summary: Injective Protocol is a decentralized layer-2 DEX that supports advanced trading features such as margin trading.
content: Injective Protocol is a decentralized layer-2 DEX that supports advanced trading features such as margin trading and derivatives. On November 30, 2020, Injective Protocol announced the launch of their public Solstice testnet. In April 2021, Injective raised $10 million in new funding round with participation from billionaire entrepreneur Mark Cuban, Pantera Capital, BlockTower Capital, Hashed Ventures, CMS Holdings, and QCP Capital. Overview The Injective Chain is a decentralized sidechain relayer network that serves as a layer-2 derivatives platform, trade execution coordinator (TEC), and decentralized order book. The core consensus is Tendermint-based. The Injective Chain provides a two-way Ethereum peg-zone for Ether and ERC-20 tokens to be transferred to the Injective Chain as well as an EVM-compatible execution environment for DeFi applications. The peg-zone is based on Peggy and the EVM execution is based on Ethermint. Injective's order book is a fully decentralized 0x-based order book enabling sidechain order relay with the on-chain settlement, a decentralized implementation of the traditionally centralized off-chain order relay used by nearly all central limit order book decentralized exchanges. Market creation is entirely open and permissionless. This enables anyone to create a market using only a price feed and deploy it to the larger Injective ecosystem. Given the unique layer-2 structure, Injective is able to avoid both network congestion and the associated high gas fees. This zero gas fee structure can enable anyone to trade freely without having to worry about high gas fees or network latencies. Many DEXs are centralized in most aspects besides custody. A few components that make DEXs centralized are the restriction to access to certain user demographics, and the retention of proprietary control over exchange infrastructure. These components allow traders to be subject to the will of an omnipotent authority. Injective Protocol aims to resolve this fundamental problem. The project was incubated by Binance Labs in 2018 and conducted an initial exchange offering on Binance as well in October 2020. Solstice Testnet On November 30, 2020, Injective Protocol announced the successful public launch of the Solstice testnet. Solstice was launched with 9 initial perpetual markets with live price feeds stemming from various sources. The initial markets included the following: Injective, Bitcoin, Ethereum, Binance Coin, Polkadot, Elrond, Chainlink, Uniswap, and Yearn Finance. The Solstice testnet was invite-only, meaning users can only gain access via a unique referral link. This provides users with opportunities to get early access to Solstice while also earning additional rewards before the start of the trading competition. Other projects that got listed on the Solstice testnet include Alpha Finance and Kava.io. On December 4, 2020, the Injective team launched their first synthetic assets on its Solstice testnet. Users became able to trade gold perpetual markets with up to 20x leverage. Solstice V2 On December 8, 2020, the Injective team launched Solstice V2. The upgrade included the exchange's color palette revamp, change of fonts, home screen market details enhancement, and adding tooltips throughout the DEX which provide helpful explanations for new traders. Solstice UI became fully responsive across all platforms. users became able to trade on Injective from any device, whether that is an iPhone, Android, a tablet, a laptop, or an external monitor. Along with the Solstice V2 release, the Injective team also announced that Injective would list Keep3r Network and The Graph on the Solstice Testnet. Solstice V2 public launch took place on December 21, 2020. Yield Farming Derivative On December 15, 2020, the Injective team launched the world's first yield farming derivative based on a specific yEarn Finance Vault. The particular derivative they have created will track the performance of $1,000 USDT on Yearn Finance's USDT3pool. This means that any trader can have access to the same yield as a farmer on the USDT3pool without deploying money or having to directly interface with the protocol itself. Decentralized Stock Futures Trading On December 24, 2020, Injective launched the world's first decentralized stock futures trading. This means that Injective users on the Solstice testnet would 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 (Decentralized Finance) platform, Mirror Protocol. The release will begin with the trading of Tesla, Airbnb, Google, and Amazon. Solstice Pro On December 29, 2020, the Injective team launched Solstice Pro, which brings unrivaled institutional-grade products to their Decentralized Exchange (DEX). Solstice Pro provides support for expiry futures, extensive trade history (ability to view trade history, position history, and deposit history), dedicated portfolio page (a custom tab where traders can see their activity across all markets on Injective including all token balances, deposits, withdrawals, open orders, open positions, and a complete trade history) and reduce only orders. Equinox Staking In February 2021, the Injective team introduced Equinox Staking, which serves as the final phase of the testnet. Equinox Staking enabled users to gain early access to Injective's staking features while also allowing them to earn rewards for helping to test the capabilities of the protocol itself. Equinox Staking allowed both validators and delegators to stake on Injective as the team prepares to launch their mainnet in Q2 2021. Validators served an integral role in this process by helping to run nodes globally for Injective. Since Injective is based on Tendermint Proof-of-stake (PoS), the algorithm used a pseudo-random election process to select a node to be the validator of the next block, based on a combination of factors that could include the number of tokens staked with a certain validator. Upon the launch of the Injective mainnet, anyone would be able to become a validator as Injective will be run by the community. Anyone can act as a delegator on Injective without needing to set up complex hardware or to set up any node. The Injective delegation process allows users to delegate their stake to a validator that helps run the day-to-day functionalities of Injective. A minimum of 5 INJ will be required in order to delegate on Injective. Equinox genesis validators included Chorus, Certus One, InfStones, Just Mining, Helios Staking, UBIK Capital, Audit.One, Hashquark, Forbole, Cosmostation, B-Harvest, StakeWith.Us, and Citadel.One. The public release of Equinox Staking was announced on March 29, 2021. Injective Learn In January 2021, the Injective team announced the launch of Injective Learn, a brand new blockchain education platform that publishes in-depth tutorials for all experience levels. The aim of the platform is to provide a comprehensive educational platform that equips learners to partake in everything that Injective has to offer. Architecture Injective Protocol is comprised of five principal components: Injective Chain, Injective Exchange Client, Injective API Provider, Injective EVM RPC provider, and Injective Bridge Contracts on Ethereum. Injective Chain Layer-2 EVM Execution Environment The Injective Chain supports generalized smart contract execution through a modular implementation of the Ethereum Virtual Machine (EVM) on top of the Cosmos-SDK, based on Ethermint. By implementing the EVM on top of Tendermint, users enjoy a scalable and interoperable implementation of Ethereum built on proof-of-stake with 1-block finality. Developers can work with an identical experience for creating DApps on the Injective EVM, with additional benefits including native support for transaction fee delegation and an increased contract bytecode size limit of 100KB. The following contracts are deployed on the Injective EVM: Injective DEX Contracts The Injective DEX Protocol is a decentralized exchange protocol supporting peer-to-peer spot and derivatives trading. The DEX protocol is implemented through smart contracts written in Solidity, and is deployed on the Injective Layer-2 EVM execution environment. The 0x V3 Exchange Protocol is used for spot markets and the bespoke Injective Derivatives Protocol is used for derivatives markets. Injective Derivatives Contracts The Injective Derivatives Protocol enables traders to create, enter into, and execute decentralized perpetual swap contracts and CFDs on any arbitrary market. 0x V3 Exchange Contracts Injective leverages the 0x V3 Exchange Contracts for peer-to-peer spot exchange. Injective Coordinator Contract The Injective Coordinator Contract follows the 0x Coordinator specification for both spot 0x transactions. The principal purpose of the coordinator is to serve as a liquidity solution enabling more competitive pricing by preventing front-running and allowing for much lower latency trading. However, unlike traditional implementations which only require one signature from a centralized coordinator, Injective's decentralized coordinator enforces transactions to have a minimum threshold of coordinator signatures in order for a transaction to be approved. These required signatures are provided through the application logic built into the consensus of the Injective Chain. Each coordinator is bonded through INJ stake and can be slashed for improperly approving transactions. Staking Contract The Injective Staking Contract maintains a compressed representation of the Injective Chain's validators set and is used to govern the Injective Derivatives Protocol and to process cross-chain ERC-20 token d