Unpacking Initia's Multi-Chain Strategy with Zon

Transcript

Your goal is not to launch super high up front. Your goal is to build something over the long term. It's a onedirectional flow of buying and selling straight from the memecoin trench buyers into the the pockets of the cabals. I feel like like the laziest way is going to be the way that wins. Welcome back to the rollup, your home for technical talks and open conversations that shape the modular future. Nothing on today's show is to be construed as financial advice. You can see our full disclosures list at the rollup.co/ventures. Sit back, relax, and enjoy today's episode after a quick word from some of our awesome partners.

Redstone Modular Oracles are available on 50 plus chains, trusted by over 100 clients, and over 6 billion in total value secured. Visit redstone.inance to find out more. All right, Git, we're at Ethanver on. It's a Gwoven now, actually. Gwven upgraded. Upgraded. I've been out of the loop. Yep. I think the last time we did that podcast was in person in New York, I think. Yeah, it's been a minute. It has. It has. I'd like to see you in person, though. It's good to see you guys. How you doing? It's been a while. It's good. You're out of the cave. Yeah. Back in action. Finally out of the bedroom. No.

I mean, I was just in at Consensus in Hong Kong, and that was just I mean, you guys have a lot of people in Asia, so you probably see this dichotomy, but the Asian Consensus Hong Kong trip versus this trip is going to be just so different. How was it? It was fun. It's just this this uh you're you're you're next to what I would consider like maybe not the most ethical or best people and then also like some of the like most wealthy capital allocators in the world and they're like all friends and you like like it's just like everything's okay. It's really it's really interesting. But also in the the US and western side I would say there's a lot of unethical people too. Yeah. And there's there's also this like kind of front that's like oh like you know I don't know there's a lot of stuff hidden

behind technicals if you will but like they don't really care about technicals. Have you uh gotten jaded yet in this market? Yeah. I feel like this cycle as compared to last we're seeing it quite a bit more um stuff that is airing on the side of crime because everyone's saying crime is legal now but I'm pretty sure it's not legal. No. No. I don't think so. Crime's illegal by definition. Yeah. So, but you do see a lot of it. No, I mean I'm definitely more and more more so with like current metas and regulations. Um, it just seems like it's okay. I mean, when the the president of the United States launches a memecoin and that would have been illegal a day before he takes office.

Now, it's suddenly okay. So, it's it signals to everyone else that it is okay. and along with all the other things that are that were illegal and are now okay. I think they're still illegal, but they're maybe just maybe we're okay with it now. We're just there's no consequences. I mean, what's your what's your kind of sentiment as a builder then? Cuz as a speculator, it's like it's obviously dried up right now, but but like as a builder, I think um so one of the most common feedbacks that we've gotten over the past like six months is that we need to be doing more crime and we've done no crime. How do you so far?

And I think one thing that is really unfortunate in this environment is that if you don't do some of these things that are a little bit more grifty and everyone is doing it, you're like a zero behind. Yeah. You lose attention or you lose whatever. Even things as simple as like botting followers, right? Yeah, people have like 800,000 followers, which is there's definitely not 800,000 people in crypto that uh when you go to an account that actually just has like 120,000 followers and you just assume that they must be botting too, but are worse at doing it. Yeah, it's unfortunate, but I think uh it really just depends on your time horizon of how long you're building. If you're betting on something to exist over, you know,

five, 10 years, then you should be doing things the right way because your goal is not to launch super high up front. Your goal is to build something over the long term. And so as long as you have conviction in what you're building, um I think it is very wise to be ethical. And I think there's um a level of trust you can build with your users, your investors, just the people that are seeing your products that know that you are being like a upfront project. So despite the community asking you for crime, you're choosing Yeah. Well, you said it's illegal, right? Okay. And so does that make your community mad? Um, I wouldn't say it

makes them mad. You're not giving in to their all their wins. We don't uh we don't negotiate with terrorists, right? So you're you're choosing to uh forego a happy golucky community for the moment in order to build a sustainable more more of a longevity play for something that will last 5 to 10. So you you anticipate that this wave of crimeloving community will subside in the coming months. I think um maybe not the coming months, maybe the next couple years.

We'll uh rotation back to quality. That's what people are saying on Twitter. Return to fundamentals. Yeah, inshallah. But it's going to take a while, I think. Okay, so uh speedrun us through. We we we sat down six months ago. There was maybe seven to 10 minutes initias as we call them which are effectively app chains. We've uh also removed the term minutia. Yeah. Good, good, good. Um wait, why good? Uh it was hard to kind of grasp if you will. And I would just go for interwoven rollup. Yeah, inter originally stood for mini initia and I felt that it was limiting right. I want applications to they can care about initia. They don't have to. It can be bigger than initia themselves ideally or ourselves. And so interwoven roll-up allows you to be aligned with initia

with the interwoven word but still good good. Okay. So there were seven or 10 interwoven rollups. You guys had recently announced some of your framework for the VIP program. Um so kind of catch us up and our audience what's the latest on Initia the last couple months and I mean honestly like when launch right is is like the question that all of the audience is going to want to know. Yeah 100%. So I think um since we last talked there's been around seven more interwoven roll-ups. So now we're at around 15 that have been publicly announced. Um throughout the past few months we've really gotten a hold of you know I think our core value proposition for these

teams and help them also do all sorts of things when it comes to like you know improving their marketing uh growing a larger community but also getting them funding so that they can go out and build without feeling like they're burdened. And so now there's around 26 million that has been put into rollups on the interwoven economy and then initia itself has raised 25 and so around 50 million in the entire ecosystem which I think is is quite a awesome number to see that roll-ups on initia have raised more than initia itself. Um and it's pretty cool signs of initial product market fit even though we still haven't launched yet. So some of the cooler projects that have recently been announced are there's one

called Cabal. Cabal is basically a convex-l like product on top of initia VIP. They raised around 2 and a half million I think. There is uh a chain called arena. They're building a TE product so trusted execution environment. Um they raised around three and a half from light speeded and paper. And um I think last week we also announced a raise for Infinity Ground. They're building like an AI platform. And so a lot of these teams are starting to find PMF, raise a little bit of money and then going to be launching with us ideally um next month. Cool. And okay, so the interro economy is getting started. Um I I don't mean to draw a

direct parallel to bar chain but there are some similarities to proof of liquidity and kind of what you guys are doing. Do you think okay so do you think bar chain launch has been a success so far and if if yes or if no why and then do you think similarly that what I I kind of think that bar chain's launch has proven that you guys are going to do well but I know it's way different in terms of like how it works but like what what are your thoughts there around like this this idea of proof of liquidity making apps and the chain kind of aligned again it's a different vision than what you guys have but like it's signaling To me, I think that what you guys are going to do is going to work well, but maybe you have different thoughts. Yeah, I think a big

proposition that Bear Chain, US, and some of the new L1s are starting to show is that we care about the applications that are building with us and value shouldn't or should flow back to the ecosystem. It's a lot when you look at staking um versus incentivizing usage of the ecosystem, you can really think about it as like the US Treasury bond market, right? When you want people to be more conservative, maybe you inflate more and so you incentivize staking and just locking of assets. But when you want to grow an ecosystem, an economy, at first you basically want to have savings rates low, so staking, but incentivize spending and using the economy. And so I think during these

initial growth phases, um, things like Inisha VIP and Barchain's P are really good for just kickstarting usage within the ecosystem. I think um Bear Chain is awesome. I've known Smokey for a long time, so only lovely things to say. I think their launch was um great in the sense that okay, a few things. I think that people it was worse than expectations. People thought it was going to launch at like 10 15 billion, but I think the way the launch went was actually much better for the long-term success of Barchain because it launched at a valuation that was like very reasonable. Like I definitely gigalonged right when it came

out because I thought, you know, surely Bear Chain's going to go up from here. This is totally not financial advice, but um I'm bullish on the ecosystem and I think once the P flywheel starts to get going, it's going to be interesting. And finally, we're starting to see people use DeFi again, which is really nice. But when um I think some of the things like their pre-eposit vaults unfortunately were not exactly a hit because anyone who wanted liquid exposure and size basically deposited into those vaults and those are supposed to automate using the chain for you to a degree. And so when the chain first launched, if you are actually a DeFi user like I was, you bridged over to the

chain, actually played around, the yields and opportunities were just insane. And so it was really good for actual onchain users, maybe less good for those predeposit vaults. And so I think um when it comes to our strategy, I don't think we're going to do anything like pre-eposit vaults. I think base liquidity will be bootstrapped by our enshrined liquidity system on the layer 1. And then um through VIP you'll see people naturally move to layer 2s um without having us to you know pre-incentivize these things. When you say with VIP people will move to layer twos we mean interwoven rollups. They'll go from the initial L1 into these apps on these rollups and ultimately start to

go from roll up to rollup maybe not ever coming back to the L1. It's possible. I mean uh VIP rewards are emitted on the layer 1. So even if you are a user of these layer 2s um you still claim these assets on the layer 1. But ultimately what we want to see as a good success metric is you know revenue that is being generated by layer 2s but also cross-pollination right we're trying to build this world where you have lots and lots of rollups but they all play really nicely together and they all care about you know the economic benefit of the initial layer one but also since they're interwoven you want to see people moving from application to application uh with the frictions and borders being virtually zero thanks to all the product work and infrastructure work we're

doing. Yeah. Layer zero helps obviously there and then all the all the rollups using Celestia helps. It just makes everything like very uh opinionated as you say. You're an opinionated guy. I think having opinions is good if you're building infrastructure because if you have no opinions and you're this open system that anyone can use with any sort of format, you're going to get in cases where you become stalled, right? Because the way you actually build a multi-chain system is you need people using the same standards. Y you need people using the same interse like a vending machine doesn't

do that and I think big modularity I tweeted about this the other day but big modularity tricked you into believing that what is valuable is like which being able to choose which DA oracle interop solution you use. But when you talk to developers, nobody cares about those choices. They care about those things just working and giving the real valuable customizations to those teams, which are execution, what type of VM you're using, how you're changing, transaction ordering. And I think that's why over the long term, we're going to see this breed of fast chains dying out because every day there's a new chain that claims they have a larger TPS,

right? I think we saw someone announce like 1 million TPS last week. Like what are we going to have next, right? And if every chain is competing just on the fast camp, you're not going to have a value proposition for your product except for this is really fast. And I think every chain is going to be fast enough within a year or two years. So what are you actually altering on your chain to make it unique to bring users in liquidity and to build a use case? Yeah, I like think of it as purpose-built is my new favorite term for this. Big modularity also is uh big on purpose build chains. What do you think about full stack app? I think about full like full stack customizability or full stack app is like the it's the right way to frame it

for developers and for for builders. I think like uh people listening to the rollup may get it and but some of them may not. I think uh I think purpose-built is is easier to understand like there's a reason why we built this this way. It's very it's very normie friendly. Yeah. Um is a a thing that's used in web 2 as well. But like what does full stack mean then? Like what is a full stack app? Innovating finance global institutional and onchain. Deep liquidity to drive capital efficiency. Now maximize yields on institutionalgrade liquid staking with M. Unlock trillion dollars of capital via F

Bitcoin. All of this secured by Mantle's treasury of billions in stables and ETH capital pools. This entire ecosystem is coordinated by a vast network of seasoned VCs that are aiming to create the next generation of banking and financial technology. This is mantle. A full stack app is an application that vertically integrates into their infrastructure itself, right? And in traditional software engineering, a full stack engineer is someone that does backend and front-end code. And so basically, you can apply the same principles to blockchains here. you're building your application, but you're also customizing the underlying chain.

And so, uh, I think full stack app is great. I also think purpose-built is great, but um, I don't know, there's too many of these words and I never know which one to use. I've had a mental shift recently from a chain centric view to more of a amorphous state just kind of existing that just there's just blobs of state. They're really not necessarily connected to chains anymore. There's there's bridges and I think ZK bridging and ZK interop is going to be especially important for this this mental model. But I think this idea of a full stack app with proper interop could ultimately play out where we no longer if I'm a developer or a builder I no longer need to think about the L1 or L2 or L3 that

I'll deploy my my application on. I'll deploy it. I'll issue my assets and some business logic and smart contracts on it. And then I'll connect via ZK and I'll just send my ZK proofs to any chain that can verify that. And that that chain that can verify ZK proof can verify the the state of my application and therefore I can interoperate amongst all the other apps that are sending ZK proofs to all. So what do you think about the UX that comes with that then too? Are you big on chain abstraction? I think chain abstraction is the right way to think about u UX and user onboarding.

Yeah, I've been kind of turned off by chain traction recently. I don't know if you have like AI just threw me for a whirl. Like we just have natural language models. I want to deploy capital on Anisha L1. I want to have some liquidity staked in a validator and LP and this enshrined liquidity and I want to participate in these three chains, these three rollups do it for me and just boom boom boom. And is that not chain? Sounds a lot like chain ab. Yes. Like I think that our mental model for chain extraction was like I'm a user that's going to like not have to change the chain in my so who the user is has changed has changed for me it's like and and I get it obviously if you're using a ledger right or you're using a hardware wallet you're you're still going to need

to do it but if there's some like delegated uh signing process or something I just feel that I feel like like the laziest way is going to be the way that wins and like the laziest way is for me just to tell some somebody in some sort of agentic thing to to kind of do is for me. Yeah, I think you're right for AI in the sense that we can get AI to to do the for us. I think traditional uh chain abstraction will also be good from a user perspective because I won't trust AI to do all this for me for probably a while. Yeah, I agree. But I think one of the biggest hurdles for chain abstraction is getting the distribution right. You basically have to get a lot of these protocols to either integrate you or you have to set up infrastructure everywhere. That's why

I'm kind of bullish on initia chain abstraction. Just kind of bullish. We already have the distribution, right? We have a product stack that all of the interwoven roll-ups already use and that means we can just tweak that over time to build a more seamless world and we don't have to do the BD work on the like go integrate our front end or our widgets or anything like that. They already do that. So, okay. So when we're thinking about the user experience then and kind of tying this back to the whole like barer chain p conversation with Anisha's enshrined liquidity. One thing that's exciting about your stack is that you have the chain traction element in terms of like the initial wallet. I don't know if you guys are calling it that the initial wallet. You have these interwoven roll-ups and then you have the enshrined liquidity which means that

like if I come in to the interwoven ecosystem I don't really need to leave like there isn't much reason for me to leave as long as as a user all my needs are met. um inshallah inshallah and I think that that that's a possible future right is that all my application needs are met within this one place um and so if you know if we get there then what what is the reflexivity like in this ecosystem right because one of the best things about defi uh and specifically defi summer like was you would you know you would ape and then your friends would ape and then it would be you know the pool two token would pump and then that would make more yield and then like it was like this very like flywheel thing and then we got like ve tokconomics and we uh you know you know

voting locks and all these different types of things. So like when we're thinking about the initia and the interroven ecosystem like what is the right way to think about the reflexivity of this ecosystem uh especially from launch right because I think like you know if this thing gets going then there's a there's a strong reflexive loop here but maybe you guys have a better understanding of it now as you're closer to launch. Yeah. So reflexivity is a big word for me but I'll try my best. Um I essentially think there's a few things here. There's definitely the initia L1 and Enshrin liquidity, right? All of those assets are paired with init. And so init kind of becomes this uh common denominating token for all things of crosschain swaps um and just liquidity bootstrapping. The second is

definitely VIP, right? What VIP does is it helps apps incentivize the usages that they care about and they can define it themselves, right? So you don't need to go to a validator and say like we want you to incentivize this, this, and this. Instead, it's about uh I as an app developer think, you know, these three things are interesting. I'm going to build a VIP scoring system around that and then my users are going to be distributed these rewards. And what's really nice about VIP is that it is retentionbased. So users don't just get all this money up front. Rather, they have to keep using applications over time to be able to vest these rewards.

and as they keep earning keep using these applications they'll earn more rewards and so there's a bit of a flywheel of like okay once you've started using one you're incentivized to keep using it and then I think what it really does is it builds demand for the init token which you know helps the entire economy whether that's the L1 and shrine liquidity or just protocols in general because I think building demand and use cases is the best way to build like relevance for your token Right. Staking is totally dead. I think staking is like the most boring use case you can ever have. And we've seen that ecosystems with high staking rates have an incredibly hard job of trying to build the ecosystem because how are you

supposed to compete uh with like 10% yield from staking when you know lending on a market is maybe like three or four. And so it's going to problem currently with their inflation. It's not a problem, but it's like it's it's the reason why Ethereum's ETH is used as an asset. ETH DeFi is far better than Salana D5 because you can just put Soul on a validator and earn 8% now where ETH it's like two or three. Yeah. This is also like the notorious problem within Cosmos Cosmos die. I mean Celestia is going through it, right? They're like we need to lower the inflation. We need to I think there's one other uh CIP that they're trying to push through. It's locked staking. Yeah. Yeah. Stop that.

Which you you guys are not doing that, right? So we have um I have had some interesting thoughts lately. Okay. So I think staking for unlocked sorry for locked tokens is bad. Okay. Because um you know those tokens aren't in circulation. But when you think about it, what do you need to do as an L1 when you bootstrap? You need to bootstrap security. And security is very hard to to bootstrap and get enough stake for. So say your initial float is something like 10 20%. Right? You need to get maybe like 50% of that to come and stake. And the only way you're going to be able to do that is by having a really high staking rate. And you're saying

that you're not doing that, right? And you're saying to we do not I think the the most critical thing is have a low staking rate so that we can give a lot more rewards to initia VIP and people can go use products. So what does that now leave you with? Yeah, you have you have a lot of luck supply that needs to contribute to to security, but they can't dump on everybody. I think there's a way that you can do it that is quite fair and is still very positive to the overall ecosystem, which is where you allow unvested tokens to be staked with validators. They get a very nominal interest rate, so something like 1 or 2%. And then all of those rewards are locked invested just as their original investment. That means you can bootstrap

security. You pay a very little amount so that it's not going to affect really too much. Those tokens are going to be vested and then you can give a lot more to actually using products in the ecosystem. And so this is uh something that we've been troubled with for the past few months. But I think ultimately we need to boost the amount of rewards going to Inisha VIP uh and lower the staking rate. And I think that's probably how we're going to do it. What are your thoughts? VIP is one of the more sophisticated capital allocation mechanisms. I think um essentially what we're trying to do is we're trying to programmatically uh and re reflexively um allocate capital smart to it's hard

it's hard it's hard to pronounce yeah to to the users. Exactly. And so you know I think like you know the whole vitalic communism tweet was kind of funny but like essenti I guess it was really funny. But what what exactly we're trying like Ethereum is doing this through public like you know public retro funding, right? And so they're like more manually and more uh with voting and governance. They're reallocating those incentives back to the users that way. I think initia and VIP is doing that programmatically. And I think ultimately what what you're saying is, you know, you don't want lock tokens. You don't want people to just save money. That's why inflation exists and it's a good thing, but you just want to keep it under control. And so I think

monetary and I've said this quite a bit but monetary velocity is more of an indication of a healthy economy than just having a lot of assets. So right now ETH has a very slow velocity. You don't see a lot of exchanging hands buying selling things. That's what indicates a good a healthy economy. That's not really happening on on ETH. It is happening on soul, but it it's a onedirectional flow of buying and selling straight from the memecoin trench buyers into the the pockets of the cabals, right? And then it just sits there and then you end up over time with just a pool of capital that sits there and you lose your monetary velocity. So I think can we can I say reflexivity one more time? I think in initia you guys do a great job of like okay you get it but

then you reallocate it programmatically right back and almost gives me the idea of like programmatic capitalism in action on initia through VIP amongst all of these interwoven rollups buying and selling and trading with one another. Those are my thoughts. It's going to be very interesting to see how VIP plays out and I think we're going to definitely have to make VIP 2.0 at some point. Um I think there's a lot of additional buckets that we can allocate to. So right now, right now the VIP rewards are distributed based on the balances of the init token a layer 2 has as well as a gauge vote on the underlying layer 1. With VIP 2.0, we can start to think about what else is interesting to incentivize here. But uh it's really hard to do because a lot of

things can be gamed, right? Like if you do things like volume, but maybe you have to think about like capital brought in from other ecosystems, you can use that as like vampire attacking. um amount of cross-pollination between rollups and everyone wins if the interwoven economy is actually being interwoven. So I think there's uh a lot of economic play that we can do here and I'm quite excited about that. Yeah. I mean I I think that the with this idea the investors will be happy they'll get a bit a little bit of extra yield in rather than zero in terms of staking right like if they were not if they were not going to be able to get any liquid staking rewards or just very Yes. Exactly. Like like like when you were like, "Oh, the investors aren't going to get any liquid staking rewards." I was like, "Damn it, Rob. We

were just too late to the Cosmos Ponzi, weren't we?" And then and then on the community side, Rollup Ventures is invested. We are bag holders. And then I think on the community side, they're just going to be happy that they're not getting dumped on and that like the chart will actually be healthy. They're not getting dumped on. And people who actually use applications are going to get so much more ideally because we'll be able to move reduce staking rewards from something like 40% of the total supply down to maybe like 20 or 25 and boost up VIP from 10 to 25 and that's that's enough to offset any kind of slashing for sure. Yeah. Yeah. And and provide enough security. People were so mad about Celestia but didn't realize that like we need like there was there needed to be some incentive to have this

security or else like you just can't like when all these uh interwoven rollups go live and security has or Celestia has very little security. It's like, well, yeah, exactly. We're all kind of screwed here if something goes wrong. But like, that's not the problem anymore. Like, there's a sufficient there's a sufficient amount of Celestia staked obviously. And that's been kind of like the topic of why Celestia has really bad sentiment on Twitter as of recently just because it's been dumped. But at the end of the day, it's like, well, you know, somebody has to be willing to put something at stake, right? If there's a nothing at stake problem then with DIU's get the data withholding attack and then all of a sudden the interwoven economy is under under duress. So yeah. So Zon I think there's only one question left to ask.

Initial looking good here. When? Yeah. When is on? March. March. Cool. Thanks for coming on. Thanks for having me. Tear sweaty.