Understanding Injective Protocol (INJ), a DeFi-Focused Blockchain

Image: INJ

Injective Protocol, with its native token INJ, has demonstrated exceptional performance in 2023, recording a remarkable 28-fold increase. This article provides a detailed overview of Injective Protocol, covering its workings and tokenomics.

What is Injective Protocol?

Injective Protocol is a layer-1 blockchain specifically built to support interoperable DeFi applications. On Injective, anyone can create DeFi and Web3 applications such as decentralized exchanges (DEX), decentralized bridges, oracles, and smart contract layers, all built using CosmWasm, the Cosmos virtual machine.

Built using Cosmos SDK and employing the Proof-of-Stake (PoS) consensus mechanism based on Tendermint, Injective Protocol achieves transaction finality while maintaining speeds of up to 10,000 transactions per second.

How Injective Protocol Works

Image: Injective framework

Injective Protocol addresses third-party involvement issues in DEX trading by generating precise sequences to accelerate orders safely without overlap. This prevents front-running and ensures a large number of orders can be fulfilled without difficulty.

Injective Chain

The Injective Chain is the core of the Injective sidechain, running parallel processes with Cosmos. It represents the project's infrastructure, propelling next-generation decentralized and reliable DeFi applications.

Injective Exchange Client

The Injective Exchange Client is a comprehensive, user-friendly graphical interface catering to users ranging from beginners to advanced.

Injective API Provider

Injective API serves two purposes: Transaction Relay Service and Data Layer. In transaction relay, API nodes assist users in interacting with the protocol by providing basic HTTP, gRPC, and Websocket APIs. In the data layer, external clients can use the API node as a data layer, offering data and analytics without additional configuration.

Injective EVM RPC Provider

This component ensures node compatibility by providing a complete Ethereum JSON-RPC API and seamlessly connecting it with Injective EVM (inEVM).

Injective Bridge Contracts

The Injective-Ethereum bridge mechanism, known as the two-way token bridge, acts as a peg zone for ERC-20 tokens to be transferred to Injective EVM and vice versa.

Advantages of Injective Protocol

High Transaction Speed Blockchain

Optimized for speed and scalability, Injective Blockchain offers a super-fast transaction settlement layer. Leveraging Tendermint consensus and CosmWasm smart contract technology, Injective achieves fast transaction finality, enabling transaction speeds of up to 10,000 transactions per second (TPS).

Intuitive Developer Experience

Injective prioritizes the developer experience by offering a flexible development environment supported by Rust and Golang programming languages. Developers can easily adjust parameters to match their specific use cases, allowing greater flexibility and creativity in building DeFi applications.

Environmentally Friendly Approach

Injective takes a sustainable approach to blockchain technology, significantly reducing its carbon footprint compared to other consensus mechanisms. Leveraging Proof-of-Stake (PoS) Tendermint consensus, Injective achieves a 99% lower carbon footprint, contributing to a more environmentally friendly blockchain ecosystem.

Ecosystem on Injective Protocol

According to DefiLlama data, Injective has a Total Value Locked (TVL) of $28.85 million as of the writing of this article (14/1/24).

Image: Injective ecosystem TVL. Source: Defilama

Nine dApps are listed on DefiLlama, built and operating on the Injective network. The highest TVL dApp is Helix, a DEX platform with a TVL of $12.03 million.
Image:  dApps pada Injective.

Injective Protocol Team and Investors

Created by a team of experienced developers and entrepreneurs at Injective Labs, CEO Eric Chen, a cryptography researcher and investor, co-founded Injective Labs with Albert Chon, a scientist and former Amazon developer. In April 2021, Injective announced a successful $10 million funding round from investors, including Pantera Capital, BlockTower, Hashed, and Cadenza Ventures.

Functions and Tokenomics of INJ

INJ is Injective's native token playing various roles in the ecosystem, including governance, token burning through auctions, and staking in the PoS network.

One core goal of INJ is to secure the network through staking, with INJ serving as collateral to incentivize validator behavior. Users staking INJ receive rewards in the form of INJ tokens.

INJ is also used throughout the Injective ecosystem, serving as collateral in DeFi lending platforms or for asset exchanges. Additionally, INJ is used as payment for transaction fees (gas fees) throughout the Injective ecosystem.

Image: INJ coin tokenomics. Source : Token Unlock

Beyond dApp transactions, INJ functions as a governance token, allowing holders to vote on network proposals, enabling all community members to play a role in shaping the future of the Injective network.

INJ has a maximum supply of 100 million coins with the following distribution:

• 36.33 million coins (36.3% of the maximum supply) allocated for ecosystem development.
• 20 million coins (20% of the maximum supply) designated for the team.
• 16.67 million coins (16.7% of the maximum supply) allocated for private sale.
• 10 million coins (10% of the maximum supply) allocated for community growth.
• 9 million coins (9% of the maximum supply) allocated for coin sales through Binance Launchpad.
• 6 million coins (6% of the maximum supply) allocated for seed sale.
• 2 million coins (2% of the maximum supply) designated for Injective advisors.

INJ will undergo its final unlock phase on January 21, 2024, meaning all coins will be in circulation, and there will be no more coin emissions thereafter.

Conclusion

Injective's unique approach to decentralized applications, combined with its emphasis on interoperability and scalability, has garnered attention from both users and developers. The tools and infrastructure, easily graspable by developers, make building dApps more accessible and straightforward.

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*Disclaimer:

This content aims to enrich reader information. Always conduct independent research and use disposable income before investing. All buying, selling, and crypto asset investment activities are the reader's responsibility.