Gem Spotlight - Injective Protocol
For this edition of Gem Spotlight, I wanted to take a look at a project called Injective Protocol. Injective protocol is one of the very exciting projects I personally have been keeping my eye on over the past few weeks. Injective Protocol provides traders unparalleled access to new decentralized derivatives markets without any restrictions.
The Injective Chain is a fully-decentralized sidechain relayer network that serves as a layer- 2 derivatives platform, trade execution coordinator(TEC), and decentralized order book. This allows for any upcoming exchange or trading platform to be able to use the Injective Chain to build a decentralized exchange that is secure, fast, and stable. Personally speaking with the growth we have seen with DeFi over the past few months, this project could be huge over the coming years if they execute correctly.
Today’s central limit orderbook decentralized exchanges (or DEXs) have limited usability due to poor liquidity, high latency, and a lack of compelling product offerings. On top of these issues, nearly all DEXs have rather centralized designs, making them censorship prone and open to failure.
Injective is trying to tackle all the problems that centralized exchanges face, they are looking to lead the way and give upcoming exchanges a more reasonable solution that is both more secure, robust, and all-round superior. The protocol itself is principally comprised of the Injective Chain, the Injective Exchange, and the Injective Futures platform. All three of these different elements make up the Injective ecosystem.
The Injective exchange is different from most exchanges, they do not serve as gatekeepers to the industry like some major centralized exchanges. Injective transforms any exchange into a decentralized powerhouse. What truly differentiates Injective is that they bring every component of a decentralized exchange to the public, from the front-end exchange interface, back-end infrastructure, smart contracts, to order book liquidity, it is all provided openly and for free.
This transforms the traditional business model of exchanges as we eliminate the technical barrier to entry for individuals to freely run a highly performative exchange.
DeFi is currently the best sector inside of the blockchain space (personal opinion) and as the sector continues to grow, I think Injective has a really good chance at being one of the leading providers for this kind of service. Another major reason I see Injective being such a successful project is due to the fact that a lot of people in the space are concerned about the amount of regulation being tightened around centralized exchanges. Speaking from personal experience, I know currently the UK has demanded user information from exchanges such as Coinbase and Binance, and people are worried and concerned about where this may lead. Injective Protocol could have a major impact on the space and really bring exchange onto another level.
Futures trading is a major part of the industry, ever since the launch of Bitmex, the amount of volume that Futures trade is pretty insane. Bitmex recently fell into some trouble so it’s a pretty good time to talk about some alternative options…
The Injective Futures protocol is a decentralized peer-to-peer futures protocol that currently supports decentralized perpetual swaps, contracts for difference (CFDs), and many other derivatives! Our protocol allows individuals to create and trade on arbitrary derivative markets with just a price feed.
Decentralized futures just sounds like just an upgrade compared to what is currently on the market, as a trader, I can not tell you the number of times I have run into issues with order books, fills and general exchange performance. I’m super excited that Injective Protocol is going to be working on a Futures product that can improve this area. A peer-to-peer futures protocol would be something truly amazing if executed well, I am personally super excited to see this rollout and be developed.
The Power of Decentralization
Many DEXs today claim to be decentralized exchanges but are actually centralized in most aspects besides custody. From restricting access to certain user demographics, retaining proprietary control over exchange infrastructure, to even requiring KYC in some cases, every central limit order book DEX that the Injective team has viewed has centralized components that allow traders to be subject to the will of an authority.
As I have mentioned previously, lots of users in the blockchain space are now more skeptical about centralized exchanges and the amount of power they really have, people are starting to look into true DEX’s that are truly decentralized. I personally believe that Injective Protocol will be one of the major provides of DEX power over the coming 12 months, they have really thought about the product that they are providing and I think it will be a major ecosystem for further growth.
I am personally super excited about this project and it is one of my favorite projects going into 2021, I am expecting big things and am happy to be supporting the project. I would consider this is a very sought-after and undervalued project right now. When listing does happen I will be looking to starting building a large long-term position.
I also wanted to talk about some more recent news that just broke in regards to Injective. They have officially announced that they will be integrating with Polkadot, and as many of you are aware, I am a very big fan of the ecosystem that Polkadot is building, I think it is one of the best chain solutions we have seen over the past 2-3 years. Injective CEO Eric Chen had this to say regarding the collaboration, “As a platform for open derivatives market creation, we’re confident that our community-driven markets will benefit from accessing tokens and on-chain data from the Polkadot ecosystem. More interestingly, we can also create synthetic tokens on futures positions and transfer them to the Polkadot DeFi ecosystem…”
Considering Ethereum and Polkadot are two of the giants in the layer-1 space, I am super excited to see this partnership, it opens up so many more doors for Injective and I think it was it should be considered a very strong partnership longterm.
Injective Protocol has shown that they know how to partner with strong projects, and just by looking at their blog, the quality of partnerships is very apparent. I am happy to see partnerships with projects such as WooTrade, Kava, Ramp, Elrond, and more, all big projects that have real value in partnering with Injective. I have a feeling that Injective might be one of the best projects coming out over the span of Q4 of this year.
If you enjoyed this newsletter please make sure to sign up with your email address, it's free and I write newsletter content a few times a week! I enjoy writing these articles! If you would like to find out more about Injective Protocol and take a Deep Dive into who they are. Also, head over to https://twitter.com/InjectiveLabs or just join their Community Channel on Telegram to stay up to date the project. Thanks again!