Introducing Injective Protocol: The New Dawn for Decentralized Finance

4 min readApr 29, 2020

A new era begins with the debut of Injective Protocol — the first layer-2 fully decentralized exchange protocol that unlocks the full potential of decentralized derivatives and borderless DeFi.

Injective Protocol enables fast, secure, and most importantly, fully decentralized trading on top of Ethereum.

Learn more at injectiveprotocol.com, read the whitepaper, or join the family on Telegram. The Injective community will be open-sourcing the protocol and launching the public beta soon.

Background: What is wrong with DEXs today?

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.

In order to unlock the full potential of decentralized finance, the community believes that these problems need to be solved.

This is where Injective steps in.

What is Injective Protocol?

Injective Protocol is an end-to-end decentralized protocol that creates a platform for decentralized perpetual swaps, futures, margin, and spot trading. Every component of the protocol has been built to be fully trustless, censorship-resistant, publicly verifiable, and front-running resistant.

The protocol itself is principally comprised of the Injective Chain, the Injective Exchange, and the Injective Futures platform.

Injective Chain

The Injective Chain is a layer-2 sidechain and Cosmos Zone connected to Ethereum. It leverages verifiable delay functions (VDFs) to enforce a fair transaction ordering consensus that reflects real-world time via proof-of-elapsed-time. This solves critical race conditions and miner extractable value issues present on Ethereum.

Currently, Injective Chain powers the layer-2 derivatives platform, serves as a decentralized Trade Execution Coordinator (TEC), and hosts a decentralized open orderbook. The chain itself is built on top of Tendermint and allows for the transferring and trading of Ethereum-based assets on the Injective Chain. In the future, Injective will be integrated with Cosmos IBC, bringing advanced inter-chain decentralized finance capabilities to users.

Injective Exchange

Unlike traditional exchanges which serve as gatekeepers to the crypto industry, Injective transforms an exchange into a decentralized public utility. What truly differentiates Injective is that it brings every component of a decentralized exchange to the public. Everything — from the front-end exchange interface, back-end infrastructure, smart contracts, to orderbook liquidity — is provided openly and for free. This transforms the traditional business model of exchanges as the technical barrier to entry for individuals is eliminated, allowing them to freely run a highly performative exchange.

Injective’s model rewards relayers in the Injective network for sourcing liquidity. By doing so, exchange providers are incentivized to better serve users as they competing amongst each other to provide better user experiences. Thus, this allows users from all around the world to access DeFi marketplaces.

Injective Futures

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! The protocol allows individuals to create and trade on arbitrary derivative markets with just a price feed.

Huge shoutout to the talented UMA team for pioneering the priceless construction and for their deep expertise in helping the Injective community design a futures protocol!

What is the community most excited about?

With the launch of mainnet in the third quarter of 2020, the Injective community plans to release the world’s first end-to-end fully decentralized exchange protocol, tackling the huge global derivatives market. The beta testnet along with tutorials for developers will be released soon!

Here is a sneak peek into some of the exciting features in the works:

🚀 New Decentralized Futures & Derivatives Markets

💵 Integration with more DeFi platforms

⛓ Cross-chain trading

The community is growing rapidly as more and more people commit to the journey towards expanding the reach of DeFi.

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.