Injective - By N1C0_B_

N1C0_B_ covers the Injective chain including the team, technology, tokemics and ecosystem overview.

Injective - By N1C0_B_

Disclaimer - This is part of our outside perspective series. Curious Cosmonaut Research is not the author we are simply highlighting some good threads and perspectives on the Cosmos ecosystem with their permission. We also, therefore, do not guarantee their accuracy.

Author:  N1C0_B_

Source: Blog

Date: January 31, 2023 (Completed, was done in stages)

Overview:

Part 1 Introduction: Unique Features, Tech Stack, Team, and Funding

Part 2 Tokenomics: Utility, Burn Model, Unlocks/Vesting, Sentiment

Part 3: Eco-System: Wormhole, Helix, Project X, Astroport

Part 1: Introduction

Injective is an L1 built for finance, It allows for fast cross-chain transactions on Ethereum and the IBC Eco-System. Injective comes with powerful pre-built modules on a decentralized order book, making it easy to create a wide range of financial applications. With cross-blockchain compatibility in mind, Injective can be used with any IBC-enabled blockchain. Injective makes it possible to issue tokens that are Ethereum backed by a layer-2 solution.

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Layer 2 of Injective's sidechain is held together by Injective Chain, and it works using a process that interacts with the Cosmos zone. It has a full orderbook, an EVM execution environment, a trade execution coordinator, and a token bridge to Ethereum that works in both directions. As a result of implementing EVM on top of Tendermint, users can take advantage of a Proof-of-Stake version of ETH that is both scalable and interoperable, and that also has a 1-block finality.

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Fun Fact: Since Injective is compatible with Ethereum accounts, users can connect using their MetaMask wallets, taking down one of the biggest hurdles to attracting users to a new L1.

Unique features

  • Advanced on-chain order book + matching engine for spot, perpetual, futures & options markets.
  • Frequent Batch Auction order matching makes it MEV resistance.
  • Dedicated Market Maker (DMM) Program for institutional traders.
  • Zero gas fees for users

What is a Batch Auction?

The problem of miner extractable value (MEV) in the DeFi protocol is solved by batch auctions. Batch auctions let protocol-based dapps accept orders without using gas and make sure that all trades happening at the same time have the same prices, even if they are from different traders. This fights against MEV, which happens when miners change the order book to steal value from the system.

A trading mechanism that enforces batch auctions to fight MEV. In batch auctions or batch trading, all of the trades in a batch are done at the same time. This is made possible by the order book. This helps price pairs of tokens that have the same price to clear per block.

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Batch auctions handle orders that aren't in the market when the market opens. In DeFi, you can do more than one transaction per block in batch auctions. In a system where miners or validators can change the way transactions work, batch auction settlements can take away their power. Because of batch settlement, miners have to do transactions in any order. In a batch auction with consistent clearing prices, the order in which trades are made doesn't affect the prices.

ELA Tech Stack

  • Exchange Client: open-source front-end offers permissionless network membership.
  • API Supplier API providers: Interact with transactions and provide a data layer for Injective.
  • API nodes: Data layer or service that relays transactions.
  • EVMRPC Provider: Injective and Ethereum interact in this aspect.
  • ETH Bridge The bridge exchanges Ethereum-based tokens (ERC-20).
  • Cosmos SDK: Tendermint + IBC + CosmWasm
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Injective Protocol has a team with a lot of experience and big investors and partners. Founded by Eric Chen has worked in finance for large organizations in New York. Albert Chon, the project's CTO, has also worked for Amazon. Most importantly, the project came from the Binance Lab Incubation Program in 2019. On the list of project investors are Binance, Pantera, QCP Capital, and other companies.

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Injective Labs' core team has spent years honing their craft at top firms like Tower Research and Two Sigma, cutting-edge startups like Tesla and Amazon, and established cryptocurrency trading platforms (i.e. OKX, Kraken). Members of the team went to top schools like Stanford and Harvard, giving them an education that can't be beaten.

What Problem is INJ Solving?

Injectve Protocol aims to solve the need for a third party by generating the correct sequence. The idea was made to maximize the benefit of DEX liquidity while doing away with the necessity for a middleman to match orders inside the same block.

Injective Protocol has raised a total of $56.7 million in funding over 5 rounds. According to Crunchbase [1], their latest funding round was raised on August 10, 2022, and the company is funded by 24 investors. Jump Crypto and BH Digital are the most recent investors.

Funding

In addition, Injective Protocol has also unveiled a $150 million ecosystem initiative with partners including crypto investment firms [2].

Injective Protocol has also raised $10 million from Mark Cuban and other investors in a private token round, bringing its total funding to date to over $17 million [3].

Part 2: Tokenomics

INJ is the native token Utility

  • Staking 21 Days Un-bonding Period
  • dApp Value Capture
  • Governance
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Incentives

Relayers Incentives: To encourage relayers to use the exchange protocol, relayers that originate orders into the shared order book will be rewarded with 40% of the trading fees from those orders.

Negative Market Fees: Negative maker fees are fees that are paid to market makers instead of being taken from them. Market makers who provide liquidity to markets with negative marker fees will get a rebate equal to a certain percentage of their total trades.

Burn Model

Exchange Fee Value Accrual: The remaining 60% of the exchange fee will undergo an on-chain buy-back-and-burn event where the aggregate exchange fee basket is auctioned off to the highest bidder in exchange for INJ. The INJ proceeds of this auction are then burned, thus deflating the total INJ supply. Each week, an auction is held to allow community members to use INJ to bid for the basket of trading fees collected by Injective that week. At the end of the auction, the winning bidder receives the full basket of assets and the winning bid (paid in INJ) is burned. This creates deflationary pressure on the INJ token supply.

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Demand

Collateral Backing for Derivatives: INJ will be utilized as an alternative to stablecoins as margin and collateral for Injective's derivatives markets. In some derivative markets, INJ can also be used as collateral backing or insurance pool staking where stakes can earn interest on their locked tokens.

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Market Cap: $194.86 M

Fully Diluted Valuation (FDV): $249.80 M

Dominance: 0.02%

Circulating Supply: 78.01 M (78.01%)

Total Supply: 100.00 M INJ

Inflation: 9.51%

Staking APR: 16.56%

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Unlocks/Vesting Schedule

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The only vesting schedule left is Team, Advisors, and Eco-System Development. I believe sell pressure will come from Team and Eco-Development mostly swapping to a stable asset for risk management. Advisors I assume will swap as they are up multiples. However, I don’t see advisors’ sell pressure as it only makes 0.43% of the Market Cap.

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Investors Sentiment

Metrics Analyzing

  • Percent Staked
  • Unique Delegations
  • Active Address
  • Pending Undelegations

Percent staked is increasing which is a sign of investors’ trust.

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Unique delegation is increasing which is a good sign that diversifies the token holders

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The active address is increasing showing users are keeping enjoying the product and coming back

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Pending un-delegation is normally low but with a spike coming on the Feb 5th

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Part 3: Eco-System

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Wormhole

Now you can easily transfer some of the most popular blockchains on the market including Solana, Aptos, Avalanche, Algorand, BNB Chain, Fantom, Oasis and Polygon In addition, Wormhole also supports L2 networks such as Arbitrum and EVM environments like Aurora, giving you access to Near Protocol.

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Helix

Offers No gas fees, the best security in its class, lightning-fast speeds, cross-chain assets, and the best rebates on the market. A total of $1 billion worth of trades in just one month. Since then, Helix has shot up to new heights, reaching a total trading volume of over $7 billion across both spot and perpetual markets.

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Project X

All in one place, Project X combines AMMs with IL protection, strategy vaults for passive yield creation, and a one-click launchpad. This would allow initiatives to get off the ground with a consolidated solution that is both inexpensive and effective by multiples of both factors. In a nutshell, Project X will serve as the nerve center of the entire INJ Eco.

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Astroport

A robust AMM protocol, that enables users to swap crypto assets using stable swap pools like Curve and constant product pools like Uniswap v2. Since Injective's Wormhole integration, Astroport users can trade Cosmos, Ethereum, Solana, Aptos, and Avalanche assets on its interoperable network. Astro decided to deploy their first outpost on Injective as they start to roll out their novel SLAMM architecture.

Sources

Part 1: Docs

Part 1: Problem + EVM

Part 1: Tech Stack

Part 1: Team

Part 1: Mainnet Upgrade

Part 1: Batch Auctions

Part 2: Tokenomics

Part 2: Mintscan Staking/Inflation

Part 2: Smartstake Charts

Part 3: Wormhole

Part 3: Helix

Part 3: Astroport

TL;DER #ALPHA

  • $INJ is already $SEI and has a Lindy effect
  • $INJ burn model is like a dividend with staking higher than inflation
  • Team is experienced, Well funded and dApps are building on to
  • I do hold $INJ but bought before recent pump and took profits but because I think the current market condition is to good to be true as no new money is flowing into the market but will be looking for DCA opportunities.