Prop 39: Initia Chain Upgrade Proposal #1: Taking Off the Training Wheels

1. Background

In a few days, Initia’s mainnet will have been live for approximately one month. During the early stages, parameters have been conservatively set to maximize initial security bootstrapping. As Initia approaches higher levels of stability, greater sustainability and decentralization will become the core focus of early upgrades, including the changes rolled out in this proposal. This patch will include adding whitelist functionality to the emergency proposal framework, introducing the ability to change optimistic bridge withdrawal times and finalization periods, adjustments of Enshrined Liquidity parameters to equilibrium rates, and IBC hooks improvements.

2. Release Binary & Upgrade Resources

• Release Name/Version: v1.1.0
• GitHub Release: https://github.com/initia-labs/initia/releases/tag/v1.1.0
• Upgrade Height: Block 3180000
• Estimated Time: May 28, 2025, at 4:37 PM UTC

3. Proposed Changes

Emergency Proposal Submitter Whitelisting

The Initia L1 allows users to submit 3 different types of proposals; normal proposal with 7 days voting period, expedited proposal with 1 day tally time, and emergency proposals.

The emergency proposal type is designed for a rapid response to security patches, chain upgrades, and other time-sensitive changes. The emergency_tally_interval, which determines the minimum period for a submitted emergency proposal to pass, was previously set at 5 minutes. However, this potentially allows malicious actors with sufficient resources to propose harmful changes using an emergency proposal, sway governance votes, and pass the proposal before it can be detected and stopped. To address this, Proposal 24 temporarily increased the tally interval for emergency proposals from 5 minutes to 1 day. While this adjustment reduces the risk, it also means there is currently no functional difference between an emergency proposal and an expedited proposal.

Thus, this upgrade introduces a feature that allows only whitelisted addresses to submit emergency proposals. This list will be modifiable only through governance. An initial list of whitelisted addresses will be proposed, along with a reduction of the proposal tally time back to 5 minutes (or a similarly shorter duration), in a separate proposal if this upgrade passes.

OP Withdrawal Period

This upgrade introduces functionality for the Initia L1 governance to adjust asset withdrawal times and the rollup finalization period for all live Interwoven Rollups. This change will standardize withdrawal times, creating a more consistent user experience across rollups, and it will allow for adjustments to the parameters after the rollup is live. If approved, an initial standard finalization period will be proposed in a subsequent proposal.

Adjusting Staking Rewards

This upgrade proposal will be submitted alongside a parameter change proposal to adjust the staking reward rate.

As of now, the staking module holds approximately 246,462,616 INIT (real time balances can be viewed here). The long-term goal is to maintain a 30% APR with a total value locked of $30 million in the USDC-INIT pool. Currently, during the bootstrapping phase, the pool is close to the target TVL but offers staking rewards nearly four times higher than the equilibrium rate. Additionally, excessively high staking APR has created competition with Initia’s L2 applications by over-incentivizing passive capital retention. Reducing staking rewards is expected to encourage a shift from passive staking to direct active capital participation across the interwoven rollups. This proposal recommends adjusting the annual equilibrium staking reward amount to 12,500,000 INIT.

Miscellaneous

• Add hashed address check to IBC Hooks receiver validation (PR #399)

Governance Votes

• YES – You support updating Initia with the changes proposed in this release.

• NO – You oppose implementing the proposed update to Initia.

• NO WITH VETO – This vote signals strong objection. It is used when the proposal is considered:

  1. Spam or irrelevant to Initia,

  2. Harmful to minority stakeholders, or

  3. In violation of Initia’s governance principles or encourages such violations.

     If more than one-third of total votes are cast as "No with Veto," the proposal will be rejected and any deposits will be forfeited (burned).

• ABSTAIN – You choose not to take a stance on the proposal but want your vote counted toward the quorum.