Injective (INJ): The Blockchain Built for Finance

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23 May 2024

Injective (INJ): The Blockchain Built for Finance

Injective Protocol (INJ) is a Layer-1 DeFi protocol built for finance.

By Eric Chen, Co-Founder & CEO, Injective Protocol

Summary

Injective is an open, interoperable smart contracts-enabled blockchain optimized for DeFi applications. Injective uniquely provides plug-and-play modules, including an order book and derivatives trading module, that make it easy for any developer to quickly launch finance applications with inherent value. Coupled with smart contracts capabilities, any developer can build complex applications with cutting-edge protocols. Built with Cosmos-SDK, Injective utilizes a Tendermint-based Proof-of-Stake consensus mechanism to achieve instant transaction finality while sustaining lightning-fast speeds. INJ is the native utility and governance token for Injective. It plays an integral role in protocol security, market maker and relayer incentives, derivatives collateralization, and more.

What is Injective?

Injective (INJ) is a blockchain built for finance. It is an open, interoperable Layer-1 blockchain powering next-generation DeFi applications, including decentralized spot and derivatives exchanges, prediction markets, lending protocols, and more.
Injective uniquely provides powerful core financial infrastructure primitives that applications can leverage, including a fully decentralized MEV-resistant on-chain order book. In addition, all forms of financial markets such as spot, perpetual, futures and options are fully on-chain. The decentralized cross-chain bridging infrastructure is compatible with Ethereum, IBC-enabled blockchains, and non Ethereum Virtual Machine (EVM)-compatible chains such as Solana.

Injective also provides a next-generation, highly interoperable smart contract platform based on CosmWasm, with advanced interchain capabilities. Injective is custom built with the Cosmos SDK and utilizes Tendermint-based Proof-of-Stake consensus mechanism, providing instant transaction finality with the ability to sustain lightning-fast performance (10,000+ TPS).

The Injective ecosystem includes 100+ projects and over 150,000 community members globally. Injective is backed by a group of prominent investors such as Binance, Pantera Capital, Jump Crypto, and Mark Cuban.
Some of Injective's key elements include:

Layer-1 smart contract blockchain: Injective provides a state-of-the-art interchain Layer-1 that is able to achieve ultra fast speeds while charging zero gas fees.
Unlimited DeFi applications: Injective allows anyone to build DeFi applications with Injective’s robust infrastructure and financial primitives such as an on-chain order book.
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 such as Cosmos and Ethereum.
Community driven network governance: Injective is governed by its decentralized community in which all new innovations are voted on by a Decentralized Autonomous Organization (DAO) structure.
Pioneering interoperability: Injective has native connections to Ethereum, Cosmos, Solana and much more.
Fully Customizable: Ship your products with the ability to swiftly modify any parameter to fit your use case.
Intuitive developer experience: Flexible and expressive development environments powered by Rust and Golang.
Environmentally Friendly: A 99% lower carbon footprint through Injective’s Tendermint PoS consensus mechanism.

Key Technical Components of Injective

Injective is comprised of four principal components:

Injective Chain nodes
Injective's bridge smart contracts and orchestrator
Injective API nodes
Injective dApps and tooling

Injective Chain: The Injective Chain is a public blockchain network custom built to support the next generation of DeFi applications. Injective utilizes Tendermint consensus and the core protocol logic is implemented through native modules built on top of the Cosmos-SDK and through smart contracts on the CosmWasm smart contract layer.
Injective Bridge: The Injective Bridge provides a decentralized cross-chain bridging infrastructure with Ethereum as well as with any IBC-enabled blockchain. Injective’s Ethereum bridge is decentralized and secured by the validators of the Injective chain, and is powered by Injective’s custom peggy bridge system. Notably, beyond just supporting standard ERC-20 transfers, Injective also supports the transmission of arbitrary data, enabling novel cross-chain execution and smart contract interoperability capabilities with Ethereum. Additionally, as an IBC-enabled blockchain, Injective supports cross-chain bridging with any other IBC-enabled blockchain, allowing developers and users to access assets from hundreds of other blockchains.

Injective API nodes: The two purposes of Injective API nodes are (1) Serving as a data layer for the protocol; and (2) Providing transaction relay services. Injective API nodes serve as a decentralized data layer for external clients. Each Injective API node indexes data from the Injective blockchain in real time and provides high performance, low latency APIs that are out-of-the-box compatible across various use cases, including, but not limited to: hosting user interfaces for applications such as exchanges, programmatic trading and high frequency market making, and hosting various dApps, analytics interfaces, block explorers and more. Additionally, Injective API nodes can optionally provide a transaction relay service which allows applications to provide users the ability to send transactions with zero-gas fees paid, through Injective’s fee delegation mechanism.

Injective dApps and tooling: Injective is a fully decentralized protocol which allows for individuals to access both the blockchain and dApps built on-chain in a permissionless manner. A number of dApps are currently built on Injective. Presently, the most widely used dApps built on top of Injective are decentralized exchanges (DEXs), which provide individuals with an advanced decentralized trading experience. One popular dApp built on Injective is Helix which is one of the fastest growing decentralized derivatives exchanges. Beyond DEXs, Injective also powers several other decentralized applications, including dApps for insurance, prediction markets, binary options and more.

CosmWasm Smart Contract

Injective provides a next-generation, highly interoperable smart contract platform based on CosmWasm, with advanced cross-chain capabilities.

Applications built on Injective’s smart contract layer can access a wide array of powerful exchange and DeFi primitives, including on-chain liquidity, oracle price feeds, cross-chain bridging and execution abilities. Additionally, Injective uniquely supports the ability for automated smart contract execution with self-executing smart contracts — a powerful new primitive that unlocks a novel design space for applications, which further allows developers to create advanced applications that are truly decentralized and permissionless.

The Role of INJ Tokens Within the Injective Ecosystem

INJ is the native utility token of Injective. INJ is a scarce asset that is used for governance, token burn auctions, and staking on the PoS network.

The burn auctions on Injective are especially unique since 60% of all fees collected from dApps are auctioned off every week via a buy back and burn mechanism. This in turn allows the supply of INJ to dramatically decrease over time. The INJ burn auction is unique in that it helps accrue value for the entire Injective ecosystem.

The use cases intended for INJ include but are not limited to: protocol governance, dApp value capture, Proof-of-Stake (PoS) security, developer incentives and staking. Further details regarding each of these use cases can be found below.

Protocol Governance: The INJ token governs every single component of Injective, including chain upgrades. Since its mainnet launch, the Injective community has actively contributed to governance, with all proposals passing through a DAO governance vote.
Protocol Fee Value Capture: 60% of all fees generated from dApps enter an on-chain buy-back-and-burn auction to maintain the deflationary nature of INJ.
Tendermint-based Proof-of-Stake (PoS) Security: INJ is used to secure the Injective blockchain using a proof-of-stake mechanism. Validators and delegators can both participate in staking.
Developer Incentives: 40% of fees generated by users on dApps built on Injective go directly towards incentivizing new developers building on Injective which brings an ever growing funnel of builders to Injective.

Injective’s Vision For Tomorrow

Injective is pioneering a new decentralized economy with the goal of creating a freer and more inclusive financial system. With the ability to plug-and-play primitives easily into any DeFi application, Injective is spearheading a diversified ecosystem for the future of finance.
By making use of technological innovations that increase settlement and trade execution in a highly decentralized, permissionless, and censorship-resistant way, Injective is building a blockchain that has the potential to transform the industry as we know it.