08/28/23

Altcoin Spotlight: Injective Protocol (INJ)

One of the best parts of being involved in the cryptocurrency world is the constant innovations that make using crypto for various aspects of life easier than before. One of the newer cryptocurrencies available on the market is known as Injective.

But what is Injective? And what is it used for? Read on to learn all about the Injective blockchain and what it can do for you.

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What is Injective?

Injective, abbreviated INJ, is a layer two DEFI blockchain solution built on top of the Cosmos blockchain to innovate finance. Like Ethereum, it is built to run a wide variety of smart contracts and is open source. INJ specializes in smart contracts that are financial products, offering options for order books and a built-in derivatives trading model.

Injective is most useful for financial companies who want to run a DEFI smart contract using the built-in features available on Injective. However, it is important to note that Injective is not a market maker, so it may not be suitable for all smart contracts.

Injective was built with many cross-chain bridges allowing it to quickly and easily be used by those who use Ethereum, Solana, or any IBC-enabled blockchain. This means that those who already have smart contracts built on the aforementioned platforms may be able to use similar techniques to offer a smart contract on the Injective platform.

How Does Injective Work?

Injective was built using Cosmos-SDK technology. It runs on the Tendermint proof-of-stake consensus mechanism allowing transactions to be executed quickly. The order book we mentioned above is built into the chain, operating on decentralized MEV-resistant technology, allowing any users of the platform to make use of it. The order book sources real-time data via Oracle chains as required.

Unlike other financial platforms, Injective does not use an automated market marker to create liquidity on the platform. Rather it uses an order book to help maintain transparency on the platform. This means that in order to make a trade, there must be someone willing to complete the other part of the trade on the platform.

The smart contract automatically matches orders and partial orders, so all a user has to do is put in what they want to trade and either wait for a matching order or, if one is available, the trade will execute immediately.

To execute orders, users pay a market maker fee, as they would on traditional fiat investment platforms. Exchange trading fees are collected by the platform and auctioned off regularly to the highest bidder. The bidder who wins the auction receives all the transaction fees, and what they paid for the fees is burned. Market marker fees are paid by INJ, the blockchain’s native governance token.

Users of Ethereum are especially lucky, as they may use a built-in Peggy protocol to convert their ERC-20 tokens to any native Cosmos token when using the platform.

Who Created Injective?

Injective was created by Injective Labs, which is controlled by Eric Chen and Albert Chon. It is unclear if they are behind this project directly or if they have members of their team running its operations.

Shortly after its invention, Injective received several large investments from Binance, Pantera Capital, and Mark Cuban, so it is assumed that they are heavily invested in the platform.

Where Can You Buy Injective?

Injective, while it has recently gained traction, is already available on most major exchanges. Users report being able to find it on Binance, Bilaxy, Huobi, and Uniswap. Before heading to a new exchange, it’s a good idea to see if it is available on an exchange you already use and trust first.

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How Many INJ Are in Circulation?

The maximum supply of INJ is 100,000,000, and currently, all are in circulation. INJ is a deflationary cryptocurrency, and there will not be any more added to the system. Any INJ which are created as a result of transactions will have an equal amount of tokens burned to keep the supply the same.

It is likely that at some point, there will be less than 100,000,000 INJ in circulation due to the highly deflationary model. It is unclear if the burning will stop when that occurs or if the platform will introduce another method of balancing the token supply.

Should You Buy Injective?

In all honestly, Injective is extremely useful for those planning to use the platform, but if you are just interested in an investment coin, Injective probably isn’t for you. Not only is Injective highly volatile but because it is a newer project (launched in 2020), it isn’t yet trusted by many.

All through 2021, 2022, and 2023, Injective has frequent “unblocking events” where they would unblock more of the supply of INJ, allowing users to buy more. These unblocking events slowed the rollout of this cryptocurrency, creating a bit of a scarcity of the token. As a result, the price has climbed steadily, leaving Injective as one of the top 50 tokens on coinmarketcap.

However, the last unblocking event was on August 21, 2023, so now will be the real test to see if the cryptocurrency is popular enough to maintain its ranking or if it will fall. Because some of the hype to this point has been artificially generated, many are warning users to be cautious of purchasing until seeing what happens in the coming months.

But, we will say that the Cosmos platform is trusted by thousands of users, therefore, this token is unlikely to be a rug-pull or pump-and-dump scheme—but that doesn’t mean it has value either.

Ultimately, whether or not you invest in Injective is a personal decision, but ensure you do your research before you buy to ensure INJ is the token for you.

Overall, as a project, Injective certainly is the worst one we have investigated for our altcoin spotlight, but it isn’t all sunshine and rainbows either. If you are interested in purchasing INJ, it might be a good idea to keep an eye on it for a few months before making your decision to invest. Just remember that any cryptocurrency investment should be seen as risky, and there is no guarantee you will see your money again.

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