What is Injective (INJ)? Challenges and Prospects of the Project
Injective (INJ) serves as a versatile platform(protocol) for DeFi applications, opening doors for a broad spectrum of financial products such as futures, perpetual swaps, and spot trading.
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Founders and Investors
Injective Protocol was brought to life in 2018 by Eric Chen and Albert Chon. Their goal was to revolutionize the landscape of decentralized exchanges and create a more inclusive, equitable, and effective trading space for everyone involved.
The project has garnered roughly $206 million in investments from various venture funds, and through ICO/IEO. Among the funds, recognizable names like Pantera Capital, Jump Crypto, and Binance Labs can be found. It's worth noting that $150 million of this total amount was recently received by Injective Protocol in January 2023.
Investors in Injective Source: injective.com
Unique Features of the Project
Injective is a first-layer blockchain built on Cosmos SDK, offering native support for ERC-20 standard tokens. It operates through a Proof-of-Stake consensus mechanism based on Tendermint and features a dual-chain structure.
Such a structure enables instantaneous transaction execution while deferring settlement processing for later. This provides a significant advantage over many other DEXs, where users must wait for block confirmation before a transaction can be finalized.
Additionally, Injective Protocol's exclusive mechanism fortifies DeFi platforms against attacks from Maximum Extractable Value (MEV) bots, which often hamper the user experience in decentralized applications. For an in-depth understanding of MEV, refer to our dedicated article on the website.
Decentralized Applications Built on Injective Protocol Source: injective.com
What is INJ?
INJ is the native token of the Injective protocol. It fulfills four crucial functions:
- Governance. INJ bestows voting rights in the Decentralized Autonomous Organization (DAO) upon its holders.
- Network Security. Validators are required to stake INJ tokens to fulfill their responsibilities.
- Supplementary Liquidity. These tokens can be lent and employed as margin in the derivatives market, as well as collateral in lending protocols.
- Incentive. INJ serves as a reward for liquidity providers, developers, and stakers (validators or delegators).
The issue of INJ is restricted to a maximum supply of 100 million tokens. At present, roughly 80% of these tokens are in circulation. Injective has implemented a deflationary mechanism, which involves burning 60% of the INJ token fees acquired from decentralized applications.
Applications of INJ Tokens Source: injective.com
Challenges and Prospects
Assessing the tokenomics and the merits of the protocol, Injective and its INJ token seem to hold considerable promise on first inspection. According to the vesting timeline, all tokens should be unlocked by 2024, which should alleviate some of the downward price pressure on INJ. Nonetheless, it's worth noting that the Decentralized Autonomous Organization (DAO) may choose to alter the issuance rules down the line..
But these advantages alone don't cut it. The project needs to foster a robust ecosystem, gain popularity, and ensure stringent security measures. As of now, it's not entirely certain whether Injective Protocol ticks all these boxes. But there's always the possibility that these achievements may be within reach in the future. Additionally, the existence of competitors, such as Synthetix, shouldn't be overlooked..
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