Injective: 2021 Review and the Road Ahead

Injective: 2021 Review and the Road Ahead

The past year was marked by rapid growth and adoption of Injective. During this time, Injective launched its state of the art mainnet and released Web3 products that would come to redefine the entire crypto industry.

Two community-driven goals currently underpin Injective. The first is enabling anyone to access, create, and trade unlimited DeFi markets. The second is to build a custom layer-1 protocol that can be utilized to build scalable cross-chain trading, derivatives, and Web3 applications. Ultimately, all of Injective’s achievements in 2021 enabled it to continue delivering upon its mission of creating a truly free and decentralized financial network for everyone.

The article here will first provide an overview of major milestones reached by the Injective community in 2021. The piece will then delve into the road ahead towards building the most powerful decentralized derivatives exchange, an interoperable smart contract layer, innovative Web3 applications and novel cross-chain integrations that will allow Injective to reach global adoption.

Injective Ecosystem Growth

The Injective ecosystem continues to be one of the fastest growing ecosystems in all of crypto. Alongside powerful exchange relayers built on Injective, a number of decentralized applications and protocols such as Terra have integrated with Injective as well.

You can view all ecosystem projects and collaborators on the official Injective ecosystem page.

Injective 2021 Milestones

The section here will provide an overview of some of the major milestones achieved by the Injective community in 2021.

First Quarter

January

Product | Solstice Decentralized expiry futures launch alongside synthetics for Tesla, GameStop, forex, and much more

Community | The Solstice testnet processes over 1,000,000 trades and Injective is accepted into the prominent Defi Alliance cohort

February

Product | Equinox Staking waitlist begins and genesis validators such as Huobi Pool are onboarded

March

NFTs | Injective works with Burnt Banksy to mint the first ever authentic Banksy NFT, gaining coverage from mainstream media such as CBS & Forbes

Product | Equinox Staking goes live after a successful pre-stake period and the Frequent Batch Auction model goes live to prevent front-running and MEV

Second Quarter

April

Capital Raise | Injective raises $10 million from Pantera, Mark Cuban, BlockTower, Figment, and many more with coverage from TechCrunch

May

Product | The first phase of the Injective mainnet commences alongside the insurance fund release

Ecosystem | Injective incubates Burnt Finance: a fully decentralized auction protocol

June

Product | The canary chain is launched with a revamped Injective Pro exchange

Ecosystem | National Thai Bank venture arm joins Injective as a validator

Third Quarter

July

Product |Initial spot markets are released on the Canary Chain

Ecosystem | Binance joins Injective as a genesis validator

August

Product | The Injective Hub is released to provide a unified platform for DeFi, governance and staking

Community | Injective rebrands its products and all visuals

September

Product | The multi-chain Injective Bridge goes live and the Injective API is introduced for institutions

Ecosystem | Picasso Exchange launches on Injective and a new ecosystem page is released for all Injective collaborations

Fourth Quarter

October

Product | The Injective Pro exchange is fully upgraded and the Injective Explorer goes public

November

Product | The Injective mainnet is launched and quickly surpasses $100 Million in volume in just a few days

Ecosystem |The $120 Million Injective Astro program is introduced and new exchanges such as MarsX and Unlimited Exchange are built on Injective

Integrations | Injective helps created the first ever IBC enabled markets with a novel oracle integration

IBC | Spot markets for ATOM become available on Injective

December

Product | Injective becomes one of the fastest growing exchanges of all time and reaches $1 Billion in total volume at record time

Integrations | Injective lists Terra UST pairs and the first ever decentralized LUNA perpetuals which reach $50M in volume in just a week

IBC | Injective Bridge onboards the Terra blockchain via IBC

Ecosystem | Picasso introduces a swap interface, the Terra community builds Lunatics Exchange on top of Injective, Unlimited Exchange introduces a new interface and Huobi Pool starts to build a Huobi relayer on Injective

INJ Burn | Injective burn auctions begin and over $700,000 worth of INJ is burned in less than a month

Community | Injective validator Orman creates a Injective stats dashboard

Event Highlights

The Road Ahead: 2022 and Beyond

Injective will continue to pave a path towards pioneering the new Web3 economy moving forward.

The focus in 2022 will be to build the most powerful decentralized derivatives exchange, an interoperable smart contract layer, novel cross-chain integrations, and innovative Web3 applications.

The Most Powerful Decentralized Derivatives Exchange

Derivatives are currently the most heavily traded asset class globally with a projected total market size worth quadrillions of dollars. However due to the unwavering grasp of centralized gatekeepers, derivatives products remain out of reach for everyday users. As a direct consequence, most individuals around the world are unable to access markets that would allow them to access new financial innovations and sophisticated hedging strategies.

Injective has solved the many of the salient issues that continue to plague the world of traditional finance by creating a permissionless protocol through which anyone can access derivatives markets in an entirely decentralized manner. Currently, users operating the Injective DAO can propose and create markets of their choice using decentralized governance. Developers can also build innovative exchange relayers (frontends) on the protocol which share one aggregate on-chain orderbook to serve distinct user bases.

The success of Injective’s decentralized exchange model cannot be understated. Injective Pro itself has already processed over $1 Billion in trading volume in just a month since the launch of its highly anticipated mainnet. To put this number in perspective, it took Coinbase over a year to achieve the same feat. The permissionless nature of Injective Protocol allows anyone to build new exchanges such as Picasso Exchange which offers a sleek swap interface. Developers have complete control in showcasing markets of their choice such as Lunatics Exchange which primarily is made for the Terra community. A significant benefit of deploying on Injective is the ability for these new exchange relayers to share one orderbook which in many ways rectifies the cold start problem faced by other DEXs that have to recruit users and liquidity from scratch.

Oracle Integrations

Looking ahead, Injective will continue to bolster its infrastructure in order to unlock the full power of decentralized derivatives. A key towards achieving this will be to integrate more decentralized oracle solutions such as Chainlink in order to embed further redundancy into the network. Integrating more oracle solutions will also allow users to have access to versatile price feeds from which new DeFi markets and pairs can be launched on the exchange itself.

Increased Liquidity

Another goal will be to increase orderbook liquidity exponentially through concerted growth in retail usage, exchange relayers and institutional adoption. Unlike most exchanges today, Injective has built an exponentially performant on-chain orderbook which is able to prevent commonplace issues such as high gas fees, slippage and predatory front-running. In other words, Injective has created the only viable solution in the market today that is able to offer traders a user experience that is on par with its centralized exchange counterparts.

Increasing liquidity for the on-chain orderbook will be led by a multifaceted strategy that focuses on growing both the institutional and retail user base.

Market markets are currently onboarded via the Injective API which has been custom built for institutional adoption. The Injective Astro program has already put into place parameters for the Designated Market Making (DMM) program to encourage market makers to offer effective liquidity on the orderbook. The incentive programs on Injective will continue to be iterated by the community in order to encourage more market maker adoption of the exchange protocol. As more market makers are recruited, the DMM process will be much more competitive, thereby leading to healthier orderbook depth for traders.

Injective Pro and other products within the Injective ecosystem will undergo new iterations to offer a much more seamless user experience. Specifically, this entails putting in place intuitive UI for the Injective Bridge and exchange. Some of these parameters are already underway such as seen through a recent mainnet upgrade that showcased an experimental feature that would allow users to trade without having to sign transactions every time with their wallet.

New Markets

More exchange pairs and market types will be also introduced to attract new retail user bases. Currently, Injective has managed to eclipse over $100 Million in daily trading volume with the help of only a few pairs listed. Over the coming months new spot and derivatives markets will be introduced by the community. The idea is basically to make Injective the go-to exchange for any form of decentralized trading since it will be able to offer access to markets not found elsewhere.

A key component of introducing new markets will also be to connect with new chains via IBC and bridge solutions that can allow Injective to offer markets originating from other protocols. The recent integration of Terra for instance allowed Injective to offer the first ever decentralized derivatives using Terra UST which provided a pathway for the Terra community to onboard onto Injective.

New markets on Injective will create a truly open and limitless ecosystem since every new listing allows new communities to learn about and utilize Injective for their everyday trading needs. As users are able to deploy novel markets on Injective in a permissionless manner, new forms of experimentation with not only perpetual contracts but also more sophisticated financial products will continue to grow.

Leveraging the Full Potential of the Injective Chain

The Injective Chain is a highly bespoke blockchain created to support the most sophisticated financial derivatives products and orderbook infrastructure.

The upcoming year will see the launch of new products and features that help accelerate the growth of the exchange layer itself. An example of this are passive trading strategies that allow users to earn yield by deploying funds into trading guilds. Essentially, a retail user can park their capital into a vault that a more sophisticated trader or market maker can then use for distinct trading strategies. In other words, the trading guild itself would act as a decentralized hedge fund for users of Injective.

Currently, spot and perpetual markets are available on Injective but the Chain can also support futures, synthetics, options and much more. The upcoming year will likely bear witness to innovative products and financial primitives where users can take part in applications such as decentralized prediction markets.

Global Adoption

2021 was primarily a year of initial product development and growth. Moving forward, there will be heightened attention towards adoption.

The Injective community has always been passionate about creating delightful user experiences. A focal point of adoption will be the deployment of more intuitive products that can be used by everyday traders. More exchange relayers will continue to be built that cater to distinct user bases and regions. For instance, an institutional interface is needed for more regulated entities who may only wish to interact with other institutional counter parties. On the other hand, everyday Chinese speaking users may wish to interact with an exchange that meets their particular needs.

New exchange relayers can also focus on meeting specific user needs. For instance, Injective validator Huobi Pool is currently working to create a Huobi relayer on Injective that would enable traders to easily stake assets with Huobi Pool while also being able to access the exchange through a trusted brand name in crypto.

New abstractions for interacting with the protocol layer will also be heavily explored this year. Essentially, users should be able to interact with products on Injective via not only the various exchange relayers but everyday applications. For instance, if Injective is able to integrate with a mobile application that already has fiat rails built into it, a user would be able to simply execute a trade that’s processed on the backend by Injective. In effect, the technical abstractions can lead to much faster mainstream adoption moving forward.

Performant Interoperable Smart Contracts

Injective is already a highly scalable chain that is custom built for cross-chain trading and decentralized derivatives. The next step is to enable a smart contract layer that allows developers to build new interoperable Web3 applications on Injective.

Nearly all other layer-one protocols are created as a standalone blockchain that hopes to attract developers. This creates a scenario where the layer-one protocol tries to be a one-size-fits-all solution for all DApps and ends up being subpar since it cannot properly cater to the specifics of each application.

Injective has flipped this traditional model by creating the first custom protocol for cross-chain DeFi and Web3 applications. The Injective Chain is unique in the fact that it was built to specifically support a truly revolutionary DeFi application: a fully decentralized derivatives exchange. While others begin with a layer one, hoping to have DApps on top, the Injective Chain was created with the specific requirements of supporting a highly sophisticated derivatives exchange in mind.

In order to allow external developers to build new applications on Injective it is necessary to create a highly performant smart contract layer on Injective Protocol.

CosmWasm: Multi-Chain Smart Contracts

The plan as it stands is to begin by integrating CosmWasm into Injective.

CosmWasm has become the de facto standard for chains built using the Cosmos SDK such as Terra. As a result, there exists a sophisticated architecture via which developers can interact with the broader Cosmos ecosystem. A significant benefit to starting with CosmWasm is the ability for DApps built on Injective to run across multiple parallel chains with the help of the IBC framework. Since Injective already has much of the core logic for Cosmos embedded into the Chain, deploying CosmWasm will likely be a faster process to enabling smart contracts compared to other alternatives available.

From a security perspective, CosmWasm is devoid of attack vectors currently present in other smart contract layers such as reentrancy. The smart contract environment within CosmWasm is also Turing complete. This means that you have the capability to perform any logic that could be implemented in Ethereum and execute it within the Cosmos SDK without modifying the underlying blockchain.

CosmWasm is also highly flexible since developers can upload code directly to transactions without having to restart the chain. As a result, rapid iteration of new features are made possible for developers who wish to build robust DApps on top of Injective.

A final benefit to beginning with CosmWasm is that it is already being adopted by many applications and bridge solutions. So once injective has CosmWasm integrated, DApps and bridge solutions can integrate with Injective and allow users to seamlessly access products on Injective.

Permissionless Web3 Applications on Injective

The smart contract layer will directly help to create a much more versatile and integrated ecosystem of decentralized Web3 applications on Injective.

All Web3 applications built on Injective directly contribute to a positive feedback loop

The DApps built on Injective will each add to the positive feedback loop within the ecosystem. For example, an exchange relayer on Injective can also integrate a yield farming application on the frontend. This way a trader can utilize the exchange to trade and then deploy capital into the yield farming pool to optimize their passive returns. The exchange relayer can also use these integrations to attract and retain new user bases who may come to trade initially but stay on the relayer of the other features it is able to provide.

Each of the DApps built on Injective will be able to utilize the custom modules of the Injective Chain such as the orderbook . As a result, many of the initial Web3 applications built on Injective will likely be ones that want to utilize the orderbook infrastructure. A prime example of this is a sports betting application that wants to build prediction markets with a decentralized orderbook at its core. Instead of having to build the orderbook layer from scratch, the betting application can simply embed the Injective orderbook module and launch markets via the Injective DAO.

Currently exchange relayers help to burn INJ since 60% of all trading fees generated go into a burn auction process that allows the token to become more deflationary over time. However, other DApps can help introduce entirely new use cases for the token thereby enabling INJ to acquire new forms of utility. A new lending application for example may leverage INJ as a form of collateral. An insurance DApp may utilize INJ to underwrite the insurance. Finally, a savings application could provide additional yield to users who lock up their INJ into a vault. The possibilities are of course endless.

Ultimately, the goal is to provide the Injective community with the tools and platform needed for them to express their unique ideas and talents. By allowing any member of the community to shape the protocol, the pace of innovation can be accelerated by the collective intelligence of the global Injective community, which is far superior to that of any one centralized team.

Cross-Chain Integrations

Injective was built with the idea that a multitude of chains would thrive in the future. As such many of the infrastructure and product level decisions were made to ensure that Injective is able to interact with other crypto ecosystems with ease.

Cosmos IBC is already enabled on the Injective Chain, allowing for an easy and low cost bridging process to other Chains such as Cosmos and Terra. Injective has also built custom applications for IBC such as the Band oracle relayer that currently uses IBC for markets on exchanges built on Injective. The oracle implementation has already been utilized to make over 100,000 IBC requests. Injective is the first chain to use IBC so extensively on mainnet, creating price feed requests every 10 seconds.

This year, users can expect to see many more IBC integrations with other chains in the Cosmos community. As more assets are bridged over to Injective, DApps built on Injective can directly benefit from the wide breadth of asset availability. Exchange relayers for example can introduce entirely new pairs that leverage assets stemming from distinct blockchain networks such as having a CRO/UST pair which would use assets from both Crypto.com and Terra.

Outside of IBC, Injective has also built a native bridge to Ethereum that allows any ERC20 token to be transferred to the Injective Chain using Ethereum native applications such as MetaMask. There will be significant effort put into integrating with other bridging solutions to allow EVM chains for instance to transfer assets directly into Injective. The idea essentially is to create a network via which the Injective community can seamlessly access new assets, markets and DApps without ever having to leave the wider Injective ecosystem.

Injective: The Future of Web3

Injective and its ecosystem have grown at an unprecedented rate over the past year.

Looking ahead, Injective will continue on its mission to create a robust infrastructure layer and Web3 applications that have the ability to democratize financial access for users globally. Injective has already built a powerful chain for cross-chain trading and decentralized derivatives. Injective will continue to build the most powerful decentralized derivatives exchange platform while simultaneously creating an interoperable smart contract layer, innovative Web3 applications and novel cross-chain integrations that will allow Injective to reach global adoption.

About Injective

Injective is a custom interoperable layer one protocol for building powerful exchange, DeFi, derivatives & Web3 applications. Injective was created using the Cosmos SDK and is able to achieve instant transaction finality while sustaining lightning fast speeds. INJ is the native deflationary scarce asset that powers the Injective Protocol and its rapidly growing ecosystem. Injective is incubated by Binance and is backed by Pantera Capital.

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