Innovations in DeFi: What’s New in INJ 2.0

Prateek Tripathi
4 min readAug 22, 2023

Injective has recently released its largest tokenomics upgrade yet, INJ 2.0, which aims to dramatically increase the amount of INJ burned weekly. This upgrade extends the benefits of the token burn mechanism to a wider array of protocols, allowing any dApp on Injective to contribute to burn auctions. The increased participation from various dApps not only amplifies the potential rewards available for auction but also allows for larger amounts of INJ tokens to be burned

The New INJ Burn 2.0 Mechanism

The INJ 2.0 upgrade enables a diverse range of dApps, such as lending platforms, NFT marketplaces, and prediction applications, to contribute to the auction burn. All protocols have the option to allocate the amount they would like to contribute to the auction, even allocating up to 100% of their collected fees to the auction basket. The developer documents for Injective have also been revamped to include instructions on how any new dApp building on Injective can directly contribute to the auction basket.

INJ: The Asset Powering a New World Economy

The INJ 2.0 upgrade represents more than just a technical enhancement; it embodies Injective’s commitment to fostering a thriving and interconnected ecosystem for all Web3 applications. This dynamic expansion encourages collaboration, innovation, and collective growth, firmly rooted in the principle of empowering the community.

Injective is a lightning-fast interoperable layer one blockchain optimized for building premier Web3 finance applications. By embracing a more inclusive and adaptable approach, Injective empowers a diverse array of dApps to contribute to the auction burn, amplifying both community engagement and a more robust economic system altogether. This transformation reflects the Injective’s unwavering dedication to building a robust and collaborative ecosystem that continues to push the boundaries of possibility.

Impact of INJ 2.0 on DeFi Ecosystem

The INJ 2.0 upgrade has the potential to significantly impact the DeFi ecosystem. By enabling a broader spectrum of use cases to be integrated into the buy-back-and-burn mechanism, the platform unlocks a new level of utility for the native INJ token. The increased participation from various dApps not only amplifies the potential rewards available for auction but also allows for larger amounts of INJ tokens to be burned. This can lead to a far more robust on-chain economy powered by INJ as burn auctions can now capture value from all dApps across the rapidly growing Injective ecosystem.

Injective Protocol enables several promising use cases for decentralized finance (DeFi) and trading. The platform provides different order types such as limit orders and market orders to meet the needs of traders. Market orders and limit orders are both readily available on Injective, which opens up countless opportunities for traders globally.

Additionally, Injective supports cross-chain swaps between any two assets on different blockchains, enabling users to trade an ERC-20 token for a BEP-20 token, or a Cosmos token for a Polkadot-based token, and so on. This interoperability means Injective sidechains have access to the entire Ethereum DeFi ecosystem, providing a seamless user experience without the long wait times often seen with layer 1 settlement

Injective leverages optimistic rollups, a layer 2 scaling solution, to provide scalability to decentralized finance (DeFi) applications. Optimistic rollups bundle or “roll up” hundreds of transactions off-chain and generate a cryptographic proof. This proof is published on the main Ethereum chain, allowing anyone to verify the rollup. The rollup is assumed to be valid, hence “optimistic.” If there are any invalid transactions, users can challenge them within a dispute period. After the dispute period, the rollup’s state becomes final on the main chain. This allows Injective to achieve significant scalability gains over a pure on-chain solution.

The scalability from optimistic rollups allows Injective to support high-frequency decentralized trading, lending, margin trading, and other DeFi applications that require fast settlement times and low fees. For example, Injective’s decentralized exchange, Injective Exchange, can support over 10,000 trades per second with sub-second settlement times and minimal fees. The exchange brings the performance of centralized exchanges to a decentralized environment, all while maintaining composability with other DeFi protocols.

Conclusion

The INJ 2.0 upgrade represents a significant milestone in the evolution of decentralized finance. By enabling a broader spectrum of use cases to be integrated into the buy-back-and-burn mechanism, the platform unlocks a new level of utility for the native INJ token. The increased participation from various dApps not only amplifies the potential rewards available for auction but also allows for larger amounts of INJ tokens to be burned. This can lead to a far more robust on-chain economy powered by INJ as burn auctions can now capture value from all dApps across the rapidly growing Injective ecosystem. Injective Protocol’s layer 2 solution provides several key benefits for scaling decentralized finance, including lower fees, faster transactions, increased throughput, interoperability, compatibility, and future-proofing. By scaling decentralized finance, Injective is enabling an open and global financial system that is accessible to anyone.

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Prateek Tripathi

Introducing Prateek Tripathi, a tech-savvy individual with a passion for all things crypto, blockchain, and coding.