INJ Is A Native Deflation Token That Powers Injective Protocols.

What Is Injective Protocol (INJ)?

Injective enables access to unlimited decentralized finance markets. Users can create any financial market on Injective’s fast, cross-chain, zero gas fee, secure, and fully decentralized exchange protocol.

The Injective Chain is custom built to support Ethereum-compatible DeFi applications that reach instant finality, sub 2 second block times, and lightning fast transaction speeds (10,000+TPS).

The trading infrastructure of Injective is supported entirely by a central limit order book that integrates the user-friendly interface and speed of centralized exchanges with the transparency of decentralized exchanges. Injective unique decentralized ordebrook exchange protocol is able to support cross-chain trading of crypto, perpetuals, futures, synthetics, and exotic assets across distinct blockchains such as Ethereum, BSC, and Cosmos.

The Injective ecosystem includes 100+ projects and over 200K+ community members from around the globe. Injective is backed by a group of prominent investors such as Binance, Pantera Capital, and Mark Cuban.

What Is The Injective Token (INJ)?

INJ is the native token of Injective Protocol. INJ is a scarce asset that is used for governance, exchange value capture, liquidity mining, and staking. 60% of all exchange fees are used to buy back and burn INJ every two weeks which allows the supply of INJ to dramatically decrease over time. In addition to this, transactions on Injective Protocol brought by new Injective ecosystem projects also help to burn more INJ.

How Does Injective Work?


Injective Protocol is made up of several components that support the functionality and development of its decentralized exchange.

Injective Chain

The Injective Chain is a decentralized exchange (DEX) protocol built on Cosmos that also allows for the transferring and trading of Ethereum tokens. This chain aims to address the scaling and throughput limitations many Layer 1 blockchains experience, while still allowing developers to use the Ethereum development kits they are familiar with. 

Traders can access several modules within the Injective Chain DEX:

  • Auction – allows token holders to bid on baskets of tokens that have been accumulated from exchange trading fees. The INJ tokens paid by the highest bidder are burned, or eliminated from circulation, by the protocol.
  • Exchange – helps traders create and trade new spot and derivatives markets. Order book management, trade execution, order matching and settlement are programmatically managed on chain. 
  • Insurance – supports underwriters who back the derivatives markets hosted on the exchange. 
  • Oracle – obtains real-world price data (such as traditional stock market data) used to set asset prices on the INJ exchange.
  • Peggy – bridges Injective Protocol to the Ethereum blockchain, allowing ERC-20 token holders to convert their tokens to Cosmos-native coins. 

Injective Exchange

The Injective Exchange is an order book model exchange based off of the popular 0x protocol. The Injective team open sourced all components of the exchange, aiming to build the platform with transparency and accessibility. These open source components include the user interface, smart contract functionality and order book management system. 

Injective Exchange also strives to eliminate trade front running by implementing a Trade Execution Coordinator (TEC). The TEC creates a delay to ensure new orders cannot be placed ahead of older orders, thus attempting to solve for advanced information obtained by some market makers or bots.

Injective Hub

Injective Hub is the dashboard that provides users with the overview and functionality they need to make the most of the Injective Protocol. 

Users can access the Injective Hub to stake their INJ to become network validators tasked with upholding the security of the Proof of Stake blockchain. INJ holders can also choose to delegate their tokens to network validators and earn a percentage of their rewards in return.

Injective Hub is also the location for community members to propose and vote on proposals that will shape the future of Injective. Examples of proposals that are put to vote include new trading pairs, platform functionality and governance procedures.

Injective Protocol Exchange Structure

Injective Protocol (INJ) is a decentralized exchange (DEX) protocol that offers advanced features like cross-chain margin tradingderivativesForex (FX)synthetics, and futures trading. Injective was designed to be a completely decentralized, permissionless, and high-performing exchange protocol with zero gas fees. Injective achieves this with its Cosmos-backed Layer-2 sidechain infrastructure that enables speed, accessibility, and decentralization with optimized connections to the main Ethereum chain.

Injective Protocol’s mission is to remove barriers of access to decentralized finance (DeFi) markets, eliminate gas fees while maintaining high transaction speeds, and provide a decidedly decentralized and limitless trading experience for everyone. To achieve this robust functionality, Injective Protocol implements several important features:

Fully decentralized network construction: The Injective Chain — based on the Cosmos Tendermint standard — is a fully decentralized sidechain relayer service that acts as a Layer-2 derivatives platform, trade execution coordinator (TEC), and decentralized order book. Injective offers access to a cross-chain decentralized derivatives marketplace with zero restrictions.

Layer-2 protocol speed: The Injective Chain facilitates the use of a two-way peg for Ethereum (ETH) and ERC-20 compatible tokens. It also boasts an Ethereum Virtual Machine (EVM)-compatible execution framework for numerous decentralized applications (dApps). Injective’s peg-zone architecture is based on the Cosmos Gravity Bridge, which allows for the transfer of value between the Cosmos Hub and Ethereum, while the EVM execution framework is based on Tendermint’s Ethermint EVM implementation. This enables powerful cross-chain compatibility and liquidity.

State-of-the-art decentralized order book: Injective’s order book solution is a fully decentralized order book that matches orders on the Injective sidechain, while transactions are settled on-chain in batches.

 

The Role Of INJ Tokens Within The Injective Protocol Ecosystem

INJ is the native utility and governance token of Injective Protocol. It plays an integral role in governance, derivatives collateralization, protocol security, market maker and relayer incentives, and exchange fee value capture.

Protocol and ecosystem governance: The INJ token enables users to participate in ecosystem governance by voting on proposed changes to the futures protocol, exchange parameters, and other protocol upgrades through a decentralized autonomous organization (DAO) structure.

Collateral backing for derivatives: The INJ token can also be used as a stablecoin alternative to supply collateral for margin trading and for the use of Injective’s derivatives market. Additionally, in specific futures markets, INJ can be used for collateral backing and insurance pool staking, allowing stakers to accrue interest on their locked liquidity provider (LP) tokens.

Tendermint-based Proof-of-Stake (PoS) security: Injective Protocol is secured by a PoS consensus that is based on Tendermint. The ecosystem incentivizes nodes to participate in network consensus by providing staking rewards. This mechanism inflates the supply of the INJ token, which began at 7% per year at genesis launch and will decrease over time to 2%.

Market maker incentives: The Injective DEX initially charges users exchange fees of 0.1% for makers, and 0.2% for takers. Fee reductions are provided to market makers who help bootstrap liquidity on the DEX trading platform. These market maker rewards will be distributed periodically by taking exchange balance snapshots from user accounts to determine their fee savings for specific periods of use.

What Problem Does The Injective Protocol Solve?

Injесtvе Prоtосоl is a tесhnоlоgу created tо solve the problem of third party involvement in trade by рrоduсing thе right sequеnсе bу which оrdеrs саn bе ассеlеrаtеd sесurеlу with no collision barriers. The invention was created to bring out the advantage of DEX liquidity while also eliminating the need for a third party to match trade orders within the same block. The tесhnоlоgу аlsо аllоws раrtiсiраnts to select оrdеr сараblе of tаking it without knowing the details of the orders belonging to other traders. This will prevent front-running and ensure that a large number of additional orders can be fulfilled without difficulty. The Injective Prоtосоl is also designed to match the аggrеgаtiоn аgrееmеnt bеtwееn most DEX to ensure Liquidity by matching orders respectively to provide flexibility and efficiency.

Let us now understand the various components of Injective Protocol and how they solve third-party involvement in trade, as mentioned below.

Injective Chain

Injective Chain, as defined by the Injective lab, is the core backbone for Injective’s sidechain layer 2, which works based on a hand-in-hand process with Cosmos zone. The Injective Chain also represents the infrastructure of the project. This infrastructure powers the Defi applications of next-gen in a decentralized and trustworthy mechanism. Injective Chain is a platform of derivatives that fully hosts an orderbook, EVM execution environment, trade execution coordinator, and a token bridge to Ethereum that is bi-directional. With the help of the sidechain that is cosmos-backed supporting EVM environments, Protocol to scale via L2 solutions, even though it offers solutions on Ethereum, is possible with the assistance of the Injective Chain. For a better understanding of the Injective Chain, let us unfold the components of the Injective Chain.

EVM Execution Environment

The generalization of smart contract execution is supported by the Injective Chain across the modular implementation of the EVM on top of cosmos SDK. Users utilize a scalable and interoperable implementation of Ethereum built on Proof-of-Stake with 1-block finality after implementing EVM on top of Tendermint.

The undermentioned contracts are deployed on Injective EVM:

  • Injective EVM Bridge Contracts
  • Staking Contract
  • Injective Coordinator Contract
  • 0x V3 Exchange Contracts
  • Injective Derivatives Contracts
  • Injective DEX Contracts

Decentralized Orderbook

A decentralized Orderbook can be defined as an Ox-based orderbook that is fully decentralized in nature, allowing the order relay of sidechains with the help of on-chain settlement. An implementation that is decentralized in nature belonging to the off-chain order relay, which is traditionally centralized. This order book is majorly used by the decentralized exchanges, which are also the central limit order book. A decentralized and censorship-resistant orderbook is hosted by the nodes of the Injective Chain, which also relays and stores orders for derivatives trading and spot trading.

Trade Execution Coordinator

Implementation of decentralized coordinator based away from the specification of 0x coordinator. The trading from front-running with the assistance of Verifiable Delay Functions enabling the lower-latency trading via soft-cancellations is done with the help of Injective TEC.

 

Injective API Provider

Relayers in the Injective network are rewarded for sourcing liquidity under the Injective model. By doing so, exchange providers are driven to better serve customers by competing to deliver a better user experience, hence increasing global access to DeFi.

Injective API nodes serve two purposes:

  • Service for Transaction Relay
  • Layer of Data

Service for Transaction Relay

Although users can communicate directly with the Injective Chain by broadcasting a compliant Tendermint transaction encoding a compatible message type, most users would find this inconvenient. API nodes help users engage with the Protocol by providing a basic HTTP, gRPC, and Websocket API. After that, the API nodes create the necessary transactions and send them to the Injective Chain.

Layer of Data

External clients can use Injective Exchange API nodes as a data layer. Injective provides a data and analytics API that works with Injective’s sample frontend interface right out of the box.

For the Injective Client, the Injective Derivatives and Spot Exchange APIs, 0x Standard Coordinator API, Injective Derivatives Protocol Graph Node GraphQL API, and different API services are required. Injective Exchange Client is all supported by the Injective API.

Injective EVM RPC provider

This component makes the nodes compatible, providing the complete Ethereum JSON-RPC API smoothly connecting it to the Injective EVM.

Injective Bridge Contracts on Ethereum

This Injective ⮂ Ethereum Bridge mechanism is known as the bi-directional Injective Token Bridge serving as a two-way Ethereum peg-zone for ERC-20 tokens to be moved to the Injective Chain EVM, allows users to transfer ERC-20 tokens from Ethereum. The peg-zone is based on Peggy and is protected by the Injective Chain’s Proof-of-Stake security. The Injective Bridge allows ERC-20 tokens to be moved from Ethereum to the Injective Chain. The standard flow, as specified by Peggy, is used to guide the procedure.

 

Ethereum to Injective  

The basic procedure for transferring ERC-20 tokens from Ethereum to the Injective Chain is as follows. Validators observe ERC20 asset locking and sign a data package containing lock information, which is then conveyed to the Injective Chain and witnessed by the Ethereum Bridge module. The Oracle module released the funds and transferred them to the intended recipient’s Cosmos address if the Cosmos address was stated specifically in the lock event. Once a quorum of 2/3 of the validators by signing power has confirmed that the transaction’s information is valid, the funds are released by the Oracle module and transferred to the intended recipient’s Cosmos address if a Cosmos address was specified in the lock event. The user can also choose to move the ERC-20 token to the Injective EVM chain’s equivalent child ERC-20 token.

The end-user is only required to transfer their ERC-20 to the Injective Peg Zone contract and select whether they want their cash transmitted to their Cosmos address (as reflected in the Cosmos bank module) or the child ERC-20 contract on the Injective EVM.

The transfer flow for moving a token to the is as follows at a high level:

  • A LogLock event is emitted when the ERC-20 is sent to the Injective Bridge Contract.
  • Listening to the event, an Injective relayer prepares and signs a Tendermint transaction encoding the data, which is subsequently broadcast to the Injective Chain.
  • Legitimacy of the transaction is verified by the nodes of the Injective Chain.
  • In the bank module, new coins representing the ERC-20 are created.
  • Following that, the ERC-20 can be used on the Injective Chain’s EVM and the Cosmos-SDK-based application logic. The Injective Chain will facilitate cross-chain transfers via Cosmos IBC in the future.

Injective Chain to Ethereum

The basic procedure for transferring ETH/ERC-20 tokens from the Injective Chain to Ethereum is as follows,

  • Validators sign a data package containing the information after seeing transactions on the Injective Chain.
  • The user’s ETH/ERC-20 is burned on the Injective Chain, freeing the ERC-20 on Ethereum.
  • The data package containing the validator’s signature is subsequently sent to the Ethereum blockchain’s Injective Bridge contracts.
  • The money is released/minted to the intended recipient’s Ethereum address once enough other validators have validated that the transaction’s information is correct.

INJ Token Economics

Injective Protocol’s INJ token functions for several utility purposes, but basically, as a governance token for the protocol. It provides the user the right to contribute to decisions concerning the Injective Protocol. For example, to propose a change and to the protocol and to vote for or against those changes.

Secondly, the token serves as support lending platforms as collateral. It functions similarly to the utilization of Stablecoins as collateral in Defi platforms. The INJ tokens can be lent as margins for the derivative markets built in the ecosystem.

The token also serves as collateral backing or pool staking for insurance to create more passive income.

Additionally, the INJ tokens serve as the means of paying market makers and relay operators. The market makers pay 0.1% for exchange fees, while takers pay 0.2%.

This allows the market makers to get payments in net positive rewards for returns. These rewards are what facilitate the incentivization of the provided liquidity. After creating liquidity, the market begins to enjoy narrow spreads and some worthy market depth.

To enhance all that, the validators and nodes will be encouraged to advance their interface or API to support trades directly. In doing so, the protocol pays them.

The remaining transaction fees can now be utilized in purchasing tokens back. They can also be used to burn the tokens in a deflationary manner. This means, decreasing the supply will increase the value.

Eventually, a part of the available remaining tokens will be shared with users based on their notional profits. Users who have the most notional profits get rewarded most rewards, and this is judged based on who rewarding those who utilize the platform most. The network calculates the rewards using a daily snapshot.

INJ Tokenomics

Tokenomics for INJ. Image via Bsc.news

Injective Protocol’s Key Features

The Injective Protocol allows users to:

  • Create and carry out trades on all market derivatives using a price feed only. Hence, creates room for more trading opportunities on markets that are not available in other exchanges.
  • Partake in decentralized trading of ‘cross-chain derivatives with 0 gas fees.
  • Access to a multitude of assets for generation of cross-chain yield.

The network is a general Defi protocol that trades over a plethora of digital products for cross-chain derivatives. The products include futures, perpetual swaps, and spot trading.

The injective Protocol is used as a Cosmos SDK module that is built with Ethermint (an EVM on Tendermint). It makes use of a ‘Tendermint-based’ Proof-of-Stake  (PoS) to enhance the trading of cross-chain derivatives across Ethereum, Cosmos, and other layer-1 protocols.

The protocol is resistant to any collision. It prevents ‘front-running’ using a VDF (verifiable delay function).

The INJ is the native token of the protocol used for functions like;

  • Mining Liquidity
  • Protocol governance
  • Staking
  • Capturing the value of the Exchange fee
  • Collateralization of Derivative

What Makes Injective Protocol Unique?

The Injective Protocol aims at solving the problems facing the financial world through the adoption of decentralized blockchain technology.

The INJ token enables users to be part of a real Defi (decentralized finance) organization. It gives them the power to propose new ideas and effect changes in the system.

The blockchain of the Injective Protocol is readily available for investors making the system completely decentralized.

Injective Protocol gives an equal level of power and influence to both big and small-time investors. In addition, its blockchain allows the trading of various CFDs, derivatives, and other types of assets.

The protocol doesn’t decentralize the ecosystem of trading and exchanges only; it also offers some proven methods of making money.

Users pay gas (transaction) fees in INJ tokens. This allows a continuous operation of the platform in a decentralized way.

How Is The Injective Protocol Network Secured?

The Injective network blockchain runs on a mechanism of (PoS) proof-of-stake consensus. This is one of the prominent ways INJ is similar to the Ethereum blockchain. INJ depends on PoS while using the EVM (Ethereum Virtual Machine) mechanism for security.

Proof-of-stake (PoS) is an alternative consensus for the proof-of-work (PoW) utilized by  Bitcoin. The PoS has a lot of advantages as regards the required power input for scalability mining and usability. The consensus plays an important role in maintaining the decentralized network operation in the entire system.

Injectus Roadmap

 

Injective Protocol Price Prediction: Targets For 2022-2031

According to The Block, DEXs recorded trading volumes of more than $1trn in 2021, an increase of 858% over the $115bn trading volumes in 2020. With around 70% of market share (combined data for Uniswap V2 and Uniswap V3 as of March 2022), Uniswap maintained its dominance in the DEX sector.

Holding more than half of the market, Uniswap (UNI) leaves a smaller market share to other DEXs, including Injective Protocol, and makes it a very competitive space. Still, the crypto derivatives trend is growing, according to the Block’s Digital Assets Outlook 2022:

According to Crypfographic statistics, INJ jumped 16 positions to become the 202nd largest cryptocurrency by market cap on 13 March. It has since improved further, and INJ now stands at 179 out of 200 major cryptocurrency projects in terms of market capitalisation (as of 25 April).

The short-term INJ price prediction from CoinCodex, based on technical analysis, was neutral today (as of 25 April), with 16 indicators giving bullish signals and nine bearish. 

The weekly simple moving averages (SMA) and exponential moving averages (EMA) were giving bearish signals. The volume-weighted moving averages (VWMA), Hull moving average (HMA) and average directional index (ADX) gave ‘buy’ signals. 

Meanwhile, the Williams percent range, stochastic fast, relative strength index (RSI) and the moving averages convergence divergence (MACD) stayed neutral.

According to a short-term injective protocol prediction, the price could rise by 22.9% to reach $6.65 by 28 April. 

Meanwhile, several algorithm-based forecasting services gave contrasting long-term INJ crypto price predictions as of 25 April:

• Wallet Investor’s INJ prediction was bearish and considered the coin a “bad” long-term investment. The average price of INJ could be $4.73 by the end of 2022, $3.88 by the end of 2023, $3.28 by the end of 2024, $3.88 by the end of 2025 and $2.47 by the end of 2026. Its five-year INJ coin price prediction suggests the token could fall to $1.50 by March 2027. 

Meanwhile, Digital Coin’s INJ crypto price prediction was moderately bullish. It estimated that the injective protocol cryptocurrency could hit an average of $7.12 in 2022, $7.80 in 2023, $8.07 in 2024, $11.20 in 2025, $9.76 in 2026, $12.43 in 2027, $17.08 in 2028 and $22.16 in 2029. Its INJ forecast expected the coin to hit $25.23 in 2030 and move up to $28.27 in 2031.

In contrast, Price Prediction gave a very bullish long-term injective protocol coin price predictions. Its projection was that the average price of INJ could hit $11.49 in 2022, $17.53 in 2023, $26.22 in 2024, $38.10 in 2025, $58.67 in 2026, $89.47 in 2027, $128.73 in 2028, $196.31 in 2029 and $285.25 in 2030. It expected the coin to exceed $400 and reach $430.89 in 2031.

When looking at INJ target prices, bear in mind that analysts’ and algorithm-based expectations can be wrong. Their injective protocol crypto price predictions are based on fundamental and technical studies of a cryptocurrency’s past performance. Past performance is no guarantee of future results.

Note that it is important to do your own research and always remember your decision to invest in INJ or any other coin depends on your attitude to risk, your expertise in the market, the spread of your investment portfolio and how comfortable you feel about losing money. You should never invest money that you cannot afford to lose.

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