Key Takeaways

• The blockchain market is highly dynamic and largely dependent on short-term narratives. In this process, most projects fail to survive for long and disappear. As mentioned in Forbes, the market is also cluttered with so-called 'zombie projects' that exist but do nothing. However, there are consistent projects that have managed to prove their value over time, both technically and non-technically, amidst these market conditions.

• Today, I'd like to introduce Injective, a prime example of a consistent project. Launched in 2018, it has shown steady growth over the past six years. Technically, it has enabled the handling of vast transactions through Frequent Batch Auctions (FBA) and has created a developer-friendly environment by introducing various modules. Additionally, it has quickly adopted projects like Ethena, Ondo, and Jambo, which have received significant attention in the market, thereby continuously attracting users.

• While the blockchain market tends to focus on fleeting trends and narratives, it is essential to recognize the value of consistent projects and maintain ongoing interest in them. Through this approach, the market may find its fundamentals.

Recently, a list of "zombie blockchains" published by the renowned media company Forbes garnered considerable attention in the market. The term "zombie project" refers to projects that, as the name suggests, are technically alive but have shown little significant activity for a long period. Notably, this list included well-known names like Ripple (XRP), Cardano (ADA), Litecoin (LTC), Bitcoin Cash (BCH), and Ethereum Classic (ETC).

The blockchain market can still be considered nascent, as things rapidly emerge and disappear. Having been in the blockchain space since 2017, I've seen many projects that were once promising now vanish or become "zombie blockchains." While I might not have been the most astute researcher, I believe the market is still too immature to make definitive claims. Even today, it's plausible to think that blockchains currently in the top 50 by market capitalization may not maintain their rank in four years, with the odds favoring such an outcome.

In this dynamic market environment, the values I'm currently focusing on are "consistency and sustainability." Which projects are not merely surviving but consistently evolving, transforming, and proving their worth? Are there any Layer 1 blockchains showing such sustainability?

As a researcher, my role is to continually examine emerging new Layer 1s, as well as those that are succeeding and consistently re-evaluating their value. I believe this is crucial for market participants to learn from.

Today, I will discuss a blockchain that is quite interesting in several respects: 1) It started during the ICO era and continues to have a significant impact on the market, and 2) It has grown quietly amidst a noisy market, ranking in the top 50 by market capitalization on CoinMarketCap as of the time of writing.

So, which chain is it? It is the Injective Network.

Ultimately, Injective embodies both values I focus on—consistency and sustainability. Exploring its history and strategies provides significant insights into what we can learn from it. Let's delve into the story of Injective Network.

1. Background: History of Injective

Before delving into the specifics of Injective's strategy, it is crucial to understand how Injective began and how it has evolved. However, before discussing the history of Injective, it is necessary to clarify a terminological point. Initially, Injective identified itself as a Layer 2 solution, but it later rebranded itself as a Layer 1 blockchain. (Strictly speaking, it could be considered a Layer 1 from the beginning since it was built on Tendermint. However, there was much debate at the time about what truly constituted a Layer 2. For example, Polygon (formerly Matic) also initially claimed to be a Layer 2, despite technically being a sidechain to Ethereum (technically a Layer 1). A similar situation applied to Injective). With this clarification out of the way, let's take a closer look at Injective.

Injective first appeared in 2018 through the Binance Labs incubation program, where it received seed funding from Binance Labs. From the outset, its goal was to establish a decentralized exchange that could efficiently handle Ethereum-based assets (like ERC tokens) built on Tendermint for high transaction speed (with the future intention of integrating with the Cosmos ecosystem and IBC).

At that time, using Tendermint to create a blockchain was quite novel, and decentralized exchanges offering rich liquidity and low trading costs were non-existent, which is why Injective's approach garnered significant attention. Perhaps due to this, in the summer of 2020, Injective secured about $2.6 million in funding led by the well-known cryptocurrency investment firm Pantera Capital, with Hashed also participating as an investor (this was Pantera Capital's first investment following the COVID-19 outbreak, attracting considerable interest). Subsequently, in 2021 and 2022, Injective received substantial investments from firms like Pantera Capital and Jump Capital, gaining significant market attention. Interestingly, during this period, renowned American billionaire and investor Mark Cuban joined as a strategic investor.

Source: Twitter

Injective garnered significant investment and market attention in 2020 primarily because its initiatives were highly innovative at the time—especially considering the few players attempting to build a DeFi ecosystem outside of the Ethereum network due to the high risks involved. Additionally, there were few chains utilizing Tendermint, making Injective's approach particularly novel. While such innovation can be striking initially, over time, these advantages can become diluted, especially in the blockchain industry where open-source is the norm, and building a technological moat is nearly impossible. However, Mark Cuban's involvement in 2021 suggests that the reasons mentioned earlier would not have been sufficient to attract investments at that time alone. So, what made Injective different, and what characteristics allowed it to continue receiving investments and maintain a significant market capitalization in the present day? Today, we aim to explore Injective’s strategies.

2. How’s Injective different?

From my perspective, Injective differentiates itself from other projects in both technical and non-technical aspects. Technically, it has modified the Tendermint core to reduce block times and increase Transaction Per Second (TPS) through Frequent Batch Auctions (FBA), and it has created a developer-friendly environment with Plug-and-Play Modules. Non-technically, the perseverance of the Injective team and their willingness to experiment and take on challenges suited to the market conditions stand out. Let's explore these two aspects in detail.

2.1 Technical Differentiator 1: FBA (Frequent Batch Auction)

Currently, Injective has a block time of 800ms (0.8 seconds) and a TPS of over 25,000. While block times on the microsecond scale are feasible for several chains based on Tendermint, a TPS of over 25,000 is a benchmark that, to date, no other Tendermint-based blockchain has achieved. How was this possible?

TPS is essentially a measure of how many transactions a network can process per second. To achieve a high TPS, the volume of transactions processed at once must be substantial. In this context, Injective's Frequent Batch Auction (FBA) is a critical feature to discuss when considering the network’s TPS. FBA can be defined by approximately three features:

2.1.1 Discrete Time

Discrete time means that the time variable only takes values at specific points. For example, if we denote time as t and have a specific time interval [t0, t10], if the possible time points within this interval are finite, such as t = t0, t1, t2, ..., it's discrete time. If there are infinitely many possible time points within this interval, it's continuous time. In Injective's auction, discrete time is used to settle specific types of orders within certain time intervals. The order of settlement is as follows:

• Market orders are settled first.

• Next, limit orders not executed in the previous auction are settled.

• Finally, the most recent auction's limit orders are settled.

If the supply and demand for a particular order don't match, the orders with smaller quantities are settled first, and the larger orders are settled pro rata (proportionally).

2.1.2 Uniform Clearing Price

The Uniform Clearing Price in auctions refers to the execution of limit orders at the price point where the most trades occur. The detailed explanation is as follows:

1. Limit Orders: A limit order is an order to buy or sell an asset at a specific price or better. A buy limit order can only be executed at the specified price or lower, and a sell limit order at the specified price or higher.

2. Crossing Orders: In the context of auctions, an order crosses when the price of a buy order is equal to or higher than the price of a sell order. This signifies that a trading opportunity has arisen, as the needs of the buyer and seller match.

3. Maximum Quantity of Crossing Orders: The Uniform Clearing Price is determined at the price level where the quantity of crossing orders is the highest. This can be considered the price that maximizes trade volume, thereby enhancing market efficiency.

4. Midpoint Price of Equal Quantities: When bidding and selling prices at various points cross at equal quantities, the midpoint of these prices is often used as the single clearing price. This is seen as a fair way to balance the interests of buyers and sellers.

2.1.3 Sealed Bid

Sealed Bid means that orders are not posted to the order book until the batch auction is executed. Injective uses this method to prevent transaction front-running. This feature alleviates the burden for market makers to address front-running issues themselves. Consequently, it enables market makers to provide ample liquidity near the market price. This scenario undoubtedly offers benefits such as providing more equitable pricing for retail traders and minimizing volatility.

The three features I mentioned earlier—discrete time, uniform clearing price, and Sealed Bid—are all being introduced for the first time in Injective. Together with these features, the Frequent Batch Auction (FBA) randomly aggregates various orders and transactions within the network and sequentially incorporates them into blocks. This method differs from traditional blockchain approaches, which prioritize transactions based on transaction costs. The combination of FBA with Tendermint, which almost instantly finalizes blocks, allows for the rapid processing of complex transactions. Thanks to these advantages, Injective has been designed as a blockchain suitable for use by institutions and professional traders.

2.2 Technical Differentiator 2: Plug-and-Play Modules

I believe that the customers of a Layer 1 blockchain should be builders, not just users. And for a healthy ecosystem, the builders on this Layer 1 blockchain should consider their end-users as their customers. From this perspective, the primary challenge for a Layer 1 blockchain is to create the most developer-friendly environment possible. While providing financial grants to developers is beneficial (though not sustainable), reducing their time and effort is also crucial for enhancing the developer experience. Injective aims to address this through Plug-and-Play modules. As the name suggests, these are pre-built infrastructures that allow developers to easily construct their applications. Let's take a look at the modules available on Injective.

2.2.1 Exchange Module

The exchange module is an indispensable component of Injective, central to its identity. This module not only enables traders to engage in various types of trading (spot or derivatives) but also manages on-chain order books and order matching (matching engine). These functions are invaluable from a builder's perspective, as previously, decentralized finance (DeFi) applications required developers to construct their matching engines and order books, which are now facilitated by the exchange module, saving time and elevating the quality of DeFi applications.

Moreover, the on-chain order book in the exchange module provides unified liquidity, significantly reducing costs for early DeFi protocols, as they do not need to issue and distribute their tokens to ensure liquidity (because they don’t need to bootstrap their own liquidity). Therefore, the exchange module is crucial in making Injective an infrastructure that is friendly for builders by 1) minimizing the time and resources needed to build financial applications, and 2) ensuring sufficient liquidity without the need for their governance tokens, which makes it a vital element of Injective’s builder-friendly infrastructure.

Currently, the decentralized order book exchange Helix utilizes Injective’s exchange module.

2.2.2 Automated Smart Contract / WASMX Module

Being a Tendermint-based blockchain, Injective supports WASM-based virtual machines (CosmWasm). While this might seem standard, Injective goes a step further by offering two exciting features: the WASMX Module and automated smart contracts.

What are automated smart contracts? Typically, smart contracts require input from a third party (usually users) for execution. However, Injective has designed its contracts to execute automatically with each block, enabling builders to create a broader range of applications. Immediate applications include automating tasks like payroll or subscriptions for services.

The WASMX Module facilitates the easy implementation of these automated smart contracts on the Injective chain. Currently, registering a smart contract through the WASMX Module requires a governance proposal, highlighting its role in managing automated smart contracts, including registration, deactivation, and setting up wallets to pay for execution fees.

2.2.3 RWA (Real World Asset) Module

With the rise of projects like Ondo Finance, RWAs have become a highly watched sector within blockchain. Given Injective’s financial focus, it supports RWAs through a module that allows institutions to easily tokenize real-world assets (like fiat currencies or bonds). The nature of the RWA sector necessitates restricted access to tokenization and trading rights (RWA project has to do this for compliance reasons), and Injective’s RWA module grants these abilities on-chain to designated institutions and entities. Ondo Finance currently supports Injective, and many more RWA initiatives are expected to unfold on Injective.

2.2.4 Auction Module

The auction module collects a portion of revenue accumulated on dApps using the exchange module into a basket and auctions them off to the highest bidder in INJ tokens, which are then burned. This mechanism allows Injective to continuously reduce the supply of its tokens, adding an interesting dimension to the value of Injective tokens. However, the process described here pertains to INJ 1.0, and currently, Injective is expanding the types of fees collected in the basket, a topic that will be discussed further when explaining INJ 3.0.

Additionally, Injective offers various other modules to assist developers, which can be explored here.

2.2.5 Governance with Real Utilities

An intriguing aspect of exploring Injective’s modules is their close relationship with its governance. Unlike most Layer 1 chains where governance is nominal, Injective uses its governance to 1) list assets on spot markets, 2) determine smart contracts for registration on the WASMX module, and 3) adjust various parameters, including those typically seen in other Cosmos chains. This capability to expand token utility with chain growth makes Injective’s diverse governance powers particularly compelling.

2.3 Non-Technical Differentiator: Adaptability to Dynamic Markets

As mentioned in the introduction, the blockchain market is still in its infancy and highly dynamic. The most crucial value in such an environment is adaptability—the ability of a project to recognize market trends and launch initiatives that align with these trends. Injective has demonstrated considerable adaptability in this regard, as evidenced by its ongoing collaborations with prominent projects.

2.3.1 Continuous Collaboration with Promising Projects

Projects like Ondo Finance, Ethena, and Jambo share a commonality: they are among the most popular in the current blockchain market. Moreover, they are all collaborating with and utilizing Injective. Ethena first expanded beyond the Ethereum ecosystem with Injective, highlighting Injective's quick adaptability to align with market trends and meet user needs, a capability underscored by recent collaborations, including Xion citing Injective as a prime example of chain abstraction.

2.3.2 Support for Multiple VMs

Injective was one of the first among Layer 1s to move towards supporting multiple VMs, a trend now seen in projects like Arbitrum’s Stylus and Initia, which are exploring multi-VM support through rollups. Injective’s early adoption and ongoing application of multiple VMs speak volumes about its foresight and adaptability, especially considering its inception in 2018, a testament to its impressive adaptability in a market filled with newer entrants.

3. Multi VM Environment

As mentioned earlier, blockchain platforms have recently started to move away from a single virtual machine (VM) model. For instance, Sei is now supporting both WASM and EVM in its V2 update. However, Injective has been working to create a development environment that can utilize various virtual machines for some time now. As a blockchain researcher, I believe that the primary customers of Layer 1 blockchains should be builders, not just users, and the users should be customers of these builders. From this perspective, enabling builders to easily create applications by supporting multiple virtual machines is a logical step for any Layer 1 blockchain (this aligns with Injective’s approach of supporting various modules at the chain level).

However, Injective's approach to supporting virtual machines is somewhat unique. Instead of supporting VMs directly on the main chain, Injective has created separate rollup chains. This design maximizes developer autonomy while ensuring that value is transmitted back to Injective’s native assets. Let’s explore these rollups in detail.

3.1 inSVM

inSVM is the first SVM (Solana Virtual Machine) based rollup in the Cosmos ecosystem. Utilizing Solana's Solana Virtual Machine enables the parallel processing of transactions and offers a significant advantage in easily integrating various interfaces existing in Solana, including Solana wallets. This creates a particularly favorable condition for Solana developers to onboard easily. But how does inSVM function?

3.1.1 How it Works

The initial plan for inSVM is to be developed in collaboration with teams that have expertise in SVM and rollups. As for its operation, it is an injective-based rollup, which means it will function in the same way as conventional rollups. Like any rollup, there will be a sequencer that collects transactions and submits them to the DA layer. Ultimately, the goal is to decentralize the sequencer, with Injective acting as the settlement layer, and Celestia participating as the DA layer.

3.1.2 Why Is It Important

The importance of Injective's inSVM lies in providing an alternative environment to developers who have been isolated within the Solana ecosystem, and offering talented Solana developers the opportunity to deploy their applications within the Injective ecosystem as well (similar to how Ethereum-native applications are deployed across chains compatible with EVM).

3.2 inEVM

Source: Injective Blog

While inSVM is Injective's SVM rollup, inEVM represents Injective's EVM (Ethereum Virtual Machine) rollup. As widely known, EVM is the virtual machine with the most extensive use cases and developer community in the blockchain industry. It's a must-have in any multi-VM support system. In the case of inEVM, it has been designed to communicate with WASM-based applications on the Injective chain through a bridge called Hyperlane. Essentially, Hyperlane enables Solidity-based applications on the inEVM chain to interact with WASM-based applications on the Injective chain. This interoperability feature of Hyperlane allows Injective to build an ecosystem where various VMs coexist without being isolated from each other. Moreover, the modules within the Injective Network core are also readily accessible within the inEVM ecosystem, providing an experience that is rare in other blockchains.

Source: InEVM Document 

Hyperlane serves as a bridge connecting rollups with each other, as well as applications between rollups and the Injective chain, while LayerZero aids inEVM in communicating with ecosystems outside of Injective. This is referred to as Omni-chain Apps (OApps) in Injective. Utilizing LayerZero’s infrastructure, calls from chains external to Injective are containerized into message packets for transmission and reception. Additionally, there exists an OFT OApp extension that enables cross-chain NFTs, allowing for the implementation of Omni-chain NFT products that are compatible across various chains connected to Injective.

In this manner, Injective, while being a Layer 1 platform, supports various VMs through rollups and facilitates seamless communication between them using Hyperlane. At the same time, it uses LayerZero to connect these rollups with chains outside of Injective.

This highly distinctive Multi VM structure is worth a closer examination, but its advantages are clear: it can potentially integrate more VMs in the future, following a similar implementation model. This not only prepares it for future technological advancements but also enables it to incorporate the most popular features of current blockchain ecosystems—combining the interoperability of Cosmos, the scalability of Solana, and the vast developer community of Ethereum. While the outcomes of this strategy will need to be monitored over time, if Injective's multi-VM structure proves successful, it could serve as a benchmark for many players in the field.

Injective's inEVM has recently collaborated with Arbitrum Orbit to bring various toolkits into inEVM, creating a more developer-friendly environment for Ethereum developers. It appears they are continuously working to enhance the ecosystem. If you're an EVM builder, it might be a good idea to take a look at inEVM at least once.

4. Unique Features of Injective

Beyond the aforementioned elements, Injective possesses several interesting features. Some of the features I find particularly fascinating include:

4.1 Gas Compression

Following the introduction of blobs through EIP-4844, the transaction costs for rollups have become significantly lower. This has sparked discussions about transaction fees across various Layer 1 networks. Comparing the transaction costs of networks like Base and Solana, rollups have now reached a level where transaction fees are more user-friendly. Lower fees generally indicate how "easily accessible" a chain is to users, meaning the lower the transaction fees, the better for users (though, from a tokenomics perspective, whether low fees are always beneficial warrants additional discussion). So, how low are the transaction fees on the Injective Network? While network conditions and external variables can vary, Injective's fees are even lower than those of Solana(In case of Injective, it is $0.0003 whereas in Solana it is $0.00045). This is made possible by a unique feature called Gas Compression, which essentially compresses transaction costs. Injective achieves this through Transaction Batching (bundling various transactions into one batch reduces computational costs) and Data Storage Optimization.

4.2 Token Burn Mechanism: Beyond Sustainability 

Unlike traditional Layer 1 blockchains, Injective incorporates a built-in mechanism to burn its native token, INJ. This mechanism relates to the Auction module I mentioned earlier. With the launch of INJ 3.0, Injective has significantly expanded the types of fees applicable to the Auction module. Initially, INJ 1.0, as previously described, involved collecting fees accrued in the exchange module into a "basket" and then auctioning this basket. The highest bidder in INJ would purchase the basket, and the INJ tokens used in the auction would be burned. INJ 2.0 extended the range of fees to include those collected from any dApp (dApp not using Exchange module can choose to contribute to the auction), leading to the auctioning of these accumulated assets. As the size of the asset baskets increased, so did the amount of INJ required to purchase them, resulting in more INJ being burned. What, then, might we expect from INJ 3.0?

In INJ 3.0, users will now be able to contribute to auctions, which will lead to an increased volume of assets being added to the basket, and more INJ tokens will be utilized for purchasing these basket assets. Furthermore, the supply of INJ tokens is structured to decrease over time, with initial reductions set at a lower bound of 5% and an upper bound of 10%. These reductions will occur quarterly, culminating in total reductions of 25% for the lower bound and 30% for the upper bound over a period of two years. Through this token burn mechanism and inherent deflation, there is a strategic plan to continuously enhance the value of the token.

This token burn mechanism from Injective demonstrates just how much effort the project is investing in the sustainability of the project and the $INJ token. While most tokens in the market dilute in value over time, Injective has devised a method to potentially increase the value of the $INJ token as the network grows. Since there are few initiatives as beneficial to the community and its members as continuously reducing the token supply to enhance its value, such efforts are truly deserving of applause.

5. Looking Ahead:The Power of Consistency

"The biggest issue with crypto is that founders become millionaires before they even launch their products, which then diverts their focus away from the product itself."

-James Prestwich

Why do "zombie blockchains" exist? James Prestwich nailed it when he said the reason is simply “because it's easy to make money.” Most crypto projects collect funds through various means such as ICOs or investments, launch their tokens, and then sell them in the market for easy profits. This can ultimately lead to less motivation among founders and their teams compared to traditional startups.

Moreover, even aside from financial incentives, the ever-changing nature of the market results in many projects making a brief impact before disappearing. How many projects from five years ago do we still remember today? And how many of them are still actively evolving? It was during this investigation that Injective caught my eye, and I was quite surprised by my findings. While many focused on the noise surrounding numerous projects, Injective quietly and persistently worked hard to reassess and enhance its value.

Injective helped developers by creating modules for easier application building, supporting multiple virtual machines for broader developer integration, and enhancing its auction mechanism to convert more fees into INJ tokens, which were then burned to raise the token's value. Additionally, it was quick to collaborate with the most promising projects in the market, providing users the opportunity to try these innovative projects early on. The metrics speak volumes: over the past two years, Injective has processed approximately 600 million transactions, achieved around $30 billion in trading volume (spot + derivatives combined), deployed 200 projects, and amassed about 700,000 community members.

I wanted to highlight their consistency. Although being more than six years old from its initial idea stage means it’s no longer new, the project has not merely survived but thrived by tackling its own challenges and achieving significant milestones. While focusing on narratives or the immediate hype is important, perhaps what the market needs most right now is the perseverance to push through with an original project, as Injective has done. This is why we should also be interested in the future that Injective is building.

I hope that consistent projects like Injective continue to receive more recognition in the future.

Thanks to Kate for designing the graphics for this article.