What Is Injective?
Injective is a Layer 1 network built for Web3 financial applications. It optimizes the Cosmos SDK framework alongside Tendermint-based Proof of Stake consensus algorithm, allowing instant transaction finality with lightning-fast speeds (25,000+ TPS).
Key Takeaways
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Injective is highly interoperable with IBC and other networks including Ethereum and Solana. By using rollup layers called Electro Chains (inEVM and inSVM so far), developers from distinct virtual machine environments can seamlessly deploy their dApps on Injective.
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Plug-and-play finance modules on the Injective blockchain include the decentralized on-chain orderbook, binary options, RWAs, and an automated smart contract structure. Developers can utilize these modules to rapidly create groundbreaking applications.
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The Injective ecosystem is rapidly growing with core offerings across Web3 finance including DeFi, NFT Fi, RWAs, Game Fi and more.
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In addition to providing security for the chain, the INJ token has a unique deflationary auction module.
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The recent Volan upgrade brings a wealth of significant changes to the Injective mainnet, including the addition of Real-World Assets (RWA) alongside enhanced speeds and interoperability.
This article is brought to you by Injective.
Every day brings a new chain to the DeFi world. Just log in to crypto socials and you’ll see the latest and greatest in brand new blockchains, all set to “revolutionize the game.” And every new blockchain touts its own advantages or dangles points and airdrops in a grasping (see: vampiric) attempt at winning over users and liquidity.
While this strategy may be effective for new blockchains in the short term, soon they will run into the same trilemma obstacle as many before: how to scale while maintaining security and decentralization?
As an established and growing Layer 1 powerhouse, Injective is prepared to answer this important trilemma question. This chain already features lightning-fast (and arguably the cheapest transactions!), native MEV-resistance, and seamless interoperability. And as more developers and users are onboarded, Injective is prepared to handle their innovations and traffic through its Electro Chain infrastructure stack, modular rollups that cater to any designs or codebases, yet retaining the security and support of Injective.
Injective: A DeFi Powerhouse
So, what makes Injective truly special?
It’s been built with both users and developers in mind.
Users can enjoy blazing-fast transactions (up to 25,000 per second!), subsecond block times and fees so tiny they’re practically nonexistent.
And for developers, Injective speaks all their languages. It’s got all the tools they need to craft killer applications, or migrate existing codebases, with built-in primitives designed specifically for high-speed action. No clunky workarounds!
For both users and developers alike, the true core of Injective's power is its plug-and-play modules which enable developers to rapidly create new dApps. So instead of taking months or even years to build applications, anyone can leverage Injective’s on-chain modules to launch innovative apps. A core offering by Injective is its unified liquidity layer via its on-chain orderbook that brings institutional grade liquidity to DeFi and can't be manipulated! Injective is also integrated with multiple bridges that lets Injective interact with all your favorite blockchains, EVM or not.
Currently, this user-friendly and developer-friendly environment has already fostered a thriving DeFi ecosystem with over $100 million locked in value! Apps like Helix, Dojoswap, and Mito are just a taste of the amazing innovations happening on Injective.
Key Features of the Injective Blockchain
All of Injective’s DeFi applications thrive on the key features of the Injective Blockchain, which include:
Unified Liquidity Layer
So we know about decentralized exchanges (DEXs) – they let you trade crypto without some central party controlling everything. Pretty cool, right? But most DEXs use systems called AMMs (Automated Market Makers). Think of them as fancy vending machines for your crypto. AMMs are easy to use, but not always the most efficient.
Then there's the OG way of trading: orderbooks. They're basically like the lists you see on stock exchanges, where buyers and sellers throw their prices in the direction they think the market is headed. Injective does orderbooks, but on steroids where every single component is entirely re-created on-chain for the first time. Here's the Injective twist:
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Supercharged Speed: Injective's orderbook can handle way more trades than those clunky AMMs – we're talking thousands of transactions zipping through every second.
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No More Cheating: Say goodbye to MEV and those pesky front-running bots! Injective’s orderbook uses "frequent batch auctions" to make sure everyone gets a fair shot and the best price.
And the best part here is that the Injective orderbook can be used by its Electro chains (those special side chains we mentioned). This will allow dApps from essentially any programming environment out there to tap into the ever growing liquidity and security of the Injective orderbook. This basically ensures that a unified liquidity layer is always present on Injective which any application can tap into to maximize capital efficiency and user experience for all.
The Interchain Smart Contract Environment
Injective optimizes the core Cosmos SDK, which basically lets blockchains talk to each other. Normally blockchains are like walled gardens – each one gated off from the rest. But with Injective, your DeFi apps can break down the walls and tap into the innovative things happening on other blockchains.
Here's what makes Injective's developer tools so useful:
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Interchain: Injective’s smart contracts are designed for interchain interactions. Anything developed on it can easily interact with other chains retaining the same structure.
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Advanced App Power: Injective's IBC connections lets your app draw on all sorts of resources by actually being able to create advanced transaction messages that span multiple blockchains so you are no longer siloed to just one chain.
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Automated Self-Executing Contracts: Normally, smart contracts need someone to push the button to get them going. Injective has created a novel solution that lets your contracts automatically self-execute functions, essentially doing their thing every block. Imagine the possibilities!
So, that's the Injective dev toolbox in a nutshell. You can build wild, futuristic apps that work across different blockchains, scooping up resources from everywhere like a DeFi super-shopper. No more gated, single-chain apps.
Interoperability Needs a Bridge
Injective’s bridge is the final piece of the interoperability puzzle. It is basically built as the universal translator that allows your apps to explore and connect wherever they need.
Here's how Injective's bridge gets your DeFi apps places:
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Cosmos Hub: This is Injective's home neighborhood, and your apps can chat with all their neighbors here easily using IBC.
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Beyond the Home Block: Injective's bridge goes beyond the Cosmos Hub. It uses well-polished tools like Axelar, Wormhole, and Peggy to connect with all sorts of other blockchains, EVM or not (think Ethereum and Solana).
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Bring Your Own Crypto: Got some ERC-20 tokens (a popular crypto format) sitting around? The Injective bridge (powered by Peggy) can whisk them over to Injective so you can use them there. Wormhole and Axelar can handle other more diversified types of crypto too.
With Injective's bridge, apps and their uses can access all kinds of resources around the DeFi space, such as yield farming opportunities or the latest trading narrative.
Injective API Nodes
Injective's public API is a key to the kingdom as it lets anyone play around with their super-fast orderbook. This API lets you:
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Become a Data Detective: Need info on Injective's prices, liquidity, or trading history? The API lets your app snag all that data and use it for whatever cool thing you can cook up.
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Build Your Own Trading Bots: Injective's API allows bots to be built right into Injective's orderbook and execute trades automatically, allowing maximum efficiency for all the best deals.
Injective dApps
Injective isn’t just an empty playground filled with the best structures – it’s full of sophisticated apps, heavily used by both developers and users alike.
Some examples of the current players are:
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Trading Tools: Apps like Helix that leverage Injective's order book for a clean user experience, automated spot grid bots, and innovative markets.
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DeFi Swiss Army Knives: Other apps like Mito, Hydro Protocol and Dojo Swap let you do all sorts of useful DeFi actions – swapping tokens, leverage your INJ staking, yield farming, or lending your crypto out for interest.
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NFT Fi: Apps like Talis and Dagora allow you to interact with Injective’s vibrant NFT ecosystem which also brings new use financial use cases for NFTs such as NFT lending.
Basically, Injective is like a Web3 finance one-stop shop. Any app related to finance whether that be DeFi, NFT Fi, Game Fi or RWAs gains new superpowers on Injective. You can trade, borrow, lend, insure, and more – all with the help of the cool apps built on Injective!
INJ Token and Tokenomics
The heart and soul of Injective is INJ – it’s the fuel that keeps the DeFi engine humming. The initial supply of INJ is 100 million and will increase over time for the Injective validators at a rate of 7%. This increase, however, is counteracted by deflation from Injective’s weekly INJ auction burn which is a first for the entire industry. Effectively, protocol revenue across Injective dApps are collected into a basket which can be bid on using INJ. The winning bid in INJ is then burned permanently. With the launch of INJ 2.0 in April 2023, any dApp can continue into the burn auction, accelerating the deflationary properties of INJ itself.
As the utility token of Injective, INJ serves a number of extra purposes that are vital to the ecosystem’s operation, including:
Governance
Injective is all about community control. INJ holders lead the way by voting on everything from marketing campaigns to the next big tech upgrade for Injective. Anyone with INJ can throw their vote in the mix, but to make sure you're not just some random anon, they ask you to put up some INJ as a deposit when you submit a proposal (think of it as a way to prove you're invested in Injective's success).
There's a voting portal where you can see all the proposals and cast your vote. They give everyone four days to make their voices heard, and as long as at least a third of INJ holders chime in, the vote goes through. All proof that Injective lets the community decide where things are headed.
Proof of Stake Security
Injective runs on a "Proof of Stake" system, where validators, the ones verifying transactions, have to lock up their INJ tokens to help keep things running smoothly and also to receive token rewards. The more INJ these validators lock up, the more weight their vote has in Injective governance.
Injective encourages everyone to join the party by letting individual users also stake their INJ on validators they trust. These individual users get rewarded with brand new INJ for their contributions as well. And the best part is, users can always change their minds and move their stake to a different validator, or even unstake their INJ entirely with just a 21-day waiting period. In short, INJ is the key to keeping Injective safe and secure, and staking it is how users get rewarded for helping out.
dApp Fee Value Accrual
Injective has another novel feature called an auction module. It collects weekly fees from dApp transactions from all over Injective and then participants throw down their INJ tokens to win these fees. At the end of the week, whoever offers the most INJ gets the sum. Then, Injective takes all those INJ and... burns them! That's right, they disappear forever.
What’s more, you can trade INJ all over the place – on Injective's own DeFi apps and even on big name exchanges like Binance and Coinbase. So if anyone is looking to get their hands on some INJ, they’ve got options!
Diving into Injective’s Volan Mainnet Upgrade
Injective started 2024 with a bang. Their Volan Mainnet Upgrade was the chain’s biggest update ever, and it served as a shot of nitrous for Injective and all the DeFi apps living on it. This upgrade throws open the doors for developers to build even more outside-the-box DeFi apps, and lets existing apps give their users a smoother, faster experience. Prepare yourselves for some serious DeFi app makeovers!
A Layer for Real World Assets (RWA)
Injective isn't stopping at just DeFi – they're gearing up for the next big thing: RWA, or Real-World Assets. Think of it as bringing real-world stuff like stocks and bonds onto the blockchain.
Their Volan mainnet upgrade preps Injective for this RWA invasion from both mainstream and native projects alike. Imagine firms and projects being able to launch special tokens based on things like cash, government bills, or even their own credit products. Injective's RWA module makes it easy for these companies to create these tokens and link them to real-world stuff, all while giving them complete control over how it works. Injective is basically opening the door for a whole new wave of financial products on the blockchain.
Supreme Scalability
Injective's Volan upgrade also comes with a major boost in speed. It cuts down the time it takes for apps to talk to Injective's orderbook by a significant 90%. This means apps can zip around grabbing data and making trades way faster, while also being able to handle way more users and keep things smooth even as the DeFi world keeps growing.
More Interoperability
The Volan upgrade isn't just about internal improvements – it's also about building bridges! The upgrade makes Injective even more compatible with other rapidly-growing blockchains. This means those other blockchains can borrow all sorts of goodies from Injective, especially their super-fast order book. Imagine being able to swap crypto across different blockchains in seconds – that's the kind of future Injective's Volan upgrade is building.
Improved Oracle Feed Design
Beyond speed and DeFi advancements, the Volan upgrade is also about opening the door to a whole new world of financial instruments. Apps on Injective can now pull live prices from the real world and stick them right on the blockchain. This means all sorts of novel assets can show up on DeFi apps, from foreign currencies to tokenized bonds.
A Better Token Burn Module
And remember that INJ auction module? The Volan upgrade activates the token burn module to any token on the Injective blockchain. With this, any project will be able to implement deflationary mechanisms for their tokens.
Enhanced INJ Deflation
On top of it all, the Volan upgrade reportedly brings an improved inflationary and deflationary balance for the INJ token. With the way it’s now designed, INJ inflation should move to zero over time along with substantial upgrades to the deflationary mechanism via token auction and burn. This would presumably strengthen the tokenomics and make INJ an increasingly scarcer asset over time. The upgrade tweaks how new INJ gets created, slowing it down to a trickle over time.
Note that this list is not exhaustive of the upgrade’s new addition to the blockchain. See the full list of proposed Volan mainnet upgrade improvements.
Final Thoughts
Even with all of the incredible developments in the blockchain space, the future outlook of blockchains is uncertain. And yet, Injective seems to have set a new trend towards sector=specific blockchains that are hyper optimized to serve specific purposes.
With blockchain technology currently largely focused on DeFi, building an optimized layer for developers to create wealth management applications is one possible gateway to limitless adoption. We are seeing a growing interest in Injective, with the INJ token enjoying over 2,800% growth in value in 2023.
This article is meant for educational purposes and should not be taken as financial advice. As always, remember to do your own research before investing in any protocols.
CoinGecko's editorial team comprises writers, editors, research analysts and cryptocurrency industry experts. We produce and update our articles regularly to provide the most complete, accurate and helpful information on all things cryptocurrencies. Follow the author on Twitter @coingecko
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