Staking Hub: Injective Protocol

Published in

Figment

3 min readMar 9, 2021

Injective Protocol aims to be the first truly decentralized derivatives exchange allowing anyone with a price feed to create a market while offering traders zero gas fees. On March 8th, Injective Protocol’s CEO, Eric Chen and Head of Business Development, Mirza Uddin joined us in Staking Hub to answer all of our questions.

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Quick Takes

Anyone has the ability to create trading pairs.
Bridges for all major Layer 1s like Ethereum, Avalanche & Polkadot in development.
Most EVM compatible wallets will work on Injective Protocol.
Nodes, including validators earn 40% of fees from trades they route to Injective Protocol.
Issuance rate and slashing parameters for INJ stakers are similar to the Cosmos standard.

What is Injective Protocol?

Injective Protocol is a fully decentralized derivatives exchange built on Tendermint and Cosmos SDK. Its design aims to solve problems like high transaction fees, liquidity, and slow speeds that currently exist on other decentralized exchanges today.

Injective Protocol will feature:

Zero gas fees for traders
The ability to earn cross-chain yield
The ability to create and trade on any market using just a price feed

One of the biggest concerns for any DEX or AMM planning to launch is liquidity. But the Injective team plans to have strong incentives for liquidity introduction from day 1 including order rebates, referral fee rebates, and market maker incentives. Individuals can even refer other users to Injective and earn 40% of the exchange fees they route, which the Injective team claims would be a first for a decentralized exchange.

Being a Layer 2 solution built on Tendermint, Injective traders will enjoy fast blocktime, instant finality and a user experience rivaling a centralized exchange that features zero gas fees.

What can be traded?

Basically anything. Perpetuals, synthetic perpetuals, expiry futures, stock futures, forex futures, and staking derivatives are all possibilities on Injective, but being completely decentralized, these markets must be created by the grander Injective community over time.

At launch, the Injective team expects mainstream perpetual swaps like ETH/USDT to be available.

There are two ways a user can list a trading pair:

The Fast Way — Create a market and contribute to the insurance with a minimum that’s determined via the governance module. The insurance fund ensures the solvency of users’ funds during a clawback event for perpetuals and futures.
The Slow Way — A user can propose a listing which would get voted on by INJ token holders, a process that takes 24 hours.

Bridges and Interoperability

The team will be building bridges connecting all major Layer 1 protocols to Injective. The Injective team stated that they are pretty heavy contributors to Ethermint, a Cosmos zone featuring the Ethereum Virtual Machine (EVM) and stated that most EVM compatible wallets would be compatible with Injective Protocol.

INJ Token

The INJ token is the staking and governance token on Injective protocol. INJ token holders who decide to stake will earn their share of new issuance on Injective and will be able to vote on governance proposals.

Injective will feature many of the same staking and slashing parameters as Cosmos.

~ 21 day unbonding period
7% issuance
67% targeted bond ratio
0.01% slashing for > 16 hours of downtime and 5% slashing for equivocation

Validators and node operators also have the opportunity to earn 40% of trading fees for trades routed through their nodes.

Project Status

Injective is currently running its Equinox Staking Incentivized Testnet. INJ token holders can join the waitlist here. Injective Protocol plans to launch its mainnet shortly after in Q2 following a security audit.

Originally published at https://figment.io/