Injective Protocol (INJ)

Key metrics

1. What is Injective Protocol (INJ)

Injective Protocol is a universal Decentralized Finance (DeFi) protocol. 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 orderbook that integrates the user-friendly interface and speed of centralized exchanges with the transparency of decentralized exchanges. Injective Protocol's decentralized orderbook exchange protocol is able to support cross-chain trading of crypto, perpetuals, futures, and exotic assets across distinct blockchains such as BSC, Ethereum, and Cosmos.

1.1 Injective Value Proposition

Injective Protocol provides a vertically integrated infrastructure that allows anyone to create and trade on any derivative market. Injective Protocol currently supports perpetual swaps and Contract For Difference (CDFs), and will support other derivatives in the future.

1.2 Key Highlights

Some of Injective Protocol's key elements include:

• Layer-2 decentralized derivatives trading: Injective is able to achieve fast trading speeds while charging zero gas fees.
• Trade on any market: Injective allows anyone to create and trade on any derivative market using only a price feed, thereby opening up many opportunities for trading on markets not found on other exchanges.
• Cross-chain trading and yield generation: Injective is capable of supporting a diverse array of trading and yield generation activities across distinct layer-1 blockchain networks.
• Community driven network governance: Injective’s network will be governed by its decentralized community in which new listings or network changes are all voted on a Decentralized Autonomous Organization (DAO) structure.
• Liquidity mining incentives: Injective’s community will be able to capture value via liquidity mining programs that have been natively built onto the network to spur continuous growth.

2. Recent news

• April 2021

  • Injective Protocol raises $10M from Pantera Capital, Mark Cuban for its ‘DeFi Robinhood’

• February 2021

  • Injective Partners with Ocean Protocol to Create Novel Data Derivative Products
  • Equinox Staking Launch: The Final Injective Testnet
  • Injective is Partnering with Conflux to Expand Cross-Chain Derivatives Trading

• January 2021

  • Injective will Collaborate with Acala to Integrate the aUSD Stablecoin into Polkadot-based Derivative Products
  • Injective Partners with AllianceBlock to Launch Decentralized Oil and Gas Futures
  • Injective Set to Launch Cross-Chain Staking Derivatives with our Partners Ramp DeFi and TomoChain
  • Injective Launches the World’s First Decentralized Tesla Stock Futures Trading

• December 2020

  • Solstice Pro Launch
  • Injective Launches the World’s First Decentralized Stock Futures Trading
  • Injective Partners with Matic to Expand Layer-2 Derivatives Trading Globally
  • Injective Launches the World’s First Yield Farming Derivative
  • Injective Partners with Binance Smart Chain to Accelerate Derivatives Adoption on BSC
  • Alpha Finance will be Listed on the Solstice Testnet

3. Product and technical infrastructure

Injective Protocol is comprised of four principal components:

• Injective Chain
• Injective's smart contracts on Ethereum
• Injective API nodes
• Injective front-end interface

Figure: Injective Technical Architecture

3.1 Injective Chain

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 Injective Chain is a fully decentralized sidechain relayer network which serves as a layer-2 derivatives platform, a Trade Execution Coordinator (TEC), and a decentralized orderbook.

Injective Chain utilizes the Tendermint consensus mechanism and the core protocol logic is implemented through Cosmos-SDK modules. Cosmos IBC allows Injective to send assets and arbitrary messages across Cosmos-based chains such as Terra.

Layer-2 derivatives platform

The Injective Chain supports building generalized derivatives applications through two avenues: the Injective Futures Protocol and general smart contracts.

• The Injective Futures Protocol is deployed on the Injective Chain as a Cosmos-SDK based application. This protocol enables traders to create, enter into, and execute decentralized perpetual swap contracts and CFDs on any arbitrary market.

• The Injective Chain provides a two-way Ethereum peg-zone for ETH and ERC-20 tokens to be transferred to the Injective Chain as well as an EVM-compatible execution environment for DeFi applications. The peg-zone is based on Peggy and the EVM execution is based on Ethermint.

EVM execution enviroment

The Injective Chain EVM is a Geth based EVM implemented as a custom Cosmos-SDK module (akin to Ethermint).

The user and developer experience for deploying and interacting with contracts on the Injective EVM will be the same, and all of the Ethereum RPC methods will be supported in the Injective EVM.

Trade Execution Coordinator (TEC)

The Injective TEC is a decentralized coordinator implementation based on the 0x 3.0 Coordinator specification. The Injective TEC safeguards trades from front-running using Verifiable Delay Functions and enables lower-latency trading through soft-cancellations.

Decentralized orderbook

Injective's Decentralized Orderbook is a fully decentralized 0x-based orderbook enabling sidechain order relay with on-chain settlement - a decentralized implementation of the traditionally centralized off-chain order relay used by nearly all central limit order book decentralized exchanges.

Nodes of the Injective Chain host a decentralized, censorship-resistant orderbook which stores and relays trading orders.

Cross-chain structure

• Ethereum ⮂ Injective Peg Zone: Both ETH and ERC-20 tokens can be transferred between Ethereum and the Injective Chain through the Injective Peg Zone. The process to do so follows the standard flow as defined by Peggy.

• Ethereum → Injective Chain: The following is the underlying process involved in transferring ETH/ERC-20 tokens from Ethereum to the Injective Chain. Validators witness the locking of Ethereum/ERC-20 assets and sign a data package containing information about the lock, which is then relayed to the Injective Chain and witnessed by the EthBridge module. Once a quorum of validators has confirmed that the transaction's information is valid, the funds are released by the Oracle module and transferred to the intended recipient's address. In this way, Ethereum assets can be transferred to Cosmos-SDK based blockchains.

This process is abstracted away from the end user, who simply needs to transfer ETH/ERC-20 assets to the Injective Peg Zone (IPZ) contract.

Figure: Injective Technical Architecture

• Injective Chain → Ethereum: Validators witness transactions on the Injective Chain and sign a data package containing the information. The user's ETH/ERC-20 token on the Injective Chain is then burned, resulting in unlocking the ETH/ERC-20 token on Ethereum. The data package containing the validator's signature is then relayed to the contracts deployed on the Ethereum blockchain. Once enough validators have confirmed that the transaction's information is valid, the funds are released to the intended recipient's Ethereum address.

3.2 Injective's smart contracts on Ethereum

Injective Protocol is a token-based protocol which is inextricably linked to the INJ token. As such, key components of protocol interactions and token economics are implemented through the following smart contracts:

• Injective Coordinator Contract: Services both 0x-based orders as well as Injective's derivative transactions on Ethereum and on the Injective Chain.

• Staking Contract: Manages the core functions for stakers in Injective Protocol including slashing, rewards, delegation and governance.

• Injective Futures Contracts: A suite of smart contracts that enable traders to create, enter into, and execute decentralized perpetual swap contracts on any arbitrary market.

• Injective Bridge Contracts: Encompasses a suite of smart contracts managing the two-way peg between Ethereum and the Injective Chain.

• Injective Token Contract: ERC-20 contract for the INJ token.

3.3 Injective API nodes

Injective API nodes have two purposes: 1) providing transaction relay services and 2) serving as a data layer for the protocol.

Transaction Relay Service:

Although users can directly interact with the Injective Chain by broadcasting a compatible Tendermint transaction encoding a compatible message type, doing so would be cumbersome for most users. API nodes provide users a simple HTTP and Websocket API to interact with the protocol. The API nodes then formulate the appropriate transactions and relay them to the Injective Chain.

The Injective API supports the Injective Futures API, the 0x Standard Relayer API version 3 (SRAv3), and the 0x Standard Coordinator API.

The API also provides abstractions for protocol actions including staking, voting and governance. The specification for this API can be found at api.injective.dev.

Data layer

Injective API nodes also serve as a data layer for external clients. Injective provides a data and analytics API which is out-of-the-box compatible with Injective's frontend interface. Although Injective provides the API server as an in-process service based on BadgerDB communicating over Google Remote Call Procedure (gRPC) with the Injective Chain node, developers can provide their own implementations for their custom needs (e.g. using a relational database for indexed queries).

3.4 Injective front-end interface

Injective Protocol is a fully decentralized protocol which allows for individuals to access the protocol in a permissionless manner. Injective provides a user-friendly frontend interface which individuals or companies can run locally or host on a web-server to interface with the protocol. This interface is also deployed on the InterPlanetary File System (IPFS).

4. Token sales and economics

4.1 Token allocation

4.2 Token sales data

4.3 Token governance and use of funds

All funds in previous fund raises were raised in stablecoins and fiat currencies. The stablecoins are either self-custodied and stored in multisig wallets, requiring at least 2 out of 3 signatures from the management team or are stored with a qualified custodian.

Funds will be utilized according to the allocations below:

• 50.00% Protocol Development
• 25.00% Business Development and Marketing
• 15.00% Operations
• 10.00% Legal and Accounting

INJ token supply distribution (%)

INJ token release schedule

4.4 INJ token overview and use-cases

INJ is the native token of Injective Protocol and is used for governance, exchange value capture, liquidity mining, and staking. The project has a buyback and buy burn mechanism funded by 60% of the exchange fees, and is triggered every two weeks. As the Injective ecosystem develops further with greater network usages, the new ecosystem projects would contribute towards the token burn, and reduce the supply of INJ over time.

The use cases intended for INJ include but are not limited to: protocol governance, exchange fee value capture, derivative collateralization, liquidity mining, and staking. Further details regarding each of these use cases can be found below.

• Protocol Governance: The INJ token can be used to govern various components of Injective's sidechain including the futures protocol, exchange parameters and protocol upgrades via a DAO structure.
• Exchange Fee Value Capture: After the relayer reward distribution, the exchange fee will undergo an on-chain buy-back-and-burn event to accrue value for INJ.
• Collateral Backing for Derivatives: INJ will be utilized as an alternative to stablecoins as margin and collateral for Injective's derivatives markets. In some futures markets, INJ can also be used for collateral backing or insurance pool staking where stakers can earn interest on their locked tokens.
• Exchange Participation Incentives: The foundation plans to incorporate a liquidity mining scheme and distribute a fixed number of INJ tokens daily weighted by the liquidity each network participant provides.
• Tendermint-based Proof-of-Stake (PoS) Security: To ensure the security of Injective's sidechain, Injective will incentivize nodes to stake INJ and participate in the sidechain's network consensus with block rewards.

5. Project team

6. Roadmap, updates, and business development

6.1 Original roadmap and achievements

6.2 Updated roadmap

2020 Q4

• Release of public testnet V1.
• Launch of Incentivized Testnet Trading Competition.
• Launch of ERC-20 token.

2021 Q1

• Release of public testnet V2.
• Release of Incentivized Staking Competition and Ethereum bridge.

2021 Q2

• Launch of mainnet V1.
• Implemention of bridges to multiple blockchain networks.
• Adding of liquidity mining (yield farming) and staking incentives.
• Swapping of token, from ERC-20 to native chain.

2021 Q3

• Launch of 10+ perpetual swaps and expiry futures.
• Launch of cross-chain yield generation.

2021 Q4

• Launch of DAO governance for community governed listings and market creation.
• Launch of staking pools on insurance funds.

2022 Q1

• Launch of institutional exchange interface.
• Launch of crypto-backed traditional financial derivatives.

6.3 Commercial partnerships and business development progress

• Polkadot: Polkadot facilitates cross-chain communication and interoperability by connecting multiple blockchains into one unified network. This integration will enable Injective to expand its decentralized cross-chain derivatives trading functionalities.
• Chainlink: Chainlink is an oracle provider in the blockchain space. This integration will allow Injective to access hundreds of secure price feeds via which users can go on to create limitless derivative markets.
• Terra: Terra is a blockchain protocol that uses fiat-pegged stablecoins to power price-stable global payments systems. This integration will provide Terra and Injective community members with a higher degree of interoperability while bringing new DeFi products found within the Terra ecosystem to Injective.
• Elrond: Elrond is a highly scalable, fast and secure blockchain platform for distributed apps, enterprise use cases and the new internet economy. Injective's partnership will open up markets for Elrond’s tech and tokens while also giving Injective’s users access to Elrond's digital currency, eGold.
• Ocean Protocol: Ocean is a blockchain-ecosystem that allows both individuals and enterprises to unlock the value of their data. This collaboration will allow Injective to create novel data derivative products.

7. Injective's activity and community overview

Injective’s community is distributed globally with various hubs located in the United States, China, South Korea, Europe and Vietnam.

Injective’s community comprises mainly of the following groups:

• Traders: This includes day traders, institutional traders and algorithmic traders that are seeking to leverage the Injective DEX for derivative market creation and trading.
• Market Makers and DeFi Enthusiasts: The Injective platform has built a liquidity mining program which can fairly compensate users for providing liquidity on the Injective platform.
• Market Creators and Developers: As an open and permissionless platform, Injective encourages developers to create unique derivatives markets. Market creators and developers are compensated for their contributions to the network through a percentage of the trading fees and by community grants.

7.1 Social activity

Injective Protocol employs a diverse array of strategies to achieve mainstream global adoption.

Current community growth strategies of Injective Protocol:

• Empowering community participants to be Injective ambassadors to grow a robust and sustainable trader and developer ecosystem.
• Increasing peg zones for cross-chain capabilities that interconnect multiple layer-1 ecosystems.
• Holding an incentivized testnet and trading competition for community to participate and provide valuable insights while being compensated for their efforts.
• Trading competitions and incentive programs to promote liquidity across the protocol.

Future community growth strategies of Injective Protocol:

• Growing its trader and market maker community by incentivizing participation in the exchange ecosystem via various liquidity mining programs.
• Introducing on-chain referral system for network participants to capture a high percentage of the exchange fees that they bring to the ecosystem.
• Launching new products around savings, stablecoins and lending to further strengthen the Injective Protocol ecosystem.

Community and social channels (data as of February 5th 2021)

Reddit | 2.2K Members
Twitter | 45.4K Followers
Telegram (English) | 15.1K Members
Blog

7.2 Development activity

8. Appendix

8.1 Technical documentation and socials

• Whitepaper
• Technical Documentation
• Social Channels
• Github

8.2 Written reviews

• ICO Drops Report
• Crypto Briefing
• DAO Maker
• Boxmining
• Ivan on Tech
• Crypto Cactus
• Shin Chan
• PaperCoins
• Incrypted (Russian)
• Journal du Coin (French)
• Black Mamba Research (Vietnamese)

8.3 Video reviews and interviews

• Bitboy: Best Coin to Make You a Millionaire in 2021
• Boxmining: Fully Decentralized Derivatives Exchange Interview
• Coin Bureau: Injective Protocol (INJ)
• Incrypted (Russian): Новое IEO на Binance Launchpad
• Cryptonauts: Hot DeFi Project by Binance Labs
• Delphi Digital: Injective, The Decentralized Derivatives Exchange Protocol
• Crypto Matrix (French): Injective Protocol demain sur Binance
• Journal du Coin (French): L''Exchange Décentralisé Ultime, Injective Protocol

8.4 Media mentions

• TechCrunch: As crypto comes back, Binance-backed Injective Protocol launches Testnet for its DeFi trading platform
• CryptoBriefing: After FAANG Stocks, Injective Protocol Lists GameStop
• CoinDesk: Decentralized Stock Trading Launching on DeFi Platform Injective Protocol
• CoinTelegraph: Synthetic assets get real: Competition for scalability, new markets heats up
• Coindesk: Pantera Capital Leads $2.6M Seed Round for DEX Protocol Injective
• Benzinga: Meet The Biggest DEX Disrupter Backed By Binance And Pantera
• Business Insider: Injective Protocol Becomes the First Binance Labs Incubated Project to Debut on Binance Launchpad
• Forbes: How Spotting Market Inefficiencies Can Spur Successful Startups, A Case Study With Eric Chen
• TechBullion: An Inside Look at Injective Protocol, Binance’s Bet on Decentralized Derivatives
• Hackernoon: Decentralized Exchanges from a DeFi Perspective: A Comparison
• E27: Inside the changing landscape of Asian cryptocurrency exchanges
• Entrepreneur: 9 Top Trends Shaping the Blockchain Industry
• Live Bitcoin News: An Analysis of Injective Protocol, A DEX for the Future of Decentralized Derivatives
• Hedgeweek: WooTrade partners with Injective Protocol