It was my pleasure to host Eric Chen, Co-Founder & CEO of Injective Protocol, for an hour-long AMA session. It was divided into two parts, the first part being Eric answering questions from my side, followed by the second part which was a short live session where everyone was open to ask him anything.
Can you introduce yourself and Injective Protocol?
Hey Everyone! I’m Eric Chen, CEO and Co-founder of Injective Protocol. Prior to Injective, I was working at hedge funds and spent a lot of time in cryptographic research at a blockchain-focused fund. Most of my time was also spent on developing new types of trading strategies and researching blockchain protocols. Before that I was also part of the NYU Blockchain Labs.
Injective Protocol is the first layer-2 decentralized exchange protocol that unlocks the full potential of DeFi. It enables fully decentralized trading without any restrictions, allowing individuals to trade on any market of their choosing such as with crypto, synthetics, and NFTs. Injective allows various forms of decentralized trading such as futures, perpetuals, spots, etc. We have built every component of our protocol to be fully trustless, censorship-resistant, publicly verifiable, and front-running resistant.
QWhat is the benefit of holding INJ tokens when using DEX? What are the benefits of long term hold of INJ tokens? In short what is the token utility :)
The use cases intended for INJ include but are not limited to: protocol governance, exchange fee value capture, derivative collateralization, liquidity mining, and staking.
Protocol Governance: The INJ token can be used to govern various components of Injective’s sidechain including the futures protocol, exchange parameters and protocol upgrades via a DAO structure.
Exchange Fee Value Capture: After the relayer reward distribution, the exchange fee will undergo an on-chain buy-back-and-burn event to accrue value for INJ.
Collateral Backing for Derivatives: INJ will be utilized as an alternative to stablecoins as margin and collateral for Injective’s derivatives markets. In some futures markets, INJ can also be used for collateral backing or insurance pool staking where stakers can earn interest on their locked tokens.
Exchange Participation Incentives: The foundation plans to incorporate a liquidity mining scheme and distribute a fixed number of INJ tokens daily weighted by the liquidity each network participant provides.
Tendermint-based Proof-of-Stake (PoS) Security: To ensure the security of Injective’s sidechain, Injective will incentivize nodes to stake INJ and participate in the sidechain’s network consensus with block rewards.
QRecently, various layer-2 related projects and cross-chain related projects are coming out. What do you think is the advantage of your project compared to those projects and also how is Injective Protocol different from the other DeFi projects?
We are currently the only layer-2 derivatives DEX in the space that’s end-to-end decentralized. Our infrastructure brings an order of magnitude speedup by scaling trade execution and settlement on layer- 2 all while being fully decentralized. Injective’s fully decentralized nature uniquely allows individuals to permissionlessly create and trade derivative markets that even centralized exchanges cannot support.
QHow will Injective exchange solve the liquidity and speed problems many DEXes face?
Injective has a strong incentive system for liquidity introduction like make order rebate, referral fee rebate, and market maker incentives. From day 1, we have multiple market making partners and investors who will be helping us provide institutional grade liquidity. Beyond the make order rebates, we also have a huge relayer incentive where people can host nodes and earn 40% of the exchange fees they route. In addition, individuals can refer other users to our DEX which would make them eligible to earn 40% of trading fees (we are the first ever DEX to have on-chain referral like this).
In terms of speed, we scale ethereum transactions on our own chain to ensure that users can enjoy fast block-time and more importantly finality brought by Tendermint consensus. So, the overall user experience for an average trader will feel just as nice as a centralized exchange, but there is no server whatsoever!
QHow will Injective want to be a leader in the mass distribution of DEX?
I think right now with uniswap daily volume breaking 270mm with extremely high gas cost, users are clearly no longer afraid of using DEX ;) But to bring DEXs to the next level, we need to not only support advanced instruments like derivatives, but also scale all transactions onto layer-2 to provide a fast, scalable, and much lower slippage trading experience than our on-chain counterparts.
QCan anonymous transactions be performed on the Injective network to hide transaction details in order to protect the confidential information of owners and tokens?
No, the transactions can be tracked, but adding zkp to increase the privacy level is on our roadmap!
QHow do you plan to market in order to gain adoption of Injective Protocol by the main stream?
Community is always the most crucial driver for any exchange! We welcome everyone to create derivatives markets, build specialized clients, and host nodes on top of us. In terms of marketing, we just completed our testnet trading competition and we have a lot of exciting events coming up soon!
QWhy did you choose Tendermint Consensus? What’s Tendermint Consensus advantages for Injective Protocol?
We picked tendermint consensus mainly due to its fast blocktime and instant finality properties, which allow for a stable and secure orderbook experience.
Tendermint has been around for quite a few years now and they have a well testnet base infrastructure, so it’s great for a lot of newer projects to bootstrap their layer 1 needs :)
QCan you share some of the partnerships you have formed with existing blockchain foundations recently?
On the business side, we have several institutional partnerships for bootstrapping liquidity and providing other valuable services on our protocol, and are backed by some of the largest market makers in the world.
We are also working with top projects in the industry backed by Binance such as Elrond and Kava. In addition, we have recently announced integrations with the likes of Polkadot and Chainlink. We plan to integrate more layer-1 chains in order to expand the scope of cross-chain trading on our platform. Most recently, we partnered with Fantom to accelerate synthetics adoption, which will create new derivative products while bridging over Fantom assets to our DEX.
On the community side, we are always working on growing a global community base, from users, traders, stakers, delegators, liquidators and much more. We plan to release incentivized staking, liquidity mining and exchange referral rewards soon.
QCan you talk about your long-term plans for Injective in partnership with Elrond?
Elrond is an amazing project and our teams have known each other for quite some time now. We discussed many points of collaboration with Benjamin and his team. The first step will include introducing eGold on our DEX as a wrapped token. Looking to the future, this collaboration will bring forth even more opportunities for both companies. With Elrond assets available on Injective’s DEX, Elrond’s unique technical capabilities can be integrated more into Injective’s future developments.
Through this partnership, Elrond will now have the ability to introduce new derivatives products that utilize EGLD via new distribution channels on Injective’s DEX. Not only will this open doors for EGLD users, but it will also allow Elrond to access new users globally and bring forward a faster adoption of Elrond’s technology stack.
Along with interoperability improvements, this partnership will enhance the user experience for both companies. Injective will provide Elrond users access to a decentralized derivatives platform and Elrond will improve Injective’s user experience by giving users access to their innovative smart contract capabilities. As a result, this partnership will benefit the rapidly growing DeFi sector as a whole.
QInjective Protocol has just integrated with Polkadot. What are the highlights and the main advantages of that integration?
One cool thing about Injective is that it has full EVM support. So it’s natural for us to integrate with an EVM-compatible chain from another ecosystem via a bidirectional token bridge. This opens up tremendous potential for various derivatives, such as staking derivatives, to be brought to Polkadot. In addition, it can enable a wide array of new derivatives to be built on Injective that leverage native Polkadot tokens, Moonbeam-based tokens, as well as other tokens launched on top of Polkadot parachains. In general, polkadot has been building rapidly with many exciting developments in DeFi over the past few months. We’re extremely excited about what’s to come and I can’t imagine what will the community make out of this when the two ecosystems meet!
PART 2: LIVE COMMUNITY QUESTIONS
QNFTs have been a trending topic in the DeFi industry and has been speculated to be the future of DeFi; what are your thoughts on this and do you have plans for the NFT marketplace?
It is a space that I’m highly interested in! But NFTs are difficult to be built into derivatives market. That being said, it’s interesting to explore some prediction market structure around NFTs down the road.
QHave you being audited ? Have not heard you talk about that security of funds is what every investor craves for and plans to escape incase of insecurity if funds, scams and rug pulls. How strongly built are your security put in place?
We actually are audited by Certik. Before the release of our mainnet we plan to have at least two more audits from reputable firms such as Peckshield.
QHow do you plan to spread awareness about your project in different countries/regions where English is not spoken well? Do you have local communities for them to let them better understand about your project?
We actually have a robust team that is capable of working across multiple regions. This includes the likes of China for example. We also work with partners in different countries to spread our message further. For example, we just partnered with TomoChain today to grow our Vietnamese presence for instance.
QWhat are the major milestones #InjectiveProtocol achieved so far & what are in future pipeline?
I believe the roadmap would be a great guide here! https://static.tildacdn.com/tild6638-6137-4236-a665-646530616465/Roadmap.svg
QI would like to be a part of your project team. Are there any ambassadorial deals or job a crypto enthusiast like me can be part of and what are your requirement?
Sure! We are looking into launching an ambassador program soon. Please subscribe to our official channels to stay updated on when this happens.
QAre there any hidden gems about your project you have not talked about till now that you believe makes you better than other projects similar to yours that would make me what to invest in your project?
There is a lot! For example, we’re working on meta transactions that enables a wide range of possibilities. One cool thing that users can do down the road is launching decentralized hedge funds and help traders deploy non custodial trading strategies.
QInjective Protocol has partnerships with projects such as: Frontier, Ramp Defi, … So what benefits and support do these partners provide for Injective Protocol and vice versa?
Each of these projects have a separate collaboration with us. You can read more in depth about each of these partnerships in our blog (https://medium.com/injective-labs). For Frontier, they will serve as another frontend interface for users to interact with our derivatives dex which aids in bringing new users and liquidity. For Ramp, we will be creating cross-chain staking derivatives which helps to unlock new forms of trading and markets in general.
QHow secure and secure is the #InjectProtocol platform? How will the KYC process be conducted and who is to follow the KYC process?
Security is our top priority since we are a dex. Since we are fully decentralized, there is no KYC needed to onboard and use Injective.
QWhat’s so special about Injective Protocol ? How are you different from your competitors and what major partners does Injective Protocol work together?
On a high level we enable anyone to create and trade on any market. This includes crypto native assets, synthetics, indices, etc. This unlocks unlimited opportunities for both retail and institutional traders.
The biggest fundamental difference between Injective Protocol and other exchanges is that we make exchange a decentralized public utility which gives our users and community the resultant value capture from our exchange protocol.
Our technology brings an order of magnitude speedup by scaling trade execution and settlement on layer- 2 all while being fully decentralized. Injective’s fully decentralized nature uniquely allows individuals to permissionlessly create and trade derivative markets that even centralized exchanges cannot support.
QI’d like you to expand our knowledge about your tokenomics. What role does it play in your platform and how would you incentivize people to use and hold it? Token Burn and buybacks have also been trending lately. What are your thoughts and plans on this? (Deflationary/Inflationary tokens?
Yes, we will have buy backs and burns which lead to a deflationary supply over time.
The use cases intended for INJ include but are not limited to: protocol governance, exchange fee value capture, derivative collateralization, liquidity mining, and staking. Further details regarding each of these use cases can be found below.
-Protocol Governance: The INJ token can be used to govern various components of Injective’s sidechain including the futures protocol, exchange parameters and protocol upgrades via a DAO structure.
Exchange Fee Value Capture: After the relayer reward distribution, the exchange fee will undergo an on-chain buy-back-and-burn event to accrue value for INJ.
-Collateral Backing for Derivatives: INJ will be utilized as an alternative to stablecoins as margin and collateral for Injective’s derivatives markets. In some futures markets, INJ can also be used for collateral backing or insurance pool staking where stakers can earn interest on their locked tokens.
-Exchange Participation Incentives: The foundation plans to incorporate a liquidity mining scheme and distribute a fixed number of INJ tokens daily weighted by the liquidity each network participant provides.
-Tendermint-based Proof-of-Stake (PoS) Security: To ensure the security of Injective’s sidechain, Injective will incentivize nodes to stake INJ and participate in the sidechain’s network consensus with block rewards.
QCommunity is a very important factor for a project. So, do you have any plans to build a community and attract new users? For example, a transaction contest or airdrop?
We will have a number of these initiatives. In fact, we just completed our testnet trading competition recently where we saw more than 1 Million trades executed from thousands of users worldwide.
QHow do you intend to get investors who have little or no crypto knowledge to invest in your project
We have an interesting plan for educating new users via educational resources and videos. This will be released soon.
QAs a dev. I realised I can earn reward for bug hunting on a project am I opened to do research on your project and if I am able to find a bug? Hope I would be rewarded?
Yeah we do plan to host a bug bounty prior to our mainnet.
QWhat issues and products does #InjectiveProtocol currently focus on developing? What are the technical priorities that #InjectiveProtocol puts on top?
Right now our core focus is on releasing the most high-performant derivatives dex in the market. This would allow anyone to create and trade on any market of their choice with zero restrictions. We believe that this area is largely untapped within the crypto industry and we can truly be the flagbearers in bringing entirely new retail and institutional trading ecosystems to Injective.
Oddgems: With this my friends we conclude the AMA, Hope everyone enjoyed the time here and learned more about Injective with this AMA. We could have gone further, but due to time constraint we have to end the AMA here :)
Thanks Eric for all the answers and Mirza for helping him with the live community questions.
Wishing Injective Protocol all the very best for their future endeavours. Hopefully, we see you again soon :)