The Fertile Ground of Liquidity in Initia’s Multichain Garden: Enshrined Liquidity
The
@initia mainnet is officially set to launch on April 24.
While the much-discussed Initia VIP incentive mechanism has garnered significant attention, the Enshrined Liquidity reward mechanism (staking rewards) is equally critical to the ecosystem’s incentive structure. It’s something you shouldn’t overlook.
What is Enshrined Liquidity?
Initia is a novel multichain ecosystem built with innovation and optimization, offering developers robust tools and infrastructure to create customized Appchains. From day one, Initia is designed to tackle the problem of liquidity fragmentation in multichain systems, enabling seamless cross-chain interactions.
InitiaDEX, a native decentralized exchange (DEX) built on Initia’s Layer 1, serves as the liquidity hub for the Initia multichain ecosystem. It supports not only daily trading but also complex cross-chain interactions, aiming to break the current barriers of fragmented liquidity in multichain environments.
(Initia-bridge, for instance, is powered by InitiaDEX.)
To bolster InitiaDEX, Initia introduces the Enshrined Liquidity mechanism. Beyond the traditional Proof-of-Stake (PoS) model of staking INIT tokens alone, this mechanism allows users to stake liquidity pool (LP) tokens from whitelisted pools (approved via governance) on Initia L1, providing liquidity to InitiaDEX.
This approach resolves the dilemma of choosing between “staking” and “providing liquidity.” Now, users can add liquidity to earn trading fees while simultaneously staking LP tokens to earn rewards—securing the network, gaining governance rights, and boosting capital efficiency all at once. It’s a “one-position, multiple-reward” strategy.
Where Do LP Staking Rewards Come From?
Like Initia VIP, Enshrined Liquidity is a core incentive designed to foster ecosystem growth and user participation.
It allocates 25% of INIT’s total genesis supply, distributed annually to users who stake INIT or whitelisted LP tokens on Initia L1. This incentivizes participation in network security, liquidity provision for InitiaDEX, and the coordinated, stable, and long-term growth of the entire multichain ecosystem.
Enshrined Liquidity Whitelist Requirements
To join the whitelist and earn staking rewards and governance voting rights, InitiaDEX LP tokens must pass a governance vote on Initia L1.
Whitelisted LPs must include INIT, with INIT accounting for at least 50% of the pair.
Staking whitelisted LPs comes with a lock-up period, and redemption requires a waiting period.
While whitelisted LPs require governance approval, anyone can create non-whitelisted LP pools, such as INIT-JENNIE or USDC-JENNIE.
Non-whitelisted LPs:
No lock-up period.
No governance rights.
Cannot be staked.
No requirement to include INIT.
Eligible for DEX trading fees.
This provides a trading venue and liquidity for a broader range of assets in the Initia ecosystem.
On Initia’s Stake page, users can check whether an LP belongs to the Enshrined Liquidity whitelist. Whitelisted LPs can also be deposited without staking to maintain liquidity, but in this case, their benefits align with those of non-whitelisted LPs.
Why provide incentives for stakers?
Although Initia’s founders,
@sinitias and
@ItsAlwaysZonny , have repeatedly emphasized discouraging idle capital, they’ve still allocated 25% of INIT’s total supply for staking rewards—equal to the VIP reward allocation, together accounting for half of the total supply.
The reason lies in Initia’s Interwoven multichain structure and diverse ecosystem, which enable a variety of composable strategies to enhance capital efficiency and ecosystem stickiness.
Here are a few examples:
Add INIT-USDC LP on Initia L1 and stake it on
@dropdotmoney to receive deINIT, earning LP staking rewards and trading fees.
deINIT can then be used as collateral in applications like
@Inertia_fi or
@EchelonMarket for additional yield or staked in
@RAVE__Trade CAVE for further rewards.
Stake INIT on
@milky_way_zone to receive milkINIT, then add INIT-milkINIT LP. This earns LP rewards, reduces impermanent loss, and may qualify for MilkyWay’s MILK rewards and VIP rewards.
Stake INIT-milkINIT LP on @CabalVIP to receive cabal-LPT, which, in addition to the above rewards, grants governance voting rights and bribery rewards.
If sINIT (
@Inertia_fi ) or xINIT ( @CabalVIP ) become whitelisted LPs in the future, similar layered yield opportunities could emerge.
Add esINIT (earned through VIP) to whitelisted LPs to unlock immediate rewards and trading fee income.
With the mainnet launch, the community will likely uncover even more creative strategies to maximize capital efficiency and yield potential.
No Additional Inflation
Enshrined Liquidity rewards are entirely sourced from INIT’s genesis allocation, ensuring no additional inflation. INIT’s maximum supply remains capped at 1 billion, a significant benefit for token holders.
Initia Belongs to the Community
Initia VIP incentives: 25% of total supply.
Enshrined Liquidity incentives: 25% of total supply.
In total, 50% of the token supply is allocated to the community and users.
Personal prediction: Due to low initial circulating supply and limited staking participation early on, INIT and LP stakers may enjoy relatively high yields in the initial phase (subject to the official Tokenomics release for precise details).
Conclusion
Initia VIP is the “sprinkler system” continuously nourishing the multichain ecosystem, providing long-term incentives for both the ecosystem and its users.
Enshrined Liquidity, on the other hand, is the fertile soil of this garden, attracting liquidity from day one, ensuring network security, and enhancing capital efficiency.
Together, they form the solid foundation of Initia’s multichain garden, driving the prosperity of its Interwoven economic system.