you most interested in and especially for you on initia zone?

Yeah, I think um you're right. It really just depends on like how hard are people going to start tinkering. Um, are we going to start getting some interesting experiments? I've been thinking about it like uh when a new PlayStation comes out, you know, you get some of the same games that you had before, but then a few years down the line, people start taking advantage of all the specs of the PS5 and you get the most awesome games possible like Elden Ring. And so I'm thinking that's uh, you know, it's a similar bet here with the Appchain thesis, right? that now that it's actually easy to do this um teams will spend a bit more time and want to control their stack and we'll build

something super interesting. The problem is what is going to be built and the spectrum is so huge in the the design space and I think the initia team itself has a range of ideas that we want to experiment with um but it's hard to say exactly what will be done and what I think is also interesting is these new virtual machines that are opening up the design space too like move has only been around for so long but it is a phenomenal language to work with. But I think the viewpoint that new virtual machines will unlock net new applications is totally wrong. Um because based on examples, we haven't seen any net new applications on

aptto or sui. We just see the same things written in move. Um and I think that's just about express expressivity as a developer. And so I am bullish on experimentation, but I totally think that it takes time for those experiments to play out. What about you? You guys curious. Yeah, I mean I do think there's strong evidence that uh you know, DeFi or financial use cases is is just is the thing that like blockchains are incredibly powerful for. And I think that's also where sort of the the blockchain advantage really comes in, right? Because the composibility in DeFi

is just amazing, right? You can like can do something and then it leverages this protocol and then use a token some other protocol and maybe borrow against it and do something again. And so I think if you compare like the traditional financial system and the onchain system then I think that kind of composability and and defined innovation there does feel like really the unique superpower. Now of course I think what it does open up is now you can maybe financialize and incentivize like a much wider range of stuff than you can in the traditional world. you can start having maybe you know social networks that have some kind of uh incentive component or games or um now yeah I I mean I think social

networks to me has been one of the things where you know even from the very beginning I felt like if you look at something like Facebook right Facebook managed to get this enormous scale but you know the users who you know the power users who really like helped make it a success they didn't benefit for the success. So I I've always felt that like if you could build something like a social network type thing where you have much more of an incentive alignment and the people actually driving it forward can benefit and you have sort of markets that actually work. You know that could be like extremely powerful. I don't think we've seen that yet, right? I mean you had some some brief spikes with like

friends tech and but like you know didn't really make sense. They weren't well designed. Uh so I think that is one one example where that's a category I feel you know very bullish on in the longer term. Gaming I don't know as much about. So I uh but I I could see see that also being one but yeah what do you think Anneil? Yeah, I think you know obviously within Deli we talk about this question a lot and I think like when it comes to app chains we've you know to to your guys' point I think we've really seen specifically not just DeFi but like per Dex's kind of be like the biggest winners in this like app thesis whether it's DYDX hyperlquid etc. I think more broadly though um you know the way that

I see crypto I've said this a bunch is just like like humans like most powerful human coordination tool right and I think that actually becomes more and more useful um with kind of like all this abundance that's created with things like AI going forward so yeah I I'm still very bullish on a lot of these use cases that we have been investing over the years even though you know something like gaming obviously we were you know big investors and big proponents of like Axi and you know alvium and stuff way back in the day I do I think um gains have like this big potential of being this like you know every I think year in crypto you always you know are hoping for you know one two or three like big uh you know mainstream applications that kind of like not just

um you know show off the power of this technology but also on board a lot of the masses that maybe aren't in crypto yet. Um, and I think games are still like a bet that that team um, still think it's very hard to make that bet cuz I think a lot of them won't work out, right? Um, but I think we've invested in a lot of like really strong teams or to think about this in like the right way and you know, we're all obviously hopeful that like one of those works out. I think when it comes to like you know, DeFi and its place in crypto, like I think I go back and forth on this honestly. I think like when I first got into crypto, I was super excited about DeFi for sure, but I still thought that like there was this huge potential for,

you know, a majority of like longtail use cases. Um, and DeFi would not be like the biggest portion of this. And I think over time, I've kind of come to realize that DeFi is kind of like the backbone of all these other use cases anyway. And what percent is that? Is that like 50 60% of what crypto will actually like enable? Is it like 80 90%? Um, is a thing I kind of go back and forth on. And I think like is like the question of like you know us doing research, us building, us investing um to you know figure that out. I think the next big boom for applications will be once ZKTLS is like here and ready right that's you can just bring anything from anywhere on chain and create primitives for it. Um, and

that just widens the scope of what we can bring on chain by like, you know, trillions, right? Right now, it's actually still pretty hard to bring new assets on chain, whether those are like RWAs that no one cares about like a wine bottle. Um, but once you have like the ability to bring someone's gaming data on chain or like their scores and stuff or their medical records, these are all things that ZKTLS just like enables a lot quicker. Um, and I think that's when you have the next boom of crypto and I'm pretty excited for that.

So, so just CKTLS basically means right like you you you have some sort of web session and then you can verify the results from that write it back on chain. So let's say if I the medical record thing I log into my I don't know medical website and then uh you can verify some data that I chose there leveraging um SSL right and then and then you can verify it on chain. Yep. So I think like you know ideas like medical records on chain have been always one of the things that people have said blockchain is great for and theoretically it makes sense. we've just never gotten that which is kind of crazy and like no one

has done it well yet and so maybe ZKTLS will make that easier but you know I'm just looking for more fun things to do on chain and I think you know like allowing people to bring their you know World of Warcraft or their League data on chain and start trading stuff or the ways that we can start to stack financial primitives here you know maybe I'm lending against some of my skins or who knows what can be created but the the design space just becomes so much bigger.

my kind of take uh although is is that basically crypto is in the trough of disillusionment stage and like I don't know I've been speaking to a lot of teams recently that have sort of like been building for a few years and are now seeing like big upticks in and this is everywhere from like sort of worldcoin to like stuff in the energy space like the decentralizing grid stuff that we've talked about for years like all these things have been building in the background for like sometimes seven, eight years and are really starting to see like upticks. Um, and I I think eventually almost all the things that people imagined in 2017 will end up happening. It'll just take much longer than everyone expected. Kind of like how

it happened with the internet, right? Like all the most ridiculous like laughed at ideas that people had in the in the late 90s ended up happening. They just happened like way later. Um, so yeah, I don't know. I think the same thing is going to probably end up happening in crypto. It's just tough because at the same time there's a lot of very overvalued like vaporware um because of just the nature of public market like giving public market liquidity to early stage things. Um and so you have like these these like two forces happening at the same time. Um, yeah, but but I'm I'm pretty bullish on a lot of these different applications like coming to market. And I do think

it's kind of a no-brainer to me that like every pretty much every asset will will end up on chain. Like you're already seeing it. And like stable coins, anyone who's ever owned a stable coin for for a sufficient amount of time just knows it's like you'd rather have that than a fiat dollar in a bank account. It's it's just better in in every way, right? you don't have like a bunk bank like cucking you every time you want to make a transaction or asking you to go into the asking you to go into branch like um yeah it's it's seamless like interoperability with any anything you want to do with it. So I just think that's going to be the case for like every asset and you're seeing it with stocks. I think Superstate just announced today they're like bringing stocks on chain. Um we know a few people

working on that too. Yeah, I I I'm pretty like um yeah, I'm I'm pretty sure on that one. And that's just like the DeFi use case. Like I'm I sort of think there's no way to to put the cat back in the in the cat back in the bottle. Doesn't sound right. Genie back in the bottle. Yeah. Don't know why you'd put a cat in a bottle really. Um yeah, I think it's I think it's going to I think it's going to happen. I I I think this goes back to like what we were saying earlier about like patience. Um, like I think the crypto industry has this kind of like mental illness of just like wanting everything to be done like ASAP and now.

And I think like one thing I always think about is taking a step back and thinking about how far we've come. Um, even since like when we've gotten into crypto, I think you know a lot of like the successes and headlines that you're seeing week by week right now or would be things that like you'd be in disbelief in that that we would even have the opportunity to see um even like six, seven, eight years ago. Um, so yeah, I think like to your point and and to Zan's point, as you bring all these assets onchain, I think another cool part is like all this, you know, experimentation, all these maybe dumb games that people view as like not value productive at all have actually been um, you know, making the infra more robust um have made like a lot of these mechanis design uh, decisions like way

clearer. So when these assets do get on chain, we have like we're not starting from zero and have to go and work through all those things while we, you know, bring these assets on chain. So yeah, I mean, I'm super excited about that. I think like, you know, one thing I've learned, you know, building Deli at large is just that like you just got to be patient. This stuff doesn't happen overnight. Um, but you know, if you take a step back, like progress is being made. I wanted to ask about one thing that maybe goes a little bit more technical regarding Initia. So if you think of the app chain, I mean one of the big struggles with if you look at Cosmos, but if you look at app chains more generally has been um you know the the fragmentation of user experience and the

challenge with liquidity as well, right? So you'd have basically the nice thing in Salana or Ethereum, right? you have all of this liquidity, everything is there. Now you have different chains. Uh it gets fragmented out. Um you know you guys are um addressing that but like how exactly are you guys solving that problem? So assets are all issued on the initial layer one or the vast majority of them and then to and from rollups. There's essentially two ways to bridge, but to simplify things, let's just say they they all use IBC. And so if you have USDC on one rollup, um, and you want to send it to another rollup, um, those tokens

transfer through the layer 1 because IBC has pair wise dependencies. If I went from rollup A to roll up B directly, I'd get, um, USDC1. And if I went through the layer one from rollup A to initial layer 1 to roll up B, I'd get USDC2. And so what we do is we essentially route all transfers through the initial layer 1 and access this hub because that's where all the liquidity is. And because of that, you can have fungeibility of these assets where if I'm sending USDC from one rollup to another, I'm going to get the same version. um and we're not going to get any new token standards. Um essentially that's just

the key way that we avoid liquidity fragmentation. Cosmos was created as is kind of a web design but really it should have been more of a hub and spoke and so we just said let's hub and spoke this thing that that was kind of like the original actually even design and idea around the Cosmos hop was that you would have this kind of hub and spoke IBC routing thing. Then I think it was just a sort of to some extent it was you know failure of execution right that that didn't happen and that you ended up having more of these like pairwise IBC thing and then that you know didn't end up everything was a bit too permissionless. Yeah. You got to start off a little bit permissioned. You know

bring the thing into the world the way you want it to be brought in. Grow it a bit and then you can start to give it the reigns. It's like having a child. So it's kind of it's kind of where Ethereum probably is maybe trying to go towards as well very in in their very slow methodical researchy way. Yeah. The nice thing is you have everyone using the same standard right whether that's to get into initia you use layer zero and then around initia use IBC. um all the standards are the same and that means we're going to have consistency of assets but we're also going to have consistency when it comes to trust assumptions. So as an asset issuer if you trust one rollup you're

going to be able to trust the other rollup in the same way. You're not going to have to look into the details and see like how is this rollup run um what's its sequencer setup? Uh do I trust this bridging or not because they're all going to be the same and those are going to be enshrined at the L1 level. And once you have this consistency of shared standards, uh, we can start to build a lot of better UX experiences over all of this. I think the UX that we have right now is not bad, but there's definitely a lot of work to be done. Um, we're currently going to do a full redesign of the Initia app. The Initia bridge page is going through a change. We're going to change a bit of the way that you connect to wallets. Um, it's already

nice that you can use EVM wallets on any virtual machine chain. I think that's just the biggest blocker for getting anyone into Cosmos is they have to download a Cosmos wallet. So, uh, I'm never going to switch from my Rabby wallet and so I need to ensure that would work on Inisha as well. And so slowly we'll we'll make this user experience better. Um, we have the assets all nice and unfragmented and the economy is just getting started and I'm excited for where it goes. So maybe final topic with Deli you guys are investors in Nisha right now.

You guys are on the validate initia. You invested in a bunch of Inisha projects. I think you guys have you know you guys have done some uh research reports right on Inisha. Uh so a lot of involvement already uh I don't know is there anything on the lab side you guys are also doing with uh not right now probably a bit early for that we could maybe maybe do something in the future but yeah not right now on the lab side but yeah as you said pretty active on the ventures and and research side yeah so people should definitely check out that research report I think if people want to go deep on init that's probably the best place to Go. Yeah, I think

we'll make it public actually for this pod. So, we'll drop it drop it in the show notes and everything like that. Cool. So, Z, maybe to to end off, what's what does the road map look like? So, if you think of like the next two years, um what are the most important? I can tell you the next two years, but I can probably tell you the next six months at least. Okay, let's do the next six months. uh next six months is getting more roll-ups that we are already working with live and out to mainet adding more assets to inrine liquidity. Um revamping the initia app bridge and wallet widget to have a better

UX and then probably tweaking initial VIP. So VIP is great in the way it is right now but it only allocates rewards based on the gauge vote and the balance pool. And I think more interesting ways to allocate these rewards will show up over time. And so we want to make sure that we're consistently evaluating and adjusting our economic models. I think people usually don't change the parameters of their chain after it's live, but these are totally things that you should tweak. Um it's basically like changing, you know, the Fed rates, whether you want savings or people spending. And so uh we're going to continue to adjust these things. Um

and that's probably what the next 6 months looks like. Awesome. And then like uh what about you know devs and users like what actions should they they be taking? If devs want to build on Initia like what's the process of that? And then you know if users want to get set up and everything like that what's the process for that? If you are a user looking to get in go to initia.xyz/onboarding. There's a whole flow there for connecting your wallet, bridging in funds, seeing what apps you can play with, um, and just getting in there. If you are a developer, docs.initia.xyz, that's your place to go or my DMs if you want to yap. Um, you can hit me up at it's always on Telegram

or Twitter. Um, if you have an interesting idea, always love to chat. Cool. Well, thanks so much Son for coming on and thanks so much Anil and Jose for, you know, doing this episode together. It was really fun and we're super excited how this uh initiates going to play out and what what's the impact going to be for, you know, sort of the larger way of how people build in crypto. Definitely. Yeah, I appreciate you guys. It was nice to be on. Yeah. Yeah. Thanks very much. Thank you, amigos.