What is Injective Protocol?
Injective Protocol ("INJ") is currently listed at £6.74 with a total market cap of £101,088,159 (the result of a circulating supply of 15,198,687 which is 15% of the total supply). Injective Protocol is a universal decentralised exchanging protocol offering cross-chain derivative trading in the spot and futures markets. The developers of the exchange call it the first front-running resistant, layer-2 exchange protocol. It is still very early days for the product and it currently offers tokenised stock of Tesla and Twitter. It also offers access to the Euro and Japanese Yen which can be traded with Tether ("USDT").
For many of us, we would not see the requirement or demand for a product such as this but the CEO of Injective Protocol says that "investing in stocks still remains inaccessible for billions of people worldwide while the existing platforms act as gatekeepers and suffer from technical challenges". It is debatable the extent to which it is true, but I can appreciate that there will definitely be a market for this.
What are they key characteristics of Injective Protocol?
Injective Protocol has a number of key characteristics that allow it to function in a unique manner including:
- Fully decentralised - Injective Protocol is a sidechain relayer network whose core consensus is Tendermint-based. Tendermint consists of a blockchain consensus engine and a generic application interface. The consensus engine ensures that the same transactions are recorded on every machine in the same order. The application interface enables the transactions to be processed in any programming language. It has evolved to be a general purpose blockchain consensus engine that can host arbitrary application states. Another cryptocurrency application that is built using a Tendermint-based consensus is Cosmos ("ATOM");
- Layer-2 speed - The Injective Chain provides a two-way Ethereum peg-zone for Ether and ERC-20 tokens to be transferred to the Injective Chain as well as an EVM-compatible execution environment for DeFi applications. This benefits users as Injective Protocol is able to avoid both network congestion and high gas fees. This allows all users to trade freely with the expectation of fast transactions and zero gas fee; and
- Unlimited markets - Market creation is entirely open and does not require permission enabling anyone to create a market using only a price feed.
What is the INJ token required for?
INJ is the native token of Injective Protocol. As you can imagine with any decentralised platform, the native token has a substantial amount of value for its holders. The token is used for the following:
- Proof of stake security - To ensure the security of the sidechain, the supply of tokens is inflated to incentivise nodes to stake INJ;
- Governance - Holders of the token are able to make decisions related to the futures protocol, exchange parameters and protocol upgrades;
- Market maker / liquidity mining incentives - Incorporate a liquidity mining scheme and distribute a fixed number of INJ tokens daily weighted by the liquidity each network participant provides;
- Relayer incentives - Nodes and validators can act as relayers who cater to traders by way of providing an improved interface. As an incentive mechanism for relayers to provide the best experience, Injective has an on-chain referral system that rewards relayers who originate orders into the shared orderbook; and
- Collateral backing for derivatives - INJ will be utilised as an alternative to USDT as margin and collateral for Injective's derivatives markets.
Who is Injective Protocol partnered with?
Injective Protocol has a number of cross-chain activity based partnerships including Elrond, Kava and Polkadot. Uniswap was one of the first exchanges to open up to Injective Protocol after its initial listing on Binance.
The collaboration with Polkadot aims to expand cross-chain trading and was facilitated by Moonbeam who enable Ethereum compatible smart contracts that can be used within the Polkadot ecosystem increasing interoperability.
Where can you buy INJ?
Injective Protocol was the 16th project of the Binance Launchpad, so as you can expect you are able to buy INJ off their exchange in a selection of pairings including BTC, USDT and BNB. It has also been listed on other decentralised exchanges such as Uniswap (WETH/INJ), and from news that just broke out yesterday, Injective Protocol is to be listed Huobi.
What does Injective Protocol have in plan for the future?
The initial release was due to begin with the trading of Tesla, Airbnb, Google, and Amazon. So far, we have seen Tesla and Twitter listed but I can imagine a lot more of the NASDAQ including those listed above will make their way onto the exchange pretty quickly. I would imagine that tokenised stocks would be their service that attracts the greatest demand as there are a number of exchanges - both centralised and decentralised, which have a firm grasp over the cryptocurrency market. However, tokenised stocks are a new world to explore and access to the $90tn stock market would definitely help attract custom.
Conclusions
This seems like an innovative idea that has definitely planned a well thought out product. The support of NASDAQ and increasing listings of companies on the exchange will make the product fully fledged. I'm not completely sold on the demand of the product but I could very well be wrong there. If you have a different view than me in that there is substantial demand for the product, then I would think that this would be an insta-buy for you. However, I am going to spend a bit of time contemplating this and see how it stacks up against some other altcoins to weigh up which coin I should land on.
Whitepaper: https://docs.injectiveprotocol.com/#introduction