We are excited to announce 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.
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, we believe that these problems need to be solved.
This is where we step 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. We have built every component of our protocol 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.
The Injective Chain is a layer-2 sidechain and Cosmos Zone connected to Ethereum. We leverage 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 our 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.
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 we bring 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 we eliminate the technical barrier to entry for individuals 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.
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! Our 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 us design our futures protocol!
What are we most excited about?
With the launch of our mainnet in the second quarter of 2021, we are excited to release the world’s first end-to-end fully decentralized exchange protocol, tackling the huge global derivatives market. Our 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
We are especially excited about our fast-growing community as we continue on this journey to expand the reach of DeFi.