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Last updated: Aug 16, 2023
Injective Protocol consists of a layer-2 DEX protocol and Injective Chain.
The Injective Chain is a Layer-2 sidechain connected to Ethereum, built on top of Cosmos and Tendermint. The network allows transferring and trading of Ethereum-based assets. Injective Chain incentivizes its nodes to act as order relayers, host an orderbook, and serve as trade execution coordinators.
The network aims to scale trade execution and settlement on Layer-2, and its primary purpose is to power the Exchange protocol, which can further be used as an arbitrary derivative trading market. The Injective Chain supports decentralized orderbook-based DEX protocols and acts as an ERC-20 token bridge to the Ethereum mainnet.
Injective Protocol is a layer 2 DEX protocol built to facilitate next-gen derivatives exchange. Through the platform, users can make use of perpetual swaps, futures, and spot trading.
The team boasts of the full decentralization of the Injective Protocol by highlighting they open-source every component of the exchange, from the front-end exchange interface to the back-end infrastructure.
The Injective Protocol chain consists of modules imported from Cosmos-SDK and is made of five unique partitions.
The Auction module is made to periodically obtain tokens from trading fees accrued by the exchange module and then sells them through an auction to the highest bidder in INJ tokens. The INJ paid for winning bids is burned.
The Exchange module is integrated with all other modules and enables users to create trades on arbitrary, spot, and derivative markets. This module provides both perpetual swap and futures market trades, as well as spot market ones.
The Insurance module holds insurance funds for the derivative markets in the exchange module and can be used to support higher leverage trading. Insurance funds grow when positions in their corresponding derivative markets are liquidated with positive equity by getting half of it; however, if a position with negative equity gets liquidated, the fund is used to cover the missing equity.
The Oracle module is primarily used by the exchange module to obtain external price data. It does that by interacting with other Cosmos SDK blockchains and obtains its price feed from sources such as BandChain’s oracle.
The Peggy module is Injective Chain’s bidirectional ERC-20 token bridge to Ethereum, through which users can convert ERC-native tokens to Cosmos-supported ones. The bridge is validated by the Injective Chain nodes.
The Injective Protocol app is comprehensive and has a user-friendly graphical interface, which the team says is catered towards both new and advanced DeFi users.
The network consists of relayers that can host the client on a server to allow users to interact with the protocol. It can also be used by individuals running the client locally and directly interacting with the protocol. The team plans to develop the client interface on IPFS.
The Injective API nodes can set up Injective Protocol fee delegation services on individual transaction levels for other users, in this case, the node pays for the gas fees of the user to provide for a zero-fee trading experience.
Injective Protocol wallet support includes only MetaMask and Ledger for now.
The INJ token is subject to inflation to incentivize nodes in staking INJ for participation in the Injective network Proof-of-Stake verification process. The initial supply of INJ was 100,000,000 tokens and it increases through block rewards. The target of the inflation levels is to decrease from 7% at genesis to a level of 2%. To compensate for the effect on the value of the inflationary supply of the token, the protocol also employs a deflationary mechanism.
The project incentivizes relayers with a minimum trading fee of 0.1% for makers and 0.2% for takers. This fee acts to encourage relayers to source trading activity on the exchange protocol by being rewarded 40% of the fees accrued by orders they source. The remaining 60% goes through an on-chain buyback event in an auction for INJ tokens, which are burned later.
INJ can also be utilized as an alternative to stablecoins and as a margin and collateral for Injective’s derivatives markets. The token can also be used as collateral backing or in insurance pool staking programs where stakers earn interest on locked tokens.
36.33% of the initially supplied tokens are allocated towards the ecosystem’s development, 20% are given to the team, 16.67% are left for private sales, 10% are for community growth programs, 9% for Binance Launchpad, 6% for a Seed sale round, and 2% for advisors.
The token is also used for the governance of the Injective Chain. Through it, users can change all aspects of the network including all modules’ parameters. INJ token holders can both vote on protocol changes and propose them.
The Injective Protocol team consists of CEO Eric Chen who is also a co-founder of the project and a venture partner at Innovating Capital (one of the early investors in Injective Protocol). Albert Chon is CTO and the second co-founder of the project, his experience includes working as a software development engineer at Amazon. The rest of the team includes full-stack, Solidity, and Golang developers, as well as financial markets and marketing research specialists. The company is backed by numerous venture capital firms including Pantera and Binance and is also supported by blockchain advisors like Sandeep Nailwal – the founder of Matic, as well as Andreas Weigend, former Chief Scientist at Amazon.
The Injective Protocol audit can be found in the protocol dashboard on this webpage.
Injective has integrations with Harmony, API3, Klayin, UMA, Reflexer’s RAI stablecoin, Division, NEAR, MDEX, Stacks, Formation Fi, Huobi Pool, HashQuark, Lithium Finance, Crypto.com, Canary Chain, Orion Terminal, Impossible Finance, Commonwealth, and many others. The latest integrations are listing ATOM Perpetual Futures, Spot Market listing Chihuahua’s HUAHUA, as well as decentralized terra ecosystem markets. All projects part of the Injective Protocol ecosystem can be viewed here.
In Injective’s latest official roadmap release, the team describes the goals set for 2022 to include working on a decentralized derivatives exchange, integration of more oracles, increased liquidity, and more trading pairs and market types available for trading. The team will also be working on the Injective Chain’s ability to support futures, synthetic assets, options, and other products.
https://docs.injective.network/
https://gov.injective.network/
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Last updated: Aug 16, 2023
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