AMA Highlights — Injective Protocol

By Raymond Reijnders, Analyst.
February 4, 2021–5 min read.

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On Friday 29 January we welcomed Eric Chen, cofounder of Injective Protocol into the Hillrise Capital Telegram Chat for an AMA.

Injective Protocol was Binance’s 16th Launchpad project — dating back to October 2020.

Injective Protocol introduces a universal DeFi protocol for cross-chain derivatives. Further, their solution enables a suite of financial products we have become accustomed to in this industry, including perpetual swaps, futures, and spot trading.

Using Tendermint-based Proof-of-Stake, interoperability between chains is made possible. The protocol utilizes ‘collision resistance’ and a ‘Verifiable Delay Function’ to mitigate deleterious front-running.

In this post, we have compiled key questions and answers from the event.

Daniel Dal Bello
Hi Eric, and thank you for joining us tonight!

We have obviously become fascinated by the broader DeFi movement over the past 6–12 months. Could you start with some background on yourself and your journey to be leading the charge with Injective Protocol?

Eric Chen
I’m Eric Chen, co-founder of Injective Protocol. Prior to Injective, I was a researcher working on market-neutral strategies and cryptographic protocols.

Injective came about as a natural marriage between my research and my day job.

Daniel Dal Bello
For as long as the project remains under the direction of the team, do you foresee any regulatory complications down the line following the listing of tokenized stock futures?

If any, what steps has the team taken to mitigate these risks from getting in the way of development?

Eric Chen
We utilize Solstice testnet as an opportunity for us to demonstrate to the Injective community what’s possible on Injective coming mainnet. The flexible and permissionless nature of Injective allows anyone to create any market on top of Injective.

That’s why it’s so important for us to be fully decentralized, this way the team, no matter where they’re based, can’t control what’s being explored by the Injective community on mainnet!

Just like Hayden Adams from Uniswap, after mainnet, I can tweet to tell the community to not trade on Injective, but there is nothing anyone can do to shut down the network.

Hawk Eye
Hi Eric, Can we expect mainnet in February? Phase 3 soon, what exactly is that? Any staking incentives anytime soon?

Eric Chen
The last phase of the testnet is really interesting. It’s where we shift the focus from the trader’s experience and really test out the infrastructure. We’ve built many components that are highly experimental surrounding Cosmos and we really want to make sure that everything is safe before we launch mainnet.

These components include the decentralized Ethereum-Injective bridge, public validator onboarding, governance proposal testing, public market creation testing, and the first buy-back-and-burn testing!

Raymond Reijnders
We noted that the platform itself is relatively static. Are there any plans to introduce different colour schemes for the exchange, a customisable UI (like FTX, Binance) or any other customisable UX/UI elements for traders?

Also curious about any plans to include additional trading pairs — especially for the foreign exchange and stock futures sections — as they’re still relatively shallow, which for regular traders like us is simply too few to actively partake.

Eric Chen
Yeah! It’s something we want to slowly expand so that our liquidity is not overextended.

And yes, this is only a testnet, we’ll expand the interface a lot more upon mainnet. The interface we have right now pretty much started with me doodling on Figma haha.

Raymond Reijnders
We read about your partnership with Allianceblock — who we’ve recently welcomed for an AMA — to bring decentralized gas and oil futures to market. Can you walk us through the process of implementing a new product like this?

Eric Chen
It’s quite easy, actually! To launch an oil and gas futures, you only need to utilize AllianceBlock’s synthetic product price feed (often found on AMMs or Oracle sources). It’s then a very quick process of specifying margin requirement + collateral type before you launch this market.

We also introduced expiry futures which look a lot like traditional futures products. This makes it a lot easier for institutions to market-make.

Raymond Reijnders
So that would be very similar to the Synthetix model then?

Eric Chen
Yeah, it’s the same for most derivatives platforms, but our advantage is that we have the entire surrounding order book and incentivized infrastructure that looks a lot like centralized platforms.

Daniel Dal Bello
We’re also quite curious to find out how the on-chain referral system will work. People don’t usually have multiple accounts for the same CEX due to a KYC system. Conversely, when trading on DEXs, it is common for people to routinely trade with new/different wallet addresses for various purposes such as security and wallet accounting (and trying to secure potential airdrops).

I expect that we would see a similar situation play out for Injective such that the referral system might prove to be ineffective, turning away large players who like to use multiple addresses. Could you dive deeper into how this may play out?

Eric Chen
Often the person being referred will also receive a discount/rebate to their trades. Regardless of address, all they need to do is specify a certain referrer address in their trade data to receive this discount. We also have an account/sub-account model so the incentive for having multiple wallets will go down as well.

Daniel Dal Bello
By Q1 2022 you expect to have the institutional exchange interface up and running. What do you think institutional participation within the crypto-ecosystem will look like by 2022 and who will be the first to come into Injective?

Eric Chen
The interface will look pretty plain but highly informative, it really reminds me of my Bloomberg terminal days, haha. I believe that institutional participation and dynamics will be commonplace and even disfavored by the retail/common folks in 2022. This is quite exciting to me because that means cryptocurrency has gone truly mainstream at that point.

In terms of who will be the first to come into Injective, one of our investors (undisclosed) is one of the largest market makers in traditional and crypto-markets. They don’t like to disclose their position, but they’ve been extremely helpful in terms of guiding long term institutional support. If anyone, they will be the first.

Hillrise Capital is an independent research, and advisory firm exclusively focused on blockchain startups and crypto-assets.

Injective Protocol introduces a universal DeFi protocol for cross-chain derivatives.

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