What if liquidity was built into a chain?

Before we dive in, a few words on enshrinement: When nerds talk about something being enshrined, they mean it’s a native feature rather than an external add-on. An example of an enshrined feature could be liquid staking on the Cosmos Hub. This functionality is baked into the L1, while chains such as Ethereum only have liquid staking enabled by higher-layer apps such as Lido. For more on enshrinement in Ethereum, check out this post by our lord Vitalik: But we digress!

On L1s like Ethereum and Solana, users can stake the network's native coin (e.g. ETH/SOL) to earn staking rewards through native coin emissions. While this allows anyone to contribute to the chain's economic security and earn rewards for doing so, it also creates fragmentation and reduces capital efficiency by forcing stakers to lock up their coins.

Remember us talking about building Liquidity into the chain? @initia has uniquely created its own native DEX, called InitiaDEX. Providing liquidity into an InitiaDEX liquidity pool will yield the liquidity provider with LP tokens, representing their share of a liquidity pool (similar to Uniswap v2) Now, a uniquely cool thing about Initia is that these LP tokens also can be staked with a validator, just like the native L1 coin INIT. App-layer liquidity thus interacts with the consensus layer and contributes toward network security. Staking these LP tokens with a validator will earn you staking rewards. As such, you're not only earning your trusty old LP swap fees on your LP provisioning, but also additional, native L1 token yield as an incentive mechanism. In that sense, Initia has liquidity enshrined by incentivizing it within the core blockchain logic.

Initia's Enshrined Liquidity enhances capital efficiency by also allowing LP tokens to be staked to secure the network and earn rewards. These LP tokens can be acquired by providing liquidity into InitiaDEX, the liquidity hub of the Minitia ecosystem.

Another cool thing about InitiaDEX is all the different types types of liquidity pools. Users can seamlessly access: • Weighted Pools (for volatile tokens) • StableSwaps (for stable assets) • MinitSwap Pools (for cross-rollup fungibility, more on this below)

But how exactly does this architecture benefit the ecosystem participants? Let's break it down

1. Enhanced staking rewards through swap fees + yield-bearing token pairs. Rather than simply earning the native staking yield, the ability to stake LP tokens creates more lucrative yields for stakers. This is due to the fact that stakers are now earning additional fees from providing liquidity.

2. Creates a liquidity moat for both the L1 and all Minitas. Piggybacking off the last point: by making it more lucrative to stake LP tokens, Initia is able to create a more liquid ecosystem for all participants. Rather than fragmenting staked tokens from the rest of the ecosystem, Enshrined Liquidity promotes their active use.

3. Allows for VM-agnostic cross-rollup fungibility using the Initia L1 as a hub. One of Initia's core offerings is the ability for Minitias to operate using any preferred virtual machine, with these being the EVM, MoveVM, or the WasmVM. With Enshrined Liquidity, assets can be seamlessly bridged to and from these interwoven rollups.

4. Just in Time (JIT) Gas Ever bridge to a new chain, just to realize you don't have the native token for gas? Fear not, for Initia's JIT Gas enables users to use any specified token for gas on any supported Minitia, which is enabled through Enshrined Liquidity on the L1.

Which pools are eligible? Before a token can be staked under Enshrined Liquidity, it first must be whitelisted through governance on the L1. This process also involves determining the reward weight, which is used to calculate the INIT rewards distributed to said pool.

As a user, this is ez-pz: • Zap into an LP position on InitiaDEX (using INIT, esINIT from VIP incentives, or the paired token) • Stake that LP token for boosted rewards And ladies and gentlemen, that's it!

In conclusion, Enshrined Liquidity is insanely ambitious. Key learnings: - Using Initia L1 as a hub, assets are fungible across rollups despite being on MoveVM, EVM, or WASM. - Initia natively incentivizes liquidity on certain pools by directing native protocol emissions towards these -JIT gas allows you to easil bridge from one rollup to the L1 -> swap -> and send to another rollup Enshrined liquidity enhances capital efficiency and aligns incentives across the boar which enables new opportunities for users and builders.

Also! In case you aren't already caught up with Initia and the Vested Interest Program (VIP), check out our thread below.

Thank you for tuning in. Till next time✌️