What is Injective Protocol?

What is Injective Protocol?

What is Injective Protocol?

…and how do you make money on it?

Dapps & Protocols

·

12 min

What is Injective Protocol?

…and how do you make money on it?

Dapps & Protocols

·

12 min

What is Injective Protocol?

…and how do you make money on it?

Dapps & Protocols

·

12 min

What is Injective Protocol?

…and how do you make money on it?

Dapps & Protocols

·

12 min

What is Injective Protocol?

Injective Protocol is one of the first layer-1 blockchains designed for DeFi. The project started as a cross-chain DEX before the team realized they can create more value by creating an environment for DeFi apps to thrive.

To explain Injective Protocol protocol, it’s important to mention that its general mechanisms apply to every other dapp. Injective Protocol is made out of a collection of smart contracts governed by the community.

Smart contracts are automated pieces of code that mediate the interaction between a user and the dapp. Whenever you interact with Injective Protocol, crypto tokens always remain in your possession. In order to access the protocol, users have to manually approve the smart contracts. You can think of it as a bot that performs the action you agree with based on a strict set of rules. This is an important difference compared to traditional finance, where the money is placed with a third party.

With smart contracts, there is no risk of a person running away with users’ money, or ever worse, locking up the money for any reason. Furthermore, anyone can access Injective Protocol regardless of their geography, political views, or religion — Injective Protocol doesn’t require KYC.


Injective Protocol mainly derives its value from being a DeFi hub. In exchange for the service provided, Injective validators receive a small fee that goes into maintaining the network. As the number of transactions increase, the fees quickly add up. A portion of these fees goes into the protocol treasury, which pays for the developers, audits, and future products.

Upon consulting with the community, core developers are usually in charge of implementing the protocol upgrades. This ensures Injective Protocol stays safe from hacks and the protocol adapts to the market conditions.

Governance is done on-chain, meaning with the exception of software proposals, the implementation will be immediate and programmatically executed. The DAO is governed by the INJ token holders. In order to participate in the process, users stake their INJ tokens. INJ also acts as a gas token. Injective relayers get 40% of the protocol fees, with the rest of the fees going into a buyback-and-burn-auction

Although the protocol development is handled by a team of experts at Injective Labs, it is important to understand that smart contracts are prone to risks. As easy as it is for developers to review each others’ code, hackers can just as easily spot a vulnerability and take advantage of it. 

The code is publicly available to verify. Those who are tech savvy can audit the code for themselves and see precisely what the smart contracts do. Less technical users can indirectly assess the safety of Injective Protocol protocol based on audits and reports issued by technical community members. 

How does Injective Protocol work?

Injective Protocol is built using the Cosmos SDK. It is a layer-2 DEX that leverages the security and interoperability of Cosmos. Using Injective, anyone can create his own financial market in a fully decentralized setup. Users can also deploy Ethereum-compatible dapps. This makes any token deployed on Injective automatically compatible with multiple blockchains.

The architecture of Injective can be divided into two layers: the Cosmos later, and the Ethereum layer.


The Cosmos layer represents the core infrastructure of the protocol. It is connected to the Injective Chain and the Injective Explorer, which is used to keep track of all the transactions made on the Injective Chain. The team chose Cosmos because of its low fees and fast settlement speeds. These properties are available to any developer choosing to build on top of the Injective Chain.

The Ethereum layer is made up of the Injective Bridge smart contract that communicates with the Injective Chain and the Ethereum network. In plain terms, it is a bridge designed to send INJ-based assets back and forth between Injective and the Ethereum blockchain. This cross-chain interoperability is a critical aspect of decentralized blockchain infrastructure, as it allows for different networks to share data and assets.

In the recent years, Injective Protocol has expanded its suite of products to accommodate more DeFi usecases. These products are: Helix App, Frontrunner, and Astroport.

Helix App

Launched in 2022, Helix App is a DEX that uses the orderbook model. Traditional DEXs rely on liquidity pools to balance the price between two or more assets. Until now, orderbooks have been associated with off-chain trading – users had to deposit their funds on a platform, trade on the interface (off-chain) and then withdraw their funds (going on-chain). The Injective team blew everyone's mind when they announced that users can now trade using a orderbook directly on-chain. Furthermore, Helix functions with near zero fees and trade execution is instantaneous – just like on Binance or Coinbase.


Helix has a user-friendly interface that makes it easy to organize and bridge assets via a host of crypto wallets, creating a seamless end-user experience for all traders. The innovation of on-chain orderbooks attracted $1B in trading volume in the first month of Helix going live. 

Over time, the Injective team will add more features to the exchange, to the point where it can compete with giants like BitMEX and Binance Futures.

Frontrunner

Injective came up with its own prediction market where users can buy shares of sports competitions and then trade them like options, contracts or stocks. The difference between Frontrunner and a centralized betting app like DraftKings is that all orders are transparent, there is no KYC, and no restriction. This is because there is no "house" to kick you out. Frontrunner is entirely governed by a collection of smart contracts. 

Unlike traditional sports books where users place a bet and wait, Frontrunner gives users full control over their portfolios, allowing them to dynamically buy and sell positions as the odds change. You can sell high to cash out your profits or sell low to mitigate your losses. The transactions on Injective are fast and gas free.


So far, Frontrunner has supported 30+ sports betting markets ranging from major sports leagues including NFL markets, Premier League markets, MLB playoff markets, NBA markets and the most recent World Cup markets!

Astroport

Originally released on Terra, Astroport was one of the largest DeFi applications on the protocol, regularly facilitating hundreds of millions of dollars in trading volume shortly after its launch. The team decided their service is worth pursuing, so they've migrated over to the Injective Chain. 

Astroport is a sophisticated AMM protocol that allows any user to swap crypto assets using multiple pool types, including Curve-style stableswap pools and traditional liquidity pools. Astroport users will also be able to take advantage of Injective’s interoperable network, swapping assets bridged from not only Cosmos or Ethereum, but also from Solana, Aptos, and Avalanche through Injective’s recent Wormhole integration.


Injective’s on-chain orderbook will also be utilized by Astroport in order to bring further capital efficiency into the exchange dapp ecosystem on Injective. Astroport is still in beta as of 2023, but they are expected to launch their mainnet by the end of the year. 

How to make money on Injective Protocol?

In case you haven't figured it out yet, Injective is more than just a plain DEX – they are a standalone DeFi chain. If you are already a fan of Comsos, then Injective should be your primary way of making money. Not only do they offer millions of dollars in ecosystem incentives, but they are also rapidly expanding their suite of products. Joining Injective early gives you a front seat for all the rewards that are about to flow into the ecosystem.

That being said, let's cut straight to the chase and see how you can make money on each of Injective's products.

Helix App

If liquidity pools are too much of a headache, with Helix you can enjoy the orderbook experience while maintaining custody over your funds. The exchange has consistent trade volume across the most popular token pairs. Using Helix, you can make money from three activities: spot trading, perpetuals, and swaps.

Because Helix is fully decentralized, this creates the opportunity for liquidity providers to become the market makers, and earn a share of the transaction fees. The DEX has two categories: one for vetted market makers, and one for the retail traders. 


As a retail trader, you can earn INJ by placing trades on Helix. The INJ distribution schedule is measured in epochs. To see the rewards, go to the Helix app, click on the "Rewards" tab, click on "Trade and Earn."

Not all trading pairs offer INJ rewards. Scroll down to see the qualifying pairs as well as the reward rate on each. Injective uses a points system that is measured differently depending on whether you spot trade, or trade derivatives. Before you draw out your calculator, it's good to focus on the quality of your trades, and let the INJ rewards come as a bonus.

Frontrunner

If you feel lucky betting on sports, then Frontrunner is your #1 option. Here, crypto is just the currency of the trade – it is up to you to do your research and bet on the winning team.

Frontrunner works a little different than your average betting dapp. Placing a prediction, or a bet, requires you to buy SHARES. A share has the value of $1. Let's say you want to place a buy order worth $0.40. A $0.60 sell order will be automatically placed at the sell side.


Sounds fair? Alright, here's how you place a bet on Frontrunner:

1. Open the Frontrunner app

2. Locate a “MARKET” and click the “TRADE” or “ADD TO ORDER SLIP” button

3. Make a “MARKET” order by entering the amount of “SHARES” you want to buy or selecting the “MAX” buy button. Or you can make a “LIMIT” order by entering the amount of “SHARES” & “PRICE” you want

4. Finish your order by selecting the “COMPLETE ORDER” button

5. Approve the transaction

6. Pofit

Payouts will be distributed 24 hours of the start of the event. All you have to do is keep an eye on the event and hope for the best. 

INJ Staking

Staking is a simple way to help secure the Injective network and earn passive rewards for doing it. Since running your own validator comes with hardware requirements, one comfortable way to earn INJ is by delegating to a pool of existing validators. 

Before getting into the staking steps, make sure you have some INJ tokens on a wallet that supports INJ tokens. 


Here's how you stake INJ:

  1. Open the Injective Hub app

  2. Head to the Stake tab

  3. Choose a validator to delegate your INJ to and select “Delegate Now”

  4. Input the amount of INJ that you wish to stake

  5. Click "Delegate" and approve the transaction

There is no limit to the number of validators you can delegate your INJ to. For example, you can split your holdings and delegate to two, or more validators. You can re-delegate your INJ tokens at any time.

Rewards are distributed continuously on every block, and you may claim your reward by clicking on “Claim” from the "Wallet" tab.

Price Prediction for Injective Protocol — Can it hit $1000?

Buying and hodling INJ — the native token of Injective Protocol — is one way of potentially making money on Injective Protocol.

By looking at its current price, it’s natural to think about the chance of INJ hitting $1000 per token. This can happen sooner, or way in the future, and is determined by a couple of ever changing factors.

Let’s examine the potential growth of the INJ token by analyzing its tokenomics. INJ’s current market cap sits comfortably at ${MARKET_CAP}. With {CIRCULATING_SUPPLY} INJ tokens being in circulation today, that means a price of {PRICE} per INJ.

How did we come to that calculation? It’s quite easy, the price of an INJ token is equal to its current market cap divided by the number of tokens in circulation. Dividing ${MARKET_CAP} by {CIRCULATING_SUPPLY} gives us a result of {PRICE} for each INJ coin. 

By changing the order in the simple formula above we can use it to calculate other things as well. This helps us a lot because we can deduce the market cap of INJ at different token prices. Then, we can use the result to compare it to the current state of the network and see what would be required for INJ to hit that price.

At a price of $1000 per token, that means the current market cap of INJ would equal ${{CIRCULATING_SUPPLY} * 1000}. Remember that we arrived at this number by multiplying the amount of circulating tokens by $1000.

Now let’s shift our attention to the fully diluted market cap.

Some blockchains may have their tokenomics built in a way that only a small percentage of tokens are circulating at the beginning. This can be misleading because we don’t have the full picture and only take into account the current number of coins released in the market.

The fully diluted market cap represents the total value of a coin if all tokens were in circulation. INJ’s whole supply of tokens is {MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} INJ which means that no more coins above that number will ever be created.

These tokens are not created at the discretion of a specific entity. They are created automatically by the network to reward different actors that keep it secure.

How does this impact the price of INJ? Taking into account the current price of an INJ token, that would result in a fully diluted market cap of ${MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY * PRICE}. INJ coins that have been burned are not taken into consideration because they have been permanently removed from circulation.

Whether it seems gigantic or not, the number we came to above only takes into account the current price of an INJ token. Doing the same calculation but with a price of $1000 gives us a result of ${{MAX_SUPPLY - TOTAL_SUPPLY + CIRCULATING_SUPPLY} * 1000} for the INJ protocol fully diluted market cap.

These are all crucial details to know when calculating if INJ can reach the price of $1000 per token. If the diluted market capitalization is way too high, the token has little room left to grow. Blockchains in general have no cap on the value they can reach, whether that number seems possible it’s totally up to you.

The future of INJ depends solely on its growth as a network used by tens and hundreds of millions of users.

If you’re looking to add some INJ to your portfolio, the most trusted places to get some are Binance and Coinbase.


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