In this age of DeFi, project after project is competing to provide users all over the world with the most innovative products. Injective Protocol, a layer 2 decentralized exchange, is one of them. Injective wants to unleash the potential of crypto derivatives and borderless decentralized finance.
The protocol supports cross-chain derivatives trading for multiple crypto products such as perpetual swaps, futures, CDFs, and more. In 2018, the protocol made it to the winner’s list of projects selected for incubation by Binance Labs. Injective wants to solve high latency, inefficiencies, and poor liquidity encountered by most exchanges today.
Understanding the Injective Protocol
Launched in 2018, the Injective Protocol is a DeFi project that wants to enable decentralized and cross-chain spot trading and derivative trading of financial products, from perpetual swaps to CDFs, to futures and more. The platform utilizes ‘peg zones’ to realize a cross-chain trading infrastructure. This environment is also trustless, censorship-resistant, transparent, and with low fees.
Highlights of the Injective Protocol
The Injective Protocol features the following highlights:
#1 Layer 2 decentralized derivatives trading: Injective can support fast, autonomous and transparent trading
#2. Trading opportunities: On Injective, anyone can create and trade on a derivative market of their choice by utilizing only a price feed. This increases opportunities for trading that are not found on other exchanges.
#3. Cross-chain trading: Injective supports a wide range of trading and yield generation activities across a variety of networks
#4. Community governance: The Injective Protocol will be governed by the community – in a true decentralization fashion. Any changes or updates to the protocol will be determined through a vote based on a decentralized autonomous organization (DAO) structure.
#5. Liquidity mining incentives: Injective users will have the ability to earn value through a variety of liquidity mining pools
Injective: Products and Technical Infrastructure
The Injective protocol is made of four key components:
- Injective Chain
- Smart Contracts on Ethereum
- API nodes
- Front-end interface
Let’s take a close look at each:
#1. Injective Chain
This is a decentralized sidechain solution that powers derivatives trading and supports a Trade Execution Coordinator (TEC) and a decentralized order book. The Injective Chain utilizes a Tendermint consensus mechanism to confirm and validate transactions.
On the Chain, users can build derivatives through two ways: the Injective Futures Protocol and smart contracts. The Injective Futures Protocol allows traders to create, enter into, and execute decentralized perpetual swaps and CFDs.
#2. Smart Contracts on Ethereum
As a token-based protocol, Injective is intricately linked with INJ, its native token. For that reason, major protocol interactions and token economics are implemented through various smart contracts, which are as follows:
- Injective Coordinator Contract: Implements orders and Injective’s derivative transactions both on Ethereum and the Injective Chain
- Staking Contract: Manages core functions like token rewards, choosing delegates, and governance
- Injective Futures Contracts: Smart contracts that allow traders to create and trade perpetual swap contracts on the market
- Injective Bridge Contracts: A suite of smart contracts that manage the flow of info between the Injective Chain and the Ethereum network
- Injective Token Contract: An ERC-20 contract for INJ token
#3. Injective API Nodes
Injective’s API nodes are responsible for two things: supporting transaction relay services and being the data layer of the protocol.
- Transaction Relay Service – This is a tool that formulates transactions and relays them to the Injective Chain. It also simplifies functionalities such as staking, voting, and governance.
- Data layer – The API nodes also act as a data layer through which external clients can interact with the protocol.
#4. Front-end interface
The Injective protocol is fully decentralized, meaning individuals and companies can use it in a permissionless manner. Injective has enabled a friendly front-end interface through which they can do so.
The INJ Token
INJ is the native token for the Injective network. It plays several roles, which include the following:
- Protocol governance: The INJ token will be used as a governance mechanism. Token holders will be able to vote on the future of the project, network parameters, and protocol upgrades through a DAO structure.
- Deflationary mechanism: The INJ token will be periodically bought back and burned so that it doesn’t flood the market – as a deflationary measure
- Collateral backing: INJ can be used as an alternative to stablecoins in the protocol’s derivatives trading, as well as a collateral backing when users lock up tokens so as to earn interest
- Incentive mechanism: The INJ token is used to reward participants for taking part in the network’s consensus
- Proof of Security (PoS): When nodes stake in INJ and get the right to take part in the network consensus, which secures the network, they will be rewarded with block rewards
INJ Token Distribution
The INJ token was distributed in the following fashion:
- Binance launchpad sale tokens: 9%
- Seed sale tokens: 6%
- Private sale tokens: 16.67%
- Team tokens: 20%
- Advisors’ tokens: 2%
- Ecosystem development tokens: 36.33%
- Community growth tokens: 10%
As of Oct 31st, 2020, the INJ token traded at $0.776922, with a market cap of $10,456,039, which places it at #470 per Coinmarketcap. The token’s 24-hour volume is $2,431,311, with a circulating and total supply of 13,458,281 and 100 million, respectively. INJ’s all-time high was $1.22 (Oct 23, 2020), while its all-time low is $0.662174 (Oct 29, 2020).
Buy and Storing INJ
You can find the INJ token listed on several exchanges, including but not limited to Binance, HotBit, Poloniex, DCoin, Uniswap (V2), VCC Exchange, and Pancake Swap. The token is listed as a market pair with USDT, BTC, BNB, BUSD, and WBNB.