CoinMarketCap takes a deep dive into Injective (INJ), the first sector-specific blockchain built specifically for finance.
This article was updated with help from Injective Labs.
Injective (INJ) is a layer-one blockchain that is custom built to support interoperable DeFi applications. On Injective, anyone can create new DeFi and Web3 applications using its unique plug-and-play financial infrastructure primitives, such as high performance on-chain decentralized exchange (DEX) infrastructure, decentralized bridges, oracles, and a composable smart contract layer with CosmWasm.
Injective is built with the Cosmos SDK and leverages a Tendermint-based Proof-of-Stake (PoS) consensus mechanism, which allows it to achieve instant transaction finality while sustaining lightning-fast speeds (10,000+ TPS).
Natively IBC-enabled, Injective is also uniquely interoperable with prominent layer-1s (L1s), including, but not limited to, Ethereum, Solana, Polygon, Aptos and more, making Injective the first network within the Cosmos ecosystem to natively support assets from these networks.
How Does Injective (INJ) Work?
Injective (INJ) provides a powerful blockchain for building interoperable DeFi applications that have high fidelity. Injective is community-driven, governed through its native token, INJ, allowing anyone to access the full potential of its platform.
The Injective Chain is custom-built to support the next generation of DeFi applications. As a result, Injective can meet the demands of developers and users all over the world. The interoperable backend allows DeFi apps built on Injective to run effectively across different blockchains, such as Cosmos, Ethereum, Solana and more.
Injective has also enabled Cosmos Inter-Blockchain Communication (IBC) which allows Cosmos-based chains to seamlessly transfer assets across to the Injective network for near zero fees.
A number of incentive mechanisms are included in the blockchain layer to encourage development. On Injective, for example, hosts of relay nodes and UIs can earn up to 40% of all trading fees, which is an unheard-of incentive in the crypto market. In addition, 60% of all protocol fees go through a buy-back-and-burn auction, which is the largest buyback and burn program in the crypto industry.
A variety of apps have arisen to aid in the development of a flexible and high-yield strategy, including, but not limited to, Frontrunner, White Whale and Kado. Astroport, one of the largest AMMs originally built on Terra, also selected Injective as its new destination chain, bringing its entire community to the Injective universe. Similar apps from multiple L1s, such as Solana, Ethereum, and Terra, continue to shift their focus to Injective creating new apps and protocols that benefit the community, such as decentralized hedge funds or yield-generating products.
Unique Features of Injective (INJ)
High Level of Confidence
The Injective Chain is a permissionless public blockchain network that allows any individual or organization to participate in Delegated Proof-of-Stake (DPoS) consensus.
Everyone who joins this public blockchain network can take part in decentralized governance. All transactions are publicly traceable or readable, indicating a high level of confidence. You have complete control over your trading and can even develop new derivatives markets in minutes.
Resistant to Front-Running
Injective users are protected from front-running due to Injective’s use of a frequent batch auction model. To acquire a pricing advantage, a predatory front-runner cannot alter the order filling procedure or intercept incoming orders.
The settlement logic can deterministically handle conflicting orders submitted in the same block (also known as trade collisions) and front-running.
Interoperability
Injective is one of the most interoperable chains within Web3, having compatibility with Ethereum, Solana, Polygon, Aptos, Avalanche and more, through a recent integration with Wormhole. To view a full list of compatible chains, please visit the Injective Hub for bridging options.
In addition, Cosmos IBC allows Injective to interconnect to the entire Cosmos ecosystem, enabling seamless transfers from sovereign blockchain networks. As Injective continues to grow, it will continue to integrate further with notable L1s to bring the best experience for developers and users alike.
Neutral Liquidity
Injective does not impose any restrictions on accessing multiple liquidity pools and enables completely decentralized and trustworthy open exchanges. Exchanges built on Injective are able to share the same liquidity, allowing the exchange to access the same user base and liquidity available across the entire network. This enables developers on Injective to avoid a cold start problem of having to acquire their own initial liquidity.
Complete Decentralization
A decentralized autonomous organization (DAO) oversees all new market listings and protocol level updates, allowing the network to be completely community-driven.
Deflationary Tokenomics
Injective utilizes the largest buy back and burn mechanism in the entire crypto exchange industry. Every week 60% of all fees collected on Injective (including from all exchange dApps built on Injective) are burned. This leads to an overall deflationary supply that makes the INJ token more scarce over time.
Developers are incentivized to build on Injective because they are able to earn the remaining 40% of the fees collected. A prominent example of DeFi applications on Injective are exchange relayers which act as frontends for accessing the protocol. By building a frontend, the developer is able to earn a significant amount of the fees earned.
Injective (INJ) Development Team
Injective was initially developed by Injective Labs, a research and development firm. Since then, Injective has grown into a vibrant community and users worldwide that contribute to the open source Injective code.
The staff at Injective Labs consists of dynamic engineers, traders, and operators.
Injective Labs not only hosts a relayer interface that connects users to the Injective network, but it also offers backend support for the protocol.
The Injective Labs team has a webpage that is solely dedicated to some of the initial contributors. Check it out here.
Injective (INJ) Ecosystem
The Injective ecosystem continues to grow rapidly, and counts hundreds of projects as a part of its ecosystem, including Helix, Astroport and Frontrunner.
It recently announced a $150M ecosystem Initiative with some of the leading firms in Web3, including Pantera Capital, Kraken Ventures, Jump Crypto, Kucoin Ventures, Delphi Labs, Flow Traders, Gate Labs and IDG Capital. This venture consortium aims to support DeFi developers who are looking to build on top of Injective and push forth its mission of creating a more democratized financial system through decentralization.
As the ecosystem grows, all existing players benefit from the positive feedback loops. For example, if a developer builds a new lending protocol on Injective, they can benefit from traders on Injective, who may use the new lending protocol. Further, derivatives on Injective can act as one of the collateral types for the lending protocol. In other words, each new DeFi application on Injective strengthens all others within the overall network.
Use Cases for the INJ Token
The INJ token is a decentralized public utility and governance token of Injective. It is extremely important since it has an impact on governance, derivatives collateralization, market maker, protocol security, relayer incentives, and more.
Governance of Injective and its Ecosystem
Injective is owned and controlled by INJ holders. The INJ token enables users to participate in its ecosystem through a decentralized autonomous organization (DAO) structure, wherein users can propose new market listings to be available to exchange dApps or carry out protocol-level software upgrades.
The Injective Labs team abstains from all voting measures in order to ensure that the community can ultimately shape the future of the protocol.
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Exchange Fee Value Capture
Any exchange built on Injective directly accrues value to INJ.
You can host an exchange on Injective, which makes you eligible for 40% of the exchange costs/fees on orders that you source. Plus, you also propose changes to the Injective Chain, such as futures protocol exchange parameters and protocol upgrades.
Market Maker Incentives
Injective provides some of the highest benefits available on any trading platform (centralized or decentralized) to market makers who provide liquidity. Market makers can receive -1BPS maker fees, fee rebates for those who utilize the Injective trading API, and also rewards based on a trade & earn program.
These market maker rewards will be provided on a regular basis by analyzing exchange balance snapshots from user accounts to calculate fee savings for certain periods of use. The Injective DAO has voted to allocate 10% of the token supply (around $120 million at current value) to a liquidity incentive program called Astro.
Staking Injective (INJ)
You can stake your INJ tokens by delegating to an existing Injective Chain validator or become a validator yourself as an INJ token holder. You'll get staking incentives for safeguarding the Injective network and you'll be able to participate in the protocol's governance.
Your specific staking rewards depend on the size of your stake.
Injective (INJ) Tokenomics
The tokenomics of INJ is as follows: maximum supply of INJ tokens is 100,000,000 and circulating supply is currently 73,005,554 INJ as of Feb. 6, 2023.
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