What is Injective?
Injective (INJ) is a decentralized trading platform built on the Ethereum blockchain and the Cosmos SDK, the Cosmos Software Development Kit. On the platform, users can trade various financial instruments, including stocks, futures, and options, globally without the need for a central intermediary. This means that users have full control over their assets.
What sets Injective apart from other decentralized trading platforms is its ability to trade without borders, not limited by traditional financial markets and exchanges. The protocol uses a decentralized order book, meaning each trade happens directly between the parties involved. This allows investors to trade in real-time with minimal latency and lower costs.
Thanks to its advanced technological design called “Tendermint Core,” the Injective platform is able to achieve high transaction speeds with strong security. The platform has its own native token, the INJ token, which is used as the main payment method on the platform and to incentivize users to participate in the network and contribute to the protocol.
How does Injective work?
Injective provides investors with access to a wide range of financial instruments and trading opportunities without the restrictions found in traditional financial markets and exchanges. Decentralized order books enable direct transactions between parties without third-party intervention, while Tendermint Core ensures high transaction speeds and enhanced security. Users can participate in the governance of the protocol, allowing them to have a say in key decisions about the future of the platform. Overall, Injective offers an attractive platform for investors looking for a decentralized alternative to traditional financial markets and exchanges.
The Technology Behind INJ
INJ is built on a custom implementation of the Cosmos SDK, a flexible framework for dApp development that allows developers to add new features and tailor the platform to user needs.
At the core of the platform is Injective Chain, a Proof-of-Stake blockchain powered by Tendermint designed to enable fast and secure financial transactions. It uses a hybrid consensus mechanism that combines Proof-of-Stake and Tendermint’s Byzantine Fault Tolerance to ensure reliability.
Injective ensures platform security through broad decentralization. It is divided into layers, including transactions, coordination, and governance, each with specific functions, which can be upgraded and maintained independently:
- The trading layer supports transactions and manages trading pairs with an efficient order book model.
- The coordination layer monitors transactions at different levels and supports communication between platform components.
- The governance layer manages INJ tokens and decides on important aspects of the platform. INJ holders participate in protocol changes and shape the future of the platform.
Injective Ecosystem
The Injective ecosystem consists of many different components that work together to support the platform. What are these components?
- Injective Chain: The core of the platform and the blockchain that enables DeFi applications to be built and run. Injective Chain is a layer-2 solution designed to provide high throughput and low transaction costs. It uses the Tendermint consensus algorithm and supports the Ethereum Virtual Machine (EVM).
- Injective Exchange: A trading platform built on Injective Chain. It offers fast and decentralized trading of various assets, including cryptocurrencies, stocks, futures, and options.
- Injective Futures: Part of Injective Exchange that offers futures contracts for a variety of assets. Users can take long and short positions and generate income by speculating on future price movements.
- Injective Markets: A component of Injective Exchange that provides markets for trading assets, including cryptocurrencies, stocks, and other financial instruments.
- Injective Liquidity Mining: A program that allows users to earn INJ tokens by providing liquidity to specific trading pairs on the platform. It incentivizes liquidity provision and helps increase the platform’s liquidity.
- Injective Hub: A developer hub that makes it easy to build applications on Injective Chain. The Hub provides tools, documentation, and support for developers looking to build dApps on the platform.
Advantages and disadvantages of Injective
Advantages of Injective
Why do investors choose Injective?
- Developer-friendly platform
- Passive income options
- Focus on cross-chain DeFi applications
- Low transaction costs
- Access previously inaccessible markets
Disadvantages of Injective
What are the disadvantages of INJ that investors should consider?
- The number of validators on the network is low
- High Competitive Pressure in the DeFi Market
- Fluctuations in token price
What is INJ token?
Injective Protocol’s native token, INJ, serves as both a utility token and a governance token. It is important for governance, collateralizing derivatives, securing the protocol, incentivizing market makers and brokers, and capturing value from transaction fees, among other things.
- Governance: Using the DAO framework, the INJ token can be used to govern many components of the Injective sidechain, such as futures protocols, exchange installations, and protocol upgrades.
- Transaction Fees: After distributing rewards to intermediaries, transaction fees will be included in the on-chain buyback and burn event to create value for INJ.
- Collateral for derivatives: Derivatives markets will use INJ as collateral instead of just using stablecoins. INJ token holders can earn interest on their INJ by staking it into insurance funds.
- Tendermint Proof-of-Stake Security: Tendermint-based PoS consensus secures the Injective Protocol. The ecosystem compensates staking nodes for participating in network consensus. This method increases the supply of INJ tokens, starting at 7% per year and decreasing to 2% over time.
- Market Maker Incentives: Injective Decentralized Exchange charges 0.1% for makers and 0.2% for takers. Market makers who help build liquidity on the DEX trading platform will receive reduced fees.
Who is the founder of Injective Labs?
Injective Labs is the first research and development company to start contributing to Injective.
Eric Chen is the co-founder of Injective Labs. Prior to founding Injective, he worked as a crypto researcher and trader at a major crypto fund, where he led innovative market-neutral trading efforts in the blockchain space as well as investing in prominent companies such as 0x, ChainLink, and Cosmos. Chen has extensive knowledge of blockchain protocols and traditional finance, along with a deep understanding of both Eastern and Western blockchain protocols and communities.
Albert Chon is the Chief Technology Officer (CTO) of Injective Labs. He holds a BA and MS in Computer Science from Stanford University and was previously a software development engineer at Amazon. He is known for pioneering a new Ethereum standard used by several major projects today and co-founded Injective Labs with Eric Chen.
Conclude
Injective represents a significant step forward in the world of Web3 finance with a focus on permissionless and censorship-resistant innovation. Its unique approach to decentralized applications, combined with an emphasis on interoperability and scalability, has attracted the attention of both traders and developers. Additionally, the easy-to-learn tools and infrastructure that Injective provides make building in DeFi easier and more accessible.
As the space continues to evolve, Injective remains at the forefront, providing innovative solutions that help users and developers diversify the financial ecosystem. With a dedicated team and passionate community, Injective is well positioned to continue making waves in the DeFi landscape, providing a truly decentralized and inclusive financial ecosystem for everyone.
With over 100 projects in its ecosystem and over 350,000 community members globally, it’s no surprise that Injective is also backed by web3 innovators and investors like Binance, Pantera Capital, Jump Crypto, and Mark Cuban.
Injective’s combination of technology, flexibility, and vision is helping to reshape decentralized applications, with its impact on the industry likely to be felt for years to come.
You can see INJ price here.
Mr. Teacher
Bitcoin Magazine
