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Injective Protocol Transaction Architecture
The Role of INJ Token in the Injective Ecosystem
Key technical components of the Injective Protocol
Injective Protocol smart contract
Future Vision of Injective Protocol
Injective Protocol Transaction Architecture
Injective Protocol is a decentralized exchange (DEX) protocol that provides advanced trading functions such as cross-chain margin trading, derivatives, and synthetic assets. Injective aims to be a fully decentralized, permissionless, high-performance transaction protocol with zero gas fees. Injective achieves this through its Cosmos-based layer-2 sidechain infrastructure, connected to the Ethereum main chain for high speed, accessibility and decentralization.
Injective Protocol's mission is to remove barriers to entry into the DeFi market, eliminate gas fees while maintaining high-speed transactions, and provide everyone with a truly decentralized and free trading experience. To this end, Injective Protocol implements this powerful function through several important features:
Fully decentralized network construction: Injective Chain — based on the Cosmos Tendermint mechanism — is a fully decentralized sidechain relay service that acts as a layer-2 derivatives platform, transaction execution coordinator (TEC), and decentralized order book. Provide Injective with a zero-impediment cross-chain decentralized derivatives market.
Layer-2 high-speed protocol: Injective Chain connects the two-way anchoring of Ethereum and ERC-20 compatible tokens. It also has an Ethereum Virtual Machine (EVM)-compatible execution framework for many decentralized applications (dApps). Injective's peg-zone architecture is based on Cosmos Gravity Bridge, which allows value transfer between Cosmos Hub and Ethereum, while the EVM execution framework is based on Tendermint's Ethermint EVM, which achieves strong cross-chain compatibility and liquidity.
Top-notch decentralized order book: Injective's order book solution is a fully decentralized order book, order matching is performed on the Injective side chain, and transactions are settled in batches on the chain.
Free market transactions: Injective's derivatives protocol allows users to conduct fully decentralized peer-to-peer derivatives transactions using perpetual contracts and contracts for difference (CFD). Additionally, the Injective Protocol enables anyone to create their own derivatives market at any time, fostering a free, community-driven innovation ecosystem.
Low network latency and 0 gas fees: Due to Injective's unique layer-2 structure, the protocol aims to avoid network congestion and associated high gas fees. Its 0 gas fee model allows all platform users to open transactions without incurring related fees, while reducing network latency.
The Role of INJ Token in the Injective Ecosystem
INJ is the native utility and governance token of the Injective Protocol. It plays an integral role in governance, collateralization of derivatives, protocol security, incentives for market makers and relayers, and value capture for transaction fees.
Protocol and Ecosystem Governance: INJ enables users to participate in ecosystem governance by voting on proposal changes to derivatives protocols, transaction parameters, and other protocol upgrades through a Decentralized Autonomous Organization (DAO) structure.
Collateral backing for derivatives: INJ tokens can also be used as an alternative to stablecoins as margin and collateral for derivatives. Additionally, in certain derivatives markets, INJ can be used as collateral or staked in insurance pools, allowing stakers to earn interest on locked tokens.
Proof-of-Stake (PoS) security based on Tendermint: The Injective protocol is based on Tendermint's PoS consensus mechanism, and the ecosystem encourages nodes to participate in network consensus by providing staking rewards. This mechanism increases the supply of INJ tokens with an initial inflation rate of 7% per year from genesis, decreasing to 2% over time.
Market Maker Incentives: Injective DEX initially charges users a 0.1% commission for making orders and a 0.2% commission for taking orders. To incentivize liquidity, we will provide fee waivers for market makers who introduce liquidity on DEX trading platforms. We will take regular snapshots of their exchange account balances to distribute corresponding rebate rewards for a specific usage period.
Key technical components of the Injective Protocol
Injective DEX is a highly technical platform designed to be trustless and publicly verifiable, while providing users with a smooth experience. To make this possible, the Injective Protocol's technical architecture is built on top of four distinct layers in the software development stack.
Injective Exchange Client is the front-end interface that users see when they log in to the trading platform. The service layer consists of Injective Application Programming Interface (API), including Exchange API, Coordinator API, Derivatives API and The Graph API (used to connect to The Graph index query system to help realize derivatives transactions on the protocol).
The APIs mentioned above are used to determine how certain parts of the system work together and communicate to allow the entire technology stack to function correctly. Together, they act as a middle layer, allowing Injective Exchange clients to communicate with the Tendemint-based Cosmos layer.
Cosmos Layer: On the other side of the software stack, the Injective API and Injective EVM RPC connect to the Injective Chain and the Injective Explorer, which is used to track all transactions made on the Injective Chain. The Tendermint blockchain was selected as the most suitable infrastructure for Injective Protocol, capable of supporting the instant certainty required to execute different spot and derivatives order types.
Ethereum Layer: Finally, the Ethereum layer consists of the Injective Bridge smart contract that communicates with the Injective Chain and the Ethereum network. This is achieved through Injective's bi-directional ERC-20 cross-chain bridge, which is designed to send INJ-based assets between Injective and the Ethereum blockchain. This cross-chain interoperability is also key to decentralized blockchain infrastructure.
Injective Protocol smart contract
The Injective Protocol interacts with the INJ token. The basic protocol interaction and token economy of the Injective ecosystem can be realized through the following Ethereum-based smart contract types:
Injective coordinator contract: The Injective coordinator contract guarantees Injective's derivative transactions on Ethereum and the Injective chain.
Staking Contract: The Staking Contract is designed to manage the core functions of stakers on the Injective Protocol through rewards, slashing, delegation, and governance mechanisms.
Injective derivatives contracts: Injective derivatives contracts are smart contracts that allow traders to create, execute and use decentralized perpetual contracts in any market.
Injective Bridge Contract: The Injective Bridge contract is a smart contract that manages the two-way peg between Ethereum and the Injective chain.
Injective Token Contract: The Injective Token Contract is an ERC-20 contract designed for different uses adopted by INJ.
Future Vision of Injective Protocol
The Injective Protocol is pioneering a new decentralized economy to create a more free and inclusive system.
Injective has created a solution that allows cryptocurrency trading to become a decentralized utility, providing users and their community with much-needed value capture in the exchange space. Injective's technology allows every user to participate in derivatives transactions based on cross-chain blockchains.
By leveraging technological innovations that increase the speed of settlement and trade execution in a truly decentralized, permissionless manner, Injective Protocol is building a transaction model that has the potential to change the industry.
