Produced | Odaily
Editor | Hao Fangzhou
Produced | Odaily
If we say that 2019 is the first year of encrypted derivatives. This year, the upsurge of derivatives trading has intensified.
SkewData shows that in the past month, the daily trading volume and open interest of Bitcoin and Ethereum hit record highs one after another. In addition, emerging option trading has also developed rapidly. Compared to Q2 2019, transaction volume in Q2 2020 increased by 166% year-on-year.
However, the current derivatives market is also facing many problems. From the perspective of trading varieties, the category is single, mostly concentrated in mainstream currencies such as BTC and ETH, and the follow-up of popular projects is often not timely; from the perspective of quality, the pricing of products is not transparent and the liquidity is insufficient.
Those who really need to trade derivatives are eager to change the status quo of the industry. Although they are proficient in finance, they suffer from ignorance of technology. How to lower the threshold for derivatives issuance has become an inevitable and important problem in the next step of the industry's development.
Today (August 10th) at 3 pm, Eric Chen, co-founder and CEO of Injective Protocol, and Wayne Lin, founder of Axia8 Ventures, visited the Chaohua community to explain in detail "issuing derivatives like creating an ERC20 Token".
Eric Chen said that Injective Protocol can lower the threshold for derivatives issuance and explore borderless finance.
Injective Protocol is the world's first Layer2 derivative DEX. Injective's peer-to-peer decentralized derivatives protocol can realize fast and safe perpetual swaps, futures, leverage and spot transactions on Ethereum, and integrates a verifiable delay function (VDF) to prevent transaction cheating and decentralization of bad transactions transaction agreement.
Currently, Injective is holding"Derivatives Market Creative Competition"click the linkclick the linkfirst level title
The following is a record of the community interview, organized by Odaily:
Q1: First of all, please give us a general introduction to the Injective protocol and the characteristics of the project.
Eric Chen：Injective Protocol is the world's first Layer2 derivative DEX. Injective's peer-to-peer decentralized derivatives protocol can realize fast and safe perpetual swaps, futures, leverage and spot transactions on Ethereum, and integrates a verifiable delay function (VDF) to prevent transaction cheating and decentralization of bad transactions transaction agreement.
Q2: DeFi is popular recently, and Injective is also positioned in the DeFi field. Many people may question, you are a hype project, how do you respond?
Wayne Lin：Many projects gossip about hot spots, and suddenly turn around and say that they are doing DeFi. Injective is also a hot spot, but it started a little earlier. It started to rub off in 2018 when there was no such word.
Injective was founded in 2018 and developed its own side chain. It also received investment from Binance Labs in 2018. Two years on, the original intention of Injective has not changed.
Injective has just completed its seed round of financing, led by Pantera Capital, with participation from QCP Soteria, Axia8 Ventures and others. The intermediate project team also encountered many problems and challenges, including that we refuted rumors three times together, and many communities and institutions resold false shares off-site or invested by themselves. Other investors include Krypton Group, K42 (OK's strategic cooperative investment institution), and many public and private encrypted asset market makers.
Q3: The biggest trump card of Injective is the derivatives protocol, which is the main derivatives protocol. Could you please introduce its application scenario, development difficulty and development cost in detail?
Eric Chen：The Injective Derivatives Protocol was originally designed to be a multifunctional, open, and customizable derivatives market protocol.
At that time, we had not seen a powerful decentralized derivatives protocol, and found that launching a new derivatives market required not only financial but also technologically huge investments. We realized early on that the rapid issuance market is a core strategy for a new exchange. So based on this belief and combined with the decentralized DNA of DeFi, we made a flexible and extensible derivatives agreement. If anyone wants to issue a market, they only need to set the parameters and oracles they want, so as to transfer energy and resources to more important market design and market making.
The final product is a derivatives agreement that can support perpetual contracts, CFDs, traditional futures, and even binary options. This flexibility allows Injective's main market to have unlimited possibilities. We also very much hope that this Injective ecosystem can discover markets that even the project party can't think of.
If a user finds a very interesting derivative product or a very rare market opportunity, he can quickly set the core parameters, connect an appropriate oracle machine, and issue it before other exchanges in just a few minutes this market. If the market you want to do is beyond our framework, the modular design of the derivatives protocol allows you to replace a certain module to realize your market.
Because our team, especially my co-founder Albert, has accumulated strong experience in EVM and Solidity security development during Open Zeppelin, the development difficulty of the derivatives protocol is relatively low compared to our other modules.
Q4: You just mentioned that the threshold of the Injective Derivatives Protocol is very low, and derivatives can be issued like ERC20. Will this cause the proliferation of derivatives? For the newly added derivatives, how to guarantee the authenticity of liquidity and transactions?
Wayne Lin：The derivatives market (such as a series of trading pairs of BTC) is not as simple as just issuing, but also needs to be traded after it is issued. Many parameters and risk control settings must be in place, including the reliability and stability of price data.
Injective's protocol is open source, and many people can use it for distribution at will. However, if the project party itself has the ability to control the distribution in the early stage, it must be reviewed before it can be "published" on Injective's DEX (front end).
So to put it simply, the Injective project team will review the design and issuance of a market, and will also find a corresponding liquidity solution for it, so that you can trade it, and it will not be casually posted or cheated like Uniswap.
Q5: I heard that Injective is holding the "Derivatives Market Creative Contest". Can you introduce the relevant situation of the contest? (entry time, rewards, etc.).
Eric Injective：The competition has started this month, and I hope everyone will use their brains to design a derivatives trading market that can be issued on Injective. Design proposals can be submitted between now and August 24. From 25th to 28th, there will be a live broadcast of the judging and awards. Winners can get a reward of up to $5,000. For truly high-quality and feasible solutions, I will publish them on the spot through the Injective Derivatives Protocol during the live broadcast of the awards.
Q6: If users intend to participate in the development, what do they need to prepare? Can you share a case with everyone to help us understand?
Wayne Lin：This activity has already been participated by students from many overseas institutions of higher learning, including:
Duke University
NYU New York University
Northwestern UniversityNorthwestern University
University of Michigan University of Michigan
University of AdelaideAdelaide
Columbia UniversityColumbia University
University of Chicago University of Chicago
Rotterdam School of Management, Eramus University
University of Bristol
Blockchain Acceleration Foundation
University of Hong Kong University of Hong Kong
MIT Massachusetts Institute of Technology
Lehigh University
These schools are the ones that we contacted the school and got affirmation to allow their students to obtain information and participate.
The content of the submitted proposal mainly starts from four dimensions: 1) trading market design, product overview and background; 2) financial and technical infrastructure structure, price calculation model and risk analysis; 3) value positioning and product efficacy; 4) similarity to existing market place. It sounds complicated, but if it is creative, the Injective team will still solve the remaining complex financial engineering problems after submission.
At present, we have received a lot of creative ideas in the background. If there are contestants who want to participate but feel unable to start, or want to get some guidance, we have specially built a small group for contestants to communicate. You can contact our little assistant WeChat (injective001) add group.
Q7: Compared with currency transactions, the frequency of derivatives transactions is higher, and the requirements for the system's load capacity and matching processing capabilities are higher. Behind the Injective Derivatves Protocol is the technical support provided by its own public chain, the Injective Chain. Could you please introduce the research and development of Injective Chain in detail?
Eric Injective：Injective Chain is a Cosmos chain based on Tendermint consensus. We use VDF on the PBFT consensus to prevent advanced transactions and resolve transaction conflicts under high load conditions, thereby creating a fair and cheat-free transaction system. At present, our Injective Chain test network is in internal testing with core partners, and the maximum block generation time is maintained at a maximum of 1 second. The public chain will start public testing with the release of Trading Competition. We look forward to a completely decentralized and high-speed transaction experience for everyone.
For more details about Injective Chain, our white paper andhttp://docs.injectiveprotocol.com/is the best resource.
Q8: In addition to Injective Derivatves Protocol and Chain, Injective also has a big trump card is the decentralized exchange. For ordinary users, the operating experience and liquidity of DEX prevent them from entering the DeFi world. How does injective DEX improve in these two aspects?
Wayne Lin：The quality of DEX depends on the underlying architecture of its blockchain and the design of tokens. Many people will say "ah, DEX has poor liquidity and poor experience". Every problem has to go back to the root element to find a solution.
In terms of operating experience, including deposit and withdrawal, transaction speed, etc., we will bridge the user experience gap of users in traditional centralized trading platforms. For example, the transaction speed must be solved through the underlying architecture of the blockchain. The second layer (layer-2) side chain on ETH and Cosmos made by Injective will be theoretically 1800X the speed of ETH, and the transaction speed of Layer-1 dex is Depending on the speed of ether, lnjective as a Layer-2 block takes one second, and a transaction runs within 0.5-1 second, which can meet most of the trading needs (except for some high-frequency strategies).
In terms of liquidity, we have incentives to allow market makers to provide liquidity to users more efficiently and expand the acceptance of DeFi by users around the world. Drawing on the successful cases of the centralized trading platform, we will initially take the make order rebate (Make Order Rebate). If you place an order, not only do you not need to pay, but you can also get tokens allocated from the foundation. And because of our special node mechanism, it also allows decentralized referrer incentives (Referral Bonus). Of course, we will also cooperate with many market makers of different sizes at the beginning, and recently we have also announced cooperation with QCP, CMS, Bitlink, etc. We will announce more partners in the future. In fact, the most important thing is to recognize that the underlying reasons for the scarcity of liquidity are the limited trading market and insufficient availability of platforms/products, etc. These are the problems to be solved.
Q9: At present, the three major exchanges are also entering Dex, and a large number of native Dex are also emerging. How does injective DEX break through, and what are its characteristics and advantages?
Eric Injective：A large number of decentralized trading protocols around order book processing have been born in the DeFi field. But in comparison, Injective is the only derivative dex that can implement layer2, and has developed its own public chain Injective Chain based on Cosmos and Ethereum networks, which completely solves the problem of transaction efficiency on the chain.
The white paper also talks about using a verifiable delay function (VDF) to implement a fair transaction ordering consensus. By forcing time delays, it solves the problem of fairness in transactions and the problem that high mining fees in Ethereum will be packaged first. At the same time With Cosmos IBC, let Injective DEX support cross-chain transactions.
On the other hand, occupy the decentralized derivatives track and develop the Injective Derivatves Protocol, allowing users to freely create and trade derivatives markets.
In general, Injective's infrastructure is currently the most open, fast, decentralized, and flexible Layer-2 transaction protocol on the market.
Q10: Injective seems to want to issue its own ecological token. What are the considerations for this? What is the development plan of tokens in the Injective ecosystem?
Wayne Lin：As a completely decentralized DEX, TOKEN is its lifeblood. In the design of the token economy, we convert and integrate all the value of the entire ecosystem into the token INJ (price).
There are two main points here. One is the repurchase and destruction link. Injective uses smart contracts to regularly repurchase INJ and then permanently destroys it. Second, if an individual does not have INJ, he can become a node, and the node can get 40% of the introduced Transaction Fees.
Our INJ token will have the following functions:
market maker incentives;
Incentives for relayers;
Transaction fee value accumulation returns;
Sidechain governance;
POS security;
Derivatives collateral;
Injective ecosystem and platform participation incentives.
The inflation mechanism of proof-of-stake is balanced with the destruction mechanism of the trading platform. If our protocol is good, users will be highly incentivized to hold tokens, and the deflationary nature can drive continuous growth in token value.
Q11: Could you please introduce the future development plan of Injective?
Eric Injective：The main network and token issuance are expected to be carried out in Q3 and Q4 of 2020. After that, our roadmap is as follows: launch decentralized options and other products; launch Injective v2.0 cross-chain transactions; realize fully decentralized governance.
Q12: What do you think of the current hot phenomenon of DeFi?
Wayne Lin：Defi is very hot now, this is great, but it is also a double-edged sword. What I am most worried about personally is that everyone’s perception of DeFi is biased: DeFi should not be equated with liquidity mining, and yield farm is just IUO.
The popularity of DeFi has brought a lot of attention, which is great, but everyone has to think about where the heat will be in three months, half a year or even a year, so that you won't "get lost" again.
The finance in Decentralized finance can actually cover a very wide range of subdivisions. Finance = Finance, may I ask how many friends have to understand what is "de" in finance?
Compared with the current popularity (I am also involved in making money), what I am most concerned about is how to distribute funds and users to the right place safely, fairly and healthily after an "excellent" hype (for example, on a derivative DEX Do real derivatives transactions). Useful innovations will be reflected in projects with reasonable underlying logic after the overheated radicalism recedes.
The goal of Injective is not to open another liquidity mining for everyone to play, but to introduce a huge transaction volume that can truly expand through blockchain technology. This trading volume is not a "speculative" volume, but a real buying and selling demand.
