One of the biggest issues with decentralized exchanges is price and order manipulation. The Injective Protocol promises to eliminate these problems with its decentralized layer-2 platform for derivatives trading.
With Injective, users receive a decentralized trade execution coordinator and order book, preventing frontrunning on the exchange. The protocol leverages its layer-2 blockchain tech for compiling transfers on-chain through an EVM-compatible environment.
The Interjection protocol builds the EVM on the Cosmos-SDK, which is a side chain allowing scaling on the Ethereum Network.
This guide will take an indepth look at how the Injective platform works and where & how to buy the project’s native INJ token.
Where to Buy Injective INJ
This section is our top picks of where and how to buy the Injective INJ Crypto token. We chose these based on our experience of using them and considered fees, security, payment options and reputation.
Binance: Largest Crypto Exchange with Low FeesCoinbase: Highly Regarded and Easy to Use for BeginnersKraken: Top Platform With High LiquidityKucoin: Long Established Exchange With Lots of Listings
Binance: Reputable Exchange with High Liquidity
Binance is the largest cryptocurrency trading exchange in daily trade volumes. The exchange offers investors full access to trade over 600 crypto assets.
The renowned platform also features a well-detailed learning curve and advanced trading tools that support well-experienced traders and investors looking to learn how to buy different cryptos. Although Binance features a user-friendly interface that facilitates a great user experience, it is more suited for well-experienced traders.
Read: Our Full Binance Review Here
Binance has a minimum deposit of $10. This enables investors to kickstart their investing journey with low fees. Investors can also initiate deposits through seamless payment methods like wire transfers, credit/debit cards, peer-to-peer (P2P) payments, and other e-wallet solutions.
Binance deposits come with a fee that varies based on the payment method used. For instance, the global exchange charges a standard fee of up to 4.50% for all deposits made with a debit/credit card.
All investors enjoy very low fees when trading on Binance, as it charges a standard trading fee of 0.1%. For investors that buy using Binance token (BNB), a discount of 25% on trading fees will be applied.
In addition, investors can rest assured that their funds and data are well protected whenever they trade on Binance. The broker features top-notch security measures like two-factor authentication (2FA), cold storage to keep most coins, whitelisting, and advanced data encryption to protect funds and data. Binance functions effectively in over 100 countries and has a spin-off regulated platform (Binance.US) that tends to US-based traders and investors.
Trading fees at 0.01%High liquidityWide range of payment methods600+ crypto assets in library
Interface is suited for advanced tradersUS-based customers cannot trade most coins via its subsidiary
Coinbase: Simple & Easy to Use Exchange
Coinbase is also a great option for investors looking for how to buy the crypto seamlessly. The US-based crypto trading platform enables users to buy, sell, and stake cryptocurrencies with zero complexity.
Coinbase integrates a user-friendly interface that simplifies crypto trading. The crypto trading platform supports well over 10,000 blockchain-based assets.
Read: Our Full Coinbase Review Here
The exchange’s signup and verification process take less than 10 minutes. For traders looking to invest easily, Coinbase is a great alternative to Binance.
Coinbase has a minimum deposit of $2, the lowest minimum deposit in the market presently This exchange also offers a wide range of deposit methods like automated clearing house (ACH), Wire transfer, debit card, and e-wallet solutions, as well as cashouts in local currencies like USD, GBP, and EUR. Coinbase charges up to 3.99% for debit card deposits.
Investors enjoy a 4% cash back reward whenever a Coinbase debit card is used for crypto purchases.
For fees, Coinbase charges a competitive fee of 0.5% – 4.5% depending on the payment method, cryptocurrency type, and transaction sizes.
Coinbase has evolved from a traditional exchange to a versatile platform with great services dedicated to retail and institutional investors, such as an in-built exchange wallet, self-issued cash back visa card, staking, derivatives, asset hubs, ventures, and many more.
Furthermore, Coinbase has in-built security practices like 2FA verification as an added security layer to investors’ usernames and passwords, crime insurance that secures digital assets from theft and fraud, and many more.
Also, Coinbase is licensed by the Securities and Exchange Commission (SEC) and regulated by top financial authorities like Financial Conduct Authority (FCA), Financial Crimes and Enforcement Network (FinCEN), and the New York State Department of Financial Services (NYSDFS).
Beginner-focusedLicensed and reputable platformInsurance in case of hacksLow minimum deposit
High fee compared to competitorsNo credit card deposits for US customers
Kraken: Top Crypto Platform with High Liquidity
Founded in 2011, Kraken is one of the oldest and most popular cryptocurrency exchanges currently in operation.
The exchange has built a reputation as being a secure destination for anyone interested in trading cryptocurrencies and it is also a popular choice for both traders and institutions across a variety of locations.
Read: Our Full Kraken Review Here
Kraken retains an international appeal and provides efficient trading opportunities in numerous fiat currencies. Kraken is also the current world leader in terms of Bitcoin to Euro trading volumes.
Kraken is most well known for its Bitcoin and Ethereum to cash (EUR and USD) markets; however a wide range of both fiat and cryptocurrencies are tradable on the platform
Dedicated service for institutionsGreat for beginners to useHigh trading liquidity
The lengthy ID verification process
KuCoin: Exchange With Lots of Listings
KuCoin is one of the world’s oldest and most popular crypto exchanges. The Seychelles-based broker is one of the most notable names in the market for traders who desire access to derivatives products to speculate in the market.
Currently, KuCoin provides access to over 600 cryptocurrencies. Besides trading and investing, the exchange allows investors to save, stake crypto, and even participate in Initial Exchange Offerings. With KuCoin, investors have an all-encompassing crypto hub.
Read: Our Full Kucoin Review Here
Like many brokers in its class, KuCoin could appear too overwhelming for beginners. The exchange is more suited for advanced traders who want to speculate and trade sophisticated products. So beginners might have some difficulty making use of it.
Despite this, investors could gain many benefits from trading with KuCoin. The broker has a low minimum balance of $5, with deposits available via major fiat currencies, peer-to-peer (P2P) transfers, and a few credit card options.
As for trading fees, KuCoin users pay 0.1% in fees. But the fees could decrease based on an investor’s 30-day trading volume and ownership of the company’s KCS token.
Security on KuCoin is also impressive. The system uses bank-level encryption and security infrastructures to protect users’ coins and data. KuCoin also has a specialized risk control department to enforce strict data usage policies.
Discounts available on trading feesExtensive staking functionalitiesQuick P2P trading systemAnonymous trading availableLow minimum balance
Injective Protocol Derivative Dex
There are dozens of blockchain projects launched every week. However, establishing the testnet for Injective Protocol created waves in the blockchain development community. The project can potentially change the digital landscape for crypto trading on decentralized exchanges.
The Injective Protocol emerged in a whitepaper released in December 2018. It consists of a development team experienced in implementing large-scale blockchain and tech projects. Understandably, the industry seems excited about what the Injective Protocol can bring to the space.
The Injective Protocol is a decentralized derivatives exchange (DEX). The project aims to bridge differences in decentralized and centralized exchanges while including the booming decentralized finance ecosystem.
In the past, a DEX represents a logical solution to the regulatory and security issues affecting CEXs. However, it’s important to note that DEXs have several obstacles to making them efficient and effective. One of the core problems with current DEX systems is an inability to provide the same levels of liquidity and convenience supplied by CEX.
Despite the DEX providing the true spirit of the blockchain and crypto movement, these core issues with the system hindered its adoption in the market. The DEX hopes to bring its enhanced functionality to the DeFi sector, providing the same kind of liquidity similar to a CEX.
Let’s take a deep dive into the design of the Injective Protocol to understand what makes the DEX a revolution in the DeFi space.
Decentralized Exchanges Explained
When we discuss crypto exchanges, we can separate them into centralized exchanges (CEX) and decentralized exchanges (DEX). A centralized exchange is a system like Coinbase and Binance. These protocols host the private keys of digital assets traded on the platform.
Decentralized exchanges, like Uniswap, do not host digital assets’ private keys. They remain in the custody of the owners, not the platform. The core selling point of a centralized exchange is its user-friendly operation, making it easy for platform users to buy and sell assets without any issues.
The CEX is a great way to increase cryptocurrency adoption by bringing new users into the system, but they present a range of problems to the user. The DEX attempts to resolve these issues. We’ve all heard the phrase ‘not your keys, not your coins.’ It’s a popular meme on Reddit and other message boards.
The phrase means that the person holding the digital assets’ private keys is its rightful owner. This is a big issue with CEX platforms. To use the CEX, you have to give them your private keys, essentially giving up ownership of your assets.
Injective Protocol Features
The Injective Protocol is a completely universal DeFi protocol enabling cross-chain trading of derivatives across several financial products like spot trading, perpetual swaps, and futures. The Injective Chain implements itself as a Cosmos SDK module, built on Ethermint.
The protocol uses a Tendermint-based Proof-of-Stake (POS) consensus protocol for facilitating cross-chain trading of derivatives across the Ethereum, Cosmos, and other layer-1 protocols. The Injective Protocol utilizes the Verifiable Delay Function (VDF), making it collision resistant and able to prevent order frontrunning.
The native token running the Injective Protocol is INJ. The token has a range of functions on the platform, such as protocol governance, derivative collateralization, staking, liquidity mining, and exchange fee value capturing.
With the Injective platform, users can contribute and implement decentralized cross-chain derivatives trading without paying gas fees. Users get access to cross-chain yield generation for several digital assets.
Users can create and trade derivative markets with a price feed, opening more opportunities for trading on markets not available on other CEXs.
Injective Protocol Improves DEX User Functionality
Recent versions of DEX protocols apply innovation to move them in the direction of being as decentralized as possible. The Injective Protocol is an example, with the project utilized as a stepping stone to creating a platform that’s diverse and flexible.
The Injective Protocol promises users improved liquidity, more market diversity, faster order execution, and zero gas fees for trading. These features of the Injective Protocol make it the first truly decentralized exchange.
The Advantages of the Injective Exchange
We can expect the Injective Protocol to change the face of decentralized finance thanks to the innovations and improvements it brings to the DeFi market. The infrastructure in the Injective Chain enables it to host several DeFi applications (Dapps), including the order execution on the platform.
The Injection Protocol provides seamless functionality in order execution. Users also get superior order matching technology and a decentralized order book, making frontrunning of orders by high-frequency systems impossible.
When forming these systems into a single protocol, these dApps create a peer-to-peer decentralized exchange. While this isn’t exactly a new technology, the tools added to the ecosystem distinguish the characteristics and features of the Injective Protocol, distinguishing it from other DEX platforms.
The Injection Protocol relies on its consensus system built on the Tendermint-based Proof-of-Stake (PoS) protocol, assisting with cross-chain trading of derivatives the Ethereum, Cosmos, and similar layer-1 protocols. The design allows for effective staking, delegating, and earning rewards.
The Injective Exchange is open-source software, allowing for comprehensive protocol auditing to remove vulnerabilities and bugs. The highly flexible infrastructure of the exchange eliminates the typical barriers to entry experienced by other DEXs.
Since exchange users can create and trade any market that offers a price feed, users can access markets through the protocol that isn’t available on the exchanges.
Core products available on the testnet for the Injective Protocol are validated and tested by the largest institutional market makers, traders, and investment funds utilizing the blockchain. As a result of this design, the team experienced no hitches when launching the mainnet in 2021.
How Does the Injective Protocol Work?
The Injective chain provides the backbone for the DEX. It plays a vital role in ensuring the functionality of all four elements of the Injective Protocol. The chain bridges the gap in order books. The 0x-based order books utilized on the exchange provide the platform for full decentralization and assist with optimizing transaction efficiency.
This protocol is possible because orders enable a side-chain relay with settlement completed on-chain. The order book also hosts censorship-resistant INJ nodes, adding to its decentralized nature. The Trade Execution Coordinator (TEC) removes the possibility of frontrunning the order book.
Frontrunning is the practice that high-frequency algorithmic traders use to monitor the order book and place orders in front of others, executing them for arbitrage purposes. As a result, the average trader receives slippage on their trade execution, or partial or no fill, depending on the order type they use.
Institutional traders claim this practice adds liquidity to the market, while traders claim it’s nothing more than stealing from orders because they have a technological advantage. For instance, many stock trading firms use a ‘Payment for Order Flow’ model where they don’t charge the trader any commissions on trades.
However, in this model, the trader ends up paying for it through more slippage and no-fills or partial fills. Many traders claim this practice is unethical, while others don’t care, as long as they don’t have to pay commissions.
The Injective Protocol utilizes verifiable delay, acting as a ‘speed bump’ ensuring new orders don’t get filled ahead of existing orders. The Bi-directional Token Bridge allows the transfer of ERC-20 tokens on the INJ chain. The bridge created in the Cosmos network is known as the “peg zone.”
These peg zones feature account-based blockchain bridges between zones in the Cosmos ecosystem and exterior blockchains, such as Ethereum, in this case. The Peg Zone Injective operates in the following stages from an Ethereum address.
Via the INJ Peg zone smart contract.Via the relay to the ETH bridge modules.Via an oracle to the Banking Module on the Cosmos address.The procedure reverses in Cosmos to Ethereum trades.
The EVM Execution Environment functionality enables the execution of Ethereum smart contracts while utilizing the Injective Chain. This structure allows developers to create dApps through the Ethereum network. However, the protocol offers a scalable environment using a Proof of Stake consensus model.
The dApp development process offers a similar approach when using the Injective EVM. This protocol provides additional benefits like improved smart contract byte code size limits. The smart contracts functionality performed in the EVM environment include the following.
Trade Execution Coordinators.Bi-directional token bridges.Staking.Futures contracts trading.ERC20 contracts.
The INJ token is the dedicated crypto token of the Injective Protocol. The INJ token serves several functions, bringing real utility to the platform. Its core purpose is to act as the governance token for regulating and managing the Injective Protocol.
The INJ token offers holders governance rights to propose changes to the protocol and vote on implementing these changes. The second use of the INJ token is to act as collateral for loans. It works like a stablecoin, providing collateral in DeFi applications where users can end INJ tokens as a margin in derivative markets created on the DEX.
The INJ tokens may also provide insurance pool staking or collateral to generate passive income through interest generated on loans. The token may also act as an incentive for operators of relay nodes and market makers.
The platform operates through a model, with market makers paying 0.1% exchange fees while takers pay a 0.2% commission. This structure allows market makers to maintain a net positive payment model in their rebates, which, in turn, incentivizes the provisioning of liquidity on the DEX.
After creating liquidity, markets enjoy tighter spreads on asset pairs while providing excellent market depth for traders. On top, the validators and nodes can improve their interface and API catering to trades while being rewarded for the transaction and providing liquidity to the market.
The protocol uses the remaining fees to buy back INJ tokens, burning them to create a deflationary ecosystem. This model adds further value to the remaining circulating supply of INJ tokens by creating scarcity. A portion of the INJ tokens available undergoes distribution to users of the DEX based on the notional profits accumulated.
Users with the largest amount of notional profits receive the most benefit from the protocol and the biggest INJ rewards. This system rewards those users who utilize the platform frequently. The protocol calculates these rewards based on daily snapshots.
INJ – Mainnet Launch
The Injective Protocol launched its mainnet in November 2021. The team released a $120 million incentive pool alongside the mainnet launch, ‘Injective Astro’ assists with promoting liquidity on the exchange and encourages higher trading volumes.
To help put this in perspective, $120 Million makes the Injective Astro program the largest liquidity incentive program in the DEX space and the Cosmos ecosystem. The mainnet and Astro incentive program launch follows the Injective Bridge, supporting seamless Ethereum and Cosmos-based token transfers.
The Injective protocol touts fast withdrawal times to Ethereum in under ten minutes. That’s far faster than other layer-2 solutions that take up to a week to process transactions. Eric Chen from the INJ team states the following surrounding the Injective protocol.
“Our mission at Injective has always been to build the most powerful cross-chain protocol for completely decentralized derivatives trading. As Injective interconnects new chains, the ecosystem will continue to serve as a DeFi gateway for trading across the multi-chain universe.
Injective’s Ethereum-native tooling allows users to create and trade new cross-chain markets without the typical roadblocks associated with making transactions across distinct blockchain networks.”
Binance Labs chose the Injective protocol as one of the first projects to benefit from its incubator program. The company raised $10 million in an investment seeding round from Pantera Capital and Mark Cuban.
How to Buy INJ Token on Binance
After exploring where to buy and the coin’s use cases, the next thing is to explore how to buy it for your portfolio. Binance is our recommended exchange, so we’ll explore how to purchase the asset using Binance.
Step 1: Sign Up
Go to the Binance home page and click on “Register”.
Binance allows investors to register using their mobile phone, email address, or Google account. Most users choose the first two options and provide their phone numbers, emails, and desired passwords. A link will be sent to their registration channel of choice, and investors can click on it to authenticate their accounts.
Step 2: Verify Your Identity
Like many other regulated brokers, Binance requires that investors verify their identity before commencing their purchase.
To complete the process, visit the “Identification” tab. Investors will have to share personal information, their proof of residence, and a government-verified means of identification. This process should take no more than a few minutes to complete.
Step 3: Deposit Your Funds
Next, investors will have to deposit into their Binance wallets. The exchange makes deposits possible using payment processors, wire transfers, bank deposits, and direct crypto transfers. And its required minimum deposit is $10.
To make a deposit, go to the “Payment” section and click “Add a new payment method” to enter payment details. Alternatively, investors can click the “Buy Crypto” button to select a payment method and complete their transfer.
Step 4: Buy
With a funded wallet, investors are ready to make a your purchase. Head to the “Buy Crypto” section and enter the desired amount. Click on “Continue” after reviewing the terms, and the wallet should be updated immediately.