Initia will increase the token supply allocated to the VIP program to more than double the original amount.

Author: Initia

Compiled by: Deep Tide TechFlow

Where is Network Inflation Headed?

The answer is actually quite simple.

As a network, our core goal is to design economic incentive mechanisms that promote the collaborative interests of various participants in the ecosystem, maximizing rewards for real, sustainable activities within the "Interwoven Economy." The Initia VIP program focuses solely on the genuine user base that uses the interwoven Rollup network day in and day out, creating value for the "Multichain Garden of Eden."

Why is sustainable economic growth so critical? The blockchain industry is filled with numerous unused "zombie chains" that continue to pay excessive inflation rewards to stakers.

Initia firmly believes that the real focus and support should be on those users who actively use the Rollup network.

We believe that the release of L1 tokens should serve two core objectives:

• To ensure the budget for network reliability and security

• To act as an incentive tool to stimulate economic activity and ecological growth

Traditional L1 chains often concentrate inflation rewards to stakers as security incentives. Unfortunately, this model inherently limits the potential for ecological development. Sadly, these traditional L1 teams have inadvertently chosen to entrap themselves. While network security is crucial, a token release mechanism that relies entirely on staking incentives actually restricts the possibilities for ecological development. In fact, part of the token release could be redirected towards more economically valuable directions—such as promoting ecological economic growth.

If staking rewards are set too high initially, the blockchain essentially conveys to token holders its expected usage of the tokens. This mechanism inadvertently fosters a behavior pattern where users hoard tokens instead of actively using on-chain services. Once such behavior becomes habitual, it can trigger a negative feedback loop among early network participants, often difficult to reverse. Early users no longer become builders of the token economy but instead continue to accumulate tokens through staking, contributing nothing to network growth. This economic model is both uninnovative and outdated; we often refer to this encouragement of hoarding behavior as fostering a "scarcity mindset."

Token release should become a strategic tool oriented towards economic growth, ultimately allowing real participants (whether end users of the interwoven Rollup or Rollup builders) to share in the value brought by productivity improvements.

This is the fundamental logic behind Initia's decision to double the total allocation of VIP program tokens—as a reward for the organic use of the interwoven economy's full-stack applications, Initia VIP will effectively activate economic growth and reward the most productive stakeholders.

Overview of the VIP Mechanism

(For a detailed explanation of the mechanism design, see: this link)

In a system containing thousands of interwoven Rollups, coordinating the interests of all network participants is crucial. The design of Initia VIP aims to leverage Initia's L1 architecture and native token INIT to enhance economic consistency and address potential agency issues between users, developers, and interwoven Rollups.

By programmatically controlling the distribution of INIT tokens, the VIP mechanism establishes economic consistency among interwoven Rollups and incentivizes all participants in the ecosystem to focus on the success of INIT. This mechanism not only creates demand and use cases for the native INIT token throughout the interwoven economy but also provides rewards to the team to attract and retain users.

Two-Factor Model for Reward Distribution

• The intensity of INIT activity on the Rollup chain

• The collective voting of INIT stakers and "Enshrined Liquidity" holders

The interwoven economy allows different Rollups to dynamically adjust incentive focuses based on their development stages: exchanges incentivize trading volume, lending protocols attract USDC deposits, and blockchain games promote task completion.

For developers, the VIP program not only creates a monetization model but also establishes a user retention mechanism—by directly distributing INIT tokens to actual users through an on-chain programmatic grant system. This means users can automatically receive incentive rewards simply by using the application normally, without any additional actions.

How to Achieve +EV (Positive Expected Value) Expansion of VIP Token Supply?

The total supply of INIT is fixed at 1 billion (1,000,000,000). To increase the supply allocated to Initia VIP, it must be reduced elsewhere.

Keep in mind that the inflation of INIT is not only a source of the on-chain security budget but will also be used to incentivize various activities within the "Interwoven Economy." As a Layer 1 blockchain (L1), economic security is crucial for Initia, as it also provides security for all Rollups deployed on the Interwoven Stack.

We have reached a crossroads, an immovable obstacle. But perhaps, there is a solution?

Fortunately, we have discovered a "gold reserve"—a large batch of INIT tokens will gradually unlock over the next four years, and currently, they have no other use. That's right, you guessed it—this batch of tokens belongs to venture capital (VC) and early investors holding 15% of the INIT supply.

This decision has sparked intense controversy. Allowing early investors to stake their unlocked tokens does not always yield ideal results. However, Initia will not become another victim of the "Cucked Cosmos Society." We believe we have found a balanced solution that ensures all Initia stakeholders achieve positive expected value (+EV).

Venture capitalists can stake their locked tokens, but must adhere to the following restrictions:

• Staking rewards will be locked with a linear unlocking plan over 4 years.

• We have significantly reduced the staking emission rate, maintaining it at only 2%-4% annual percentage yield (APY).

By allowing early investors to stake their tokens and provide security for the chain, we can:

• Redirect nearly 15% (about 25%) of the total supply of INIT to Initia VIP,

• Allocate more tokens to active users and quality applications.

We have taken an extremely cautious approach to this decision and do not view it as a minor adjustment to economic policy—this is a fundamental capital redistribution aimed at promoting the expansion and liquidity of the "interwoven economy."

While other Layer 1 blockchains continue to pursue a "scarcity mindset," incentivizing token hoarding by allocating most of the token supply to on-chain security, Initia chooses to leverage the supply surplus as a weapon to ignite sustainable growth for the network.

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