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.
How Does Injective (INJ) Work?
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.
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
Resistant to Front-Running
The settlement logic can deterministically handle conflicting orders submitted in the same block (also known as trade collisions) and front-running.
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.
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.
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
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.
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.