Discover what is Injective Protocol and how the project is building the future of decentralized exchanges.
The primary idea of cryptocurrency is to decentralize finance, and empower you to truly “be your own bank”.
In a perfect crypto world, every aspect of cryptocurrency transactions –mining, buying, storing, spending, staking, trading should be completely decentralized.
However, it will surprise you to know that in an industry that is built on the basic principle of decentralization and financial sovereignty of the individual, centralized exchanges account for more than 90% of all cryptocurrency trading.
The wide gap and the reason why centralized exchanges still dominate the market is because decentralized exchanges have close to zero user experience, are extremely slow, unreasonably expensive, not truly fully decentralized, have very low volume & liquidity, does not interface with fiat and lacks support for cross-chain transactions and atomic swaps.
These problems, among other factors, make decentralized exchanges highly inefficient, unappealing, and sometimes downright ineffective to the average crypto user.
Centralized exchanges on the hand are fast, convenient, highly effective, efficient, and more user-friendly.
However, they’re relatively less secure, censorship prone, not transparent, and vulnerable to manipulations.
Enters Injective Protocol – The project that is building the future of decentralized exchanges and aims to give you back full control of your funds and trade anonymously through their peer-to-peer secure exchange system.
What is Injective Protocol?
Injective Protocol is a BinanceLab and StartX backed, first front-running resistant (using Verifiable Delay Functions (VDFs) and selective delay), fully decentralized layer-2, exchange protocol on the Ethereum network that aims to unleash the full potential of borderless finance by supporting decentralized margin trading, derivatives, and futures.
The project aims to provide traders and cryptocurrency traders with a fully end-to-end (peer-to-peer) decentralized trading system and thus protecting investors from hacks, trade manipulations, exit scams, and front-running.
From order discovery to order settlement, traders on Injective Protocol powered decentralized exchanges maintain full control of their private keys and crypto-assets.
Injective is arguably the only known decentralized exchange protocol that is fully trustless, publicly verifiable, resolvable, liquidity neutral, and front-running resistant.
Now that sounds like a lot and if you’re wondering how they make all that possible, I invite you to read on and find out how Injective Protocol Work.
The Injective Protocol Products
The Injective Protocol comprises of three different products:
- The Injective Chain
- The Injective Exchange
- The Injective Futures Platform.
1. Injective Chain
Injective Chain is a Tendermint powered layer-2 sidechain that is connected to the Ethereum network and allows for the transfer and trading of Ethereum based crypto assets on the chain.
By layer-2 we mean that protocol is built on top of another blockchain and is usually aimed at solving the transaction speed and scaling problems of major blockchain and cryptocurrency networks.
Injective Protocol leverages the verifiable delay functions (VDFs) to enforce a fair transaction ordering consensus through a proof-of-elapsed-time mechanism.
The Injective Chain powers the Injective derivatives platform serves as a decentralized Trade Execution Coordinator (TEC) and hosts a decentralized open order book.
The team plans to integrate the Injective Chain with the Cosmos IBC sometime in the future in order to provide advanced, decentralized inter-chain capabilities.
2. Injective Exchange
The Injective Exchange product aims to fully decentralize cryptocurrency exchanges by making open-source every component of decentralized exchange –from the user interface designs, to the back-end and smart contracts functionality down to orderbook liquidity.
Everything is opened-sourced and completely free for anyone to access and verify.
Thus drastically reducing the entry barrier for new players into the permissionless, highly scalable, and high-performance exchange DEX market.
The Injective Exchange model rewards “relayers” in the Injective network for sourcing liquidity. By doing so, “exchange providers are incentivized to better serve users, competing amongst each other to provide better user experience, thus broadening access to DeFi for users all around the world”.
3. Injective Futures
The last in the suite of Injective Protocol’s products is The Injective Futures protocol – “a decentralized peer-to-peer futures protocol which currently supports decentralized perpetual swaps, contracts for difference (CFDs), and many other derivatives; allowing individuals to create and trade on arbitrary derivative markets with just a price feed”.
How Does Injective Protocol Work
Injective is a full collision and front-running resistant decentralized exchange protocol on the Ethereum network that integrates verifiable delay functions (VDF) as a proof-of-elapsed-time to resolve same-block order conflicts while preventing front-running attacks. ~The Injective Team.
Front-running is a major problem of decentralized exchanges and a form of market manipulation in which certain market participants such as miners, exchanges, and “smart” big traders can choose to or find a way to execute their own trades ahead of time in order to enjoy price advantages.
As decentralized trading is executed on the blockchain and every transaction (trade) is subject to miners’ confirmation before they’re executed, dubious miners can choose what transaction they confirm first for personal benefits at the expense of the regular trader who doesn’t understand how all these works in the background.
1. Transparent Fair Trade Settlement
In order to address all the aforementioned problems of existing decentralized exchanges, Injective Protocol uses an innovative on-chain settlement logic that establishes a fair sequence of incoming orders and thereby resolving collisions and front-running.
This is accomplished using a publicly verifiable proof-of-elapsed-time algorithm and verifiable delay functions and thus effectively enabling truly decentralized liquidity sharing, order matching, and trade settlement across multiple DEXs.
More so, in a situation where two traders submit the same order at different timestamps but within the same, the block, the fair and transparent Inventive Protocol system will allow the first order placed based on the time submitted to be matched and filled first.
2. Trustless Relayer Network
Working asynchronously with fair trade settlement discussed above, the Injective Protocol introduced what it calls “Injective Relay” –a decentralized, trustless relayer network that matches orders using a non-interactive commit-reveal scheme and prevents censorship and front-running even at scale.
Individual relayer nodes in an aggregated liquidity pool will remain trustless as long as they have zero incentive to act dishonestly.
3. Network Attacks Prevention
In order to prevent Sybil network attacks –a situation where a malicious trader attempts to flood the network with false encrypted orders with invalid information or random ciphertexts –the Inventive Protocol implemented a staking mechanism that forces traders to stake a fixed amount of the native token prior to making a trade.
Traders found to have intentionally submitted false, encrypted orders with the intention of wasting network resources will lose their staked token to compensate relayers for wasted computational resources.
And traders who send unencrypted orders would not have the option to stake any tokens but would pay higher exchange fees and accept the risk of getting front-run as the order is visible for bad actors to plan a front-run attack on them.
This mechanism ideally, should motivate especially large volume traders to opt for submitting encrypted orders and staking the native tokens as security.
After all, if you’re not a bad actor you have nothing to lose as your staked tokens will be released to you.
More so, since users maintain the private keys to the crypto assets and funds are never deposited on the side chain, users will never experience loss of funds due to network failures.
As this solution is certainly going to have a negative impact on user experience, traders are given the option to send either encrypted or unencrypted orders.
The Injective Protocol Team
The success of every project is dependent on the quality of the team.
Judging from the information about the people behind the Injective Protocol on the website’s team page, the project is being developed by some highly competent and experienced finance and blockchain experts with strong academic backgrounds and hands-on experience.
Injective Protocol was co-founded by Eric Chen –Protocol researcher at Innovating Capital and who also doubles as the CEO of Injective Protocol and Albert Chon – who is the CTO (chief technology officer) of Injective Protocol.
Albert is a consultant at OpenZeppelin and Software Engineer at Amazon according to the information on the Injective website.
The founders work along with 4 other engineers and blockchain developers. Obviously this is a small, young but experienced and competent team, given their listed experiences and qualifications.
Unique Features of the Injective Protocol
- Trustless: No trusted third-party is required to establish the true sequence of incoming orders and for trade settlements.
- Resolvable: Conflicting orders can be effectively resolved through the protocol settlement logic and thus create a fair and transparent market.
- Publicly verifiable: All orders are submitted with a time-stamp which is publicly visible and anyone can use that information to verify that the correct order sequence was executed.
- Liquidity neutral: Because Inventive is protocol agnostic, it provides access to different liquidity pools and allows for open exchange.
- Front-running proof: Prevents front-runners cannot intercept incoming orders and manipulate the sequence of order-filling to gain undue price advantages
Some of the exciting features the team is currently working on includes:
- New Decentralized Futures & Derivatives Markets
- Integration with more DeFi platforms
- Cross-chain trading
The Injective Protocol Token (INJ)
INJ is both an Ethereum-based ERC-20 and Binance-based BEP-20 token that serves as the native cryptocurrency of the entire Injective Protocol ecosystem.
The Injective Protocol token was launched via a Binance Launchpad token sale on the 19th of October 2020.
Which saw 9,000,000—9%— of the token’s total supply sold at a price of $0.4.
Thus effectively raising $3.6 million for the project.
The Injective Protocol (INJ) Tokenomics
INJ has a maximum total supply of 100,000,000 (100 million) tokens and a 7% annual inflation rate that will be systematically reduced to 2% over time.
The token also has a buyback and burn program which theoretical will reduce the total supply over time. Thus making INJ a deflationary token.
The current circulating supply as of today, November 8, 2020, is $13,458,281 with a token price of $0.81 and a fully diluted market capitalization of $82 million.
Click here to check out the current token information on CoinGecko
Seed Sale Allocation
6% of the total supply —6000,000— was allocated for the seed sale at a price of $0.0833.
The tokens will be released to the investors and into the circulating supply in 3 installments starting from the 7th month of the sale.
Strategic Sale Allocation
16.67% of the token total supply —16,670,000— was allocated for the strategic sale at a price of $0.1800.
The tokens will be released to the investors and into the circulating supply in 3 installments effective from the 6th month of the sale.
The Injective Protocol Token (INJ) Use Cases
The real-life use cases of the Injective Protocol token —INJ— include:
- INJ is used as the governance token of the Injective Protocol. So holding some INJ gives you the right and power to participate in the decision-making process of the project —including submitting proposals and voting on proposals.
- INJ is used by nodes as the staking token for securing the Injective network.
- INJ is used to incentivize market makers on Injective DEX.
- INJ is used to incentivize relayers on the Injective network for their work.
- INJ is used to pay for exchange fees on Injective DEX.
- INJ is used as collateral in the Injective derivatives.
- INJ is used to incentivize exchange participants. The more actively you trade on the Injective DEX, the higher your share of the INJ tokens allocated for rewarding platform users.
Injective Protocol Price Prediction for 2020 to 2025
What will INJ be worth by the end of 2020 and in the next 2 to 5 years?
We can only imagine and make an educated guess at best, as nobody can tell you with all certainty what the price of a particular asset will be in the future.
The Injective Protocol token was listed on Binance on October 21, 2020, at the price of $0.40 which shot up to $1.4 (its current ATH) in the first few seconds (or minute).
And since then has been moving sideways withing the $0.6 and $$0.8 price range most of the time.
Injective Price Prediction by End of 2020
Aside from the many partnership announcements and the scheduled public testnet for Q4, there’re not other excitements that could bring some FOMO and move the price of INJ beyond $0.8 to $1.
So my Injective Protocol token (INJ) price prediction for 2020 end is $1.
If the public testnet doesn’t come in Q4 then it will even be harder to reach the $1 dollar, except the entire crypto market and altcoins experience regain some upward momentum.
Injective Price Prediction for 2021
With the Injective Protocol DEX and suite of projects scheduled to be launched in Q1 2021, we expect to see some good price action with the INJ.
But at the same time, we must also note that the early investors’ tokens will begin to be unlocked in batches from around Q2 so there could be some serious cashing out by earlier investors, which could slow the potential upward price rally or worse, create a massive dip.
In either case, I am optimistic that INJ will be trading in the range of $2 to $5 if we experience a sustained bull market in 2021.
The launch of the Injective DEX and activation of other use cases as mentioned above plus the fact that Injective will regularly use some of the fees to implement a token buyback and burn program all act as catalysts for the projected price of $5 for INJ in 2021.
Injective Price Prediction 2022 to 2025:
How can Injective sustain a rising price for the INJ token?
Through increased demand which is fueled by the level of activity in its ecosystem and how useful the platform is to traders and other network participants.
Given that similar projects such as Uniswap, Balancer, Compound, Synthethix, etc are valued at between $1 billion to $3 billion, it’s reasonable to expect a similar market valuation for Injective Protocol if the platform becomes successful.
Which will put its price at around $10 per token.
With a total market capitalization of $500 million, INJ will be trading at $5.
And this is assuming that the entire supply of 100 million INJ is in circulation.
The price will be much higher per token if a lesser amount of INJ is in circulation.
So taking into account the growth potential of the platform, and other factors already discussed my most conservative Injective Protocol token (INJ) price prediction by end of 2025 is $10.
So in summary
- Injective protocol token (INJ) price prediction f0r 2021: $5
- Injective protocol token (INJ) price prediction f0r 2022: $6-$7
- Injective protocol token (INJ) price prediction f0r 2023: $7-$8
- Injective protocol token (INJ) price prediction f0r 2024: $8-$10
- Injective protocol token (INJ) price prediction f0r 2025: $10+
Remember, in between, there certainly will be dips and pull-backs which you’re going to HODL through or even take advantage of to buy more of the tokens at cheaper prices to maximize your overall profitability.
Final Thought on Injective Protocol
Decentralized exchanges are supposed to be the primary means of cryptocurrency trading as they support, promote, and protect the true ideals of the blockchain and cryptocurrency technology –decentralization and the financial sovereignty of the individual.
But existing solutions are slow, expensive, vulnerable, difficult to use, and lacks adoption due to their poor user experience.
The Inventive Protocol aims to make all that a thing of the past by unlocking the full potential of decentralized exchanges and making them fully decentralized, user-friendly, and secure.
Injective’s mainnet launch is scheduled for sometime between Q4 2020 and Q1 2021 which will bring to life the world’s first end-to-end fully decentralized exchange protocol.
This project has the potentials to disrupt the DEX market if successful and is really interesting to follow and see how the team brings these brilliant ideas to real life.
DISCLAIMER: I hold a small amount of INJ tokens. And nothing in this post should be taken as investment advice. This is my own personal opinion of the project as an optimistic investor. Everything can go to zero and you should always be prepared for that.
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What do you think about the Injective Protocol? Share your thoughts with us in the comments section below.