An Inside Look at Injective Protocol, Binance’s Bet on Decentralized Derivatives  (2024)

Decentralized finance, better known as DeFi, has become an undeniable force in the cryptocurrency world over the past year. Decentralized exchanges (DEXs), platforms in which users trade directly wallet to wallet as opposed to requiring a mediator to hold assets and aid in executing a trade, have been a site of key innovation.

One in particular, Injective Protocol, is likely the most highly-anticipated DEX at the moment, fresh off of a $2.6 million fundraise led by Pantera Capital. Founded by seasoned technologists and incubated by Binance, Injective is a decentralized layer-2 DeFi protocol that supports trading of all markets, including spots, futures, derivatives, CFDs, and perpetual swaps. By creating an exchange that is both accessible for all globally while still retaining a user-friendly interface, Injective is seeking to create a paradigm shift in decentralized trading.

2020 has shaken up institutional markets and brought innovation to the crypto

DeFi rests on the principle of true financial freedom that comes from non-regulated, safe, and permissionless applications that everyone can use for their benefit. Therefore, it’s unsurprising that the cryptocurrency community turned away from Centralized Exchanges (CEXes) to rising DEXes. Over the years, CEXs have become notorious for falling to cyberattacks and imposing strict regulatory restrictions, leading to an inflexible trading platform. In the past few months the market has seen Kucoin, Bitmex, Bithumb, OKEx, and other large CEXs suffer losses or halts due to security incidents and regulatory intervention.

New issues have also arisen with the supposedly superior DEXs as they suffered from lower liquidity, smaller user based, and often an ongoing reliance on centralized authorities hosting backend services to maintain communication between network applications. DEXes are not for the faint of heart, and are still ultimately, not entirely decentralized.

This summer has been a boon for DEXes and DeFi. With wildly successful decentralized protocols such as Uniswap, the cryptocurrency and blockchain community has been reinvigorated with technological innovation that hasn’t been seen since the 2017 ICO boom. However, platforms such as Uniswap continue to face issues related to high gas fees, front-running and slow transaction speeds. After what seems to be the end of the yield farming hype, it is yet to be proven whether Uniswap will return to its usual volume and liquidity.

Recent DEX iterations apply innovations to be truly decentralized. Injective is a great example, having utilized some of the best functions DeFi has to offer to create a flexible and diverse platform. Thanks to their strong institutional market marking partners, Injective’s Futures Protocol allows users to experience better market diversity, execution speed, and liquidity with no gas fee and an 1800x speed up in execution speed. These are a few reasons why Injective has been hailed by many as the “first truly decentralized exchange”.

Injective will change the way in which everyone trades globally

The Injective Chain is an infrastructure that can host DeFi applications, including the first fully decentralized orderbook, trade execution coordinator, order matcher and order execution environment. Injective’s Futures Protocol provides a decentralized peer-to-peer exchange, supporting a variety of tools to enable users to make the best of permissionless futures. The Protocol’s Consensus is built on a Tendermint-based Proof-of-Stake (PoS) to help with cross chain derivative trading across Cosmos, Etherum, and other layer-1 protocols.

Finally, the Injective Exchange is a completely open-source, highly performant exchange infrastructure that eliminates technical barriers to entry. By allowing users to create and trade on any market using only a price feed, users will gain access to trade on markets that cannot be found on other exchanges. The core products have been privately tested and validated by some of the biggest funds in the blockchain space, market makers and institutional traders, which bodes well after dozens of historically rocky launches that have forsaken some DEXs.

The Injective team is composed of a strong group of top-tier university graduates, with the executive team having worked at Amazon, Open Zeppelin and a diverse array of institutional hedge funds. Backed by Pantera Capital, Binance Labs, Hashed, and investors and advisors from some of DeFi’s most prominent platforms such as Compound and Polkadot, Injective has thoroughly set themselves up for a promising and exciting launch on Binance’s Launchpad on October 20, 2020.

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