Injective Research Report L1 Built Specifically for Financial Applications

Injective Research Report L1 for Financial Applications

The industry is breaking free from the high DeFi yields of inflationary assets, and Injective is ready to offer products typically seen in traditional finance, all with extremely low gas fees.

Original author: Jake LianGuaihor

Institutions are injecting funds into decentralized order books. And what about Injective? They have developed one of the best order books. I believe that a 350% increase within a year is just the beginning. This is my research report on INJ in August 2023.

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Injective is a blockchain built specifically for financial applications. It has the following features:

• The fastest L1 blockchain;

• Decentralized and modular order books;

• Finality of immediate transactions achieved using Tendermint;

• Interoperable across multiple chains.

Its value proposition is to provide the most advanced and next-generation financial infrastructure for the next user adoption cycle. Injective is determined to build applications that attract new users and promote institutional adoption and growth.

The industry is moving away from the high DeFi yields of inflationary assets. Injective is ready to offer products typically seen in traditional finance, such as spot and derivative markets based on an order book model. All of this, plus extremely low gas fees.

The current total value locked (TVL) is $21 million (more than doubled since March). The majority of TVL (83%) is currently deposited in Helix, the top decentralized exchange on Injective. $INJ has been following this positive trend and is one of the best-performing coins this year (+357% in 1 year).

The maker fee is 0.1%, and the taker fee is 0.2%.

• 40% of INJ dApps fees → Developer incentives;

• 60% of INJ dApps fees → Weekly auction through buyback and burn mechanism.

The transaction fees generated in the past week amount to approximately $35,000.

INJ is the native and deflationary asset that powers Injective and its ecosystem. It is used for:

• Network security;

• Paying gas fees;

• Governance.

It is a PoS network that currently offers a staking reward of 16% annualized.

Injective also implements the highest weekly token burn in the industry. 60% of the protocol’s transaction fee revenue is auctioned and then burned in the form of INJ. So far, over $5.7 million worth of INJ tokens have been burned ($12.4 million).

Here is the current supply statistics:

• Circulating supply = 83.76 million;

• Maximum supply = 100 million;

• Market cap = $607 million;

• FDV = $725 million;

• Market cap/FDV = 0.84.

The last unlock period is set in January 2024.

Injective’s treasury includes:

• 15.2 million INJ tokens;

• Total value of $105 million.

It is concentrated in the native token, which may bring significant diversification risks.

Injective has established a global DAO that allows community participation in the following matters:

• Protocol upgrade proposals;

• Staking networks (proof-of-stake rewards);

• Burning auctions.

The minimum deposit requirement is 500 INJ, and each voting period lasts for more than 4 days.

Injective Labs was founded in 2018 and was incubated by Binance Labs in the same year. The project attracted some impressive investors after becoming the first project to go live on Binance Launchpad in October 2020.

In multiple rounds of financing, INJ raised about $56.7 million. It recently announced the formulation of two incentive programs:

• $120 million Cosmos ecosystem incentive program;

• $150 million ecosystem fund plan with partners (LianGuaintera, Jump, Kucoin, Delphi Labs).

Injective faces competition on two fronts. First, from traditional EVM-based perpetual protocols such as GMX, Gains, and Synthetix. Second, from new competitors that have developed their own custom application chains, such as dYdX, Kujira, and Sei (decentralized order book).

Although dYdX is the obvious leader in terms of total locked value (TVL) and revenue, Injective has a large treasury and support from some heavyweight institutions. To stay in sync with powerful competitors, Injective must continue to innovate.

The project has been audited and received a security score of 73.82 from CertiK. It scored very high (top 10%) in code security, fundamental soundness, operational resilience, and governance strength. However, in terms of market stability, it ranked in the bottom 5%.

Overall, I am very optimistic about Injective and the ecosystem it is building. Here are some bullish catalysts:

• Adoption by institutions;

• $150 million Injective Venture Group;

• Token burning;

• Ecosystem and integration expansion.

We will continue to update Blocking; if you have any questions or suggestions, please contact us!