We are excited to launch decentralized stock futures trading on Injective. This means that our users on the Solstice Testnet will soon be able to securely access the $90 trillion stock market without any centralized control.
Stock trading on Injective is made possible by partnerships with cross-chain data oracle, Band Protocol and Terra’s synthetic DeFi platform, Mirror Protocol.
Background: Traditional Stock Trading is Broken
A number of salient issues remain with respect to the purchase of traditional stocks.
From a high level, brokerage trading fees tend to be quite high. Although popular retail platforms such as Robinhood have begun to do away with commission fees, they suffer from a number of other issues. For instance, just this year alone Robinhood had a number of outages that seemingly occurred only when the market tended to rally. According to DownDetector, Robinhood has experienced outages every month, except for August and December 2019, since July 2019. This means that users were unable to carry out their trades, leading to significant losses.
In addition, trading platforms claim to be “fee-free” but continue to charge additional fees on the backend with various order routing mechanisms. Robinhood recently agreed to pay $65 million to settle charges from the SEC for “misleading customers” about its “revenue sources” between 2015 and 2018.
By design, these centralized entities also hold custody of all user funds which means traders must forfeit control over their holdings and place all trust into these centralized platforms. This also means that billions of individuals globally are not able to have access to certain stocks due to various regulations in place that continue to restrict usage.
Lastly, all trading is normally restricted to traditional market hours for stocks. This normally harms the creation of a truly global ecosystem that is currently available in the digital asset space.
The Solution: Injective’s Decentralized Stock Futures Trading
We have always envisioned Injective to become the core platform for any and all markets worldwide. From the very start of the project, we have wanted to explore the addition of traditional equity markets.
Our team began to formalize a proper plan for this launch earlier this year. This required us to source a robust decentralized price oracle for stocks that could be deployed on the custom-built Injective Chain. We found a qualified partner for this endeavor in Band Protocol. Band is a cross-chain data oracle platform that aggregates and connects real-world data and APIs to smart contracts.
We had begun to work in stealth with Band a few months ago as we looked to further expand our oracle partner network. We quickly came to the realization that Band Protocol’s oracle would be go-to-solution to deliver low-latency and truly decentralized price oracles for various stocks with respect to degree of decentralization, cost and developer experience. Price feeds on Band Protocol update every 15 seconds which are consistently optimized for increasing redundancy and security via numerous institutional-grade data providers.
“Creating and shipping cutting-edge DeFi products requires a highly flexible architecture on all layers including blockchain platform and most importantly, oracles. Band Protocol partnering up with Terra and Injective Protocol to provide access to stock future trading unifies all three marketing leading innovators in decentralized platforms, applications and security,” said Soravis Srinawakoon, CEO & Co-Founder of Band Protocol.
In addition, Band Protocol has become one of the first ever external teams to deploy smart contracts on the Injective Chain using the Cosmos SDK. This helped meet our need for a decentralized oracle that would aid us in providing traders with access to stock trading.
However, we still needed price data for stock trading to occur outside of the traditional market hours. For this, we partnered with Terra’s newly launched Mirror product which allows for the creation of synthetics assets that track the price of real world assets such as stocks. Earlier this month, Mirror began to enable synthetic stock trading and already has over $100M in total value locked. Our idea was essentially to leverage the market prices from Mirror to allow for stock trading outside of normal market hours.
“We’re entering a significant new phase for DeFi, particularly cross-chain DeFi, where porting TradFi assets onto permissionless blockchains augments their characteristics with composability,” says Do Kwon, Co-Founder and CEO of Terra. “Collaborating with Injective and Band Protocol, we envision DeFi consisting of decentralized derivatives markets that reflect any TradFi asset side-by-side with crypto — fueled by the accessibility that blockchains afford a global set of users.”
This collaboration with Band Protocol and Mirror enables Injective to provide 24/7 access to stock futures trading. This means zero gas fee trading with uninterrupted access to global stocks from anywhere in the world.
“We are excited to be working with titans in the blockchain sector such as Band Protocol, Terra, and Mirror Protocol as we launch stock futures trading. This will undoubtedly help lead to a paradigm shift in decentralized derivatives trading,” said Injective CEO, Eric Chen.
The release will begin with the trading of Tesla, Airbnb, Google, and Amazon. Over the coming weeks, we will be adding a number of new markets to the platform as well.
We are thrilled to be pioneering a new era in decentralized stock futures trading. The teams at Band Protocol, Mirror, and Injective share a common ethos to further democratize opportunities within the financial sector.
Our plan at Injective is to continue adding support for new stocks, indices, ETFs, and other unique derivatives. As we look towards 2021 and coming years, we are confident in our ability to deliver an unparalleled derivatives trading platform that unlocks a truly limitless trading experience for everyone worldwide.
About Band Protocol
Band Protocol is a cross-chain data oracle platform that aggregates and connects real-world data and APIs to smart contracts. Blockchains are great at immutable storage and deterministic, verifiable computations — however, they cannot securely access data available outside the blockchain networks. Band Protocol enables smart contract applications such as DeFi, prediction markets, and games to be built on-chain without relying on the single point of failure of a centralized oracle. Band Protocol is backed by a strong network of stakeholders including Sequoia Capital, one of the top venture capital firms in the world, and the leading cryptocurrency exchange, Binance.
About Mirror Protocol
Mirror Protocol is a DeFi protocol powered by smart contracts on the Terra network that brings price exposure to real-world assets on-chain. Bridging DeFi with traditional markets, Mirror introduces mAssets — synthetics that can be held in fractional amounts and transacted without involving real assets, while maintaining open access and censorship resistance. Though developed by Terra, Mirror is a decentralized protocol from the onset, with all decisions determined by on-chain governance.
About Injective Protocol
Injective Protocol is the first layer-2 decentralized exchange protocol that unlocks the full potential of decentralized derivatives and borderless DeFi. Injective Protocol enables fully decentralized trading without any restrictions, allowing individuals to trade on any derivative market of their choosing. Injective Protocol is backed by a prominent group of stakeholders including Pantera Capital, one of the most renowned venture capital firms in the world, and the leading cryptocurrency exchange, Binance.