Thank you all for attending our AMA with Injective Protocol. We are very excited to join forces with the Injective team and celebrate the successful launch of their Solstice testnet V2.
Please find a recap of our AMA below, where we discussed Solstice testnet, liquidity incentives, INJ use cases, and what the future has in store for Injective!
The Dude: Welcome Eric! Glad to have you here. Let’s start the AMA with you sharing a bit of your background! Sounds good?
Eric: Hey Everyone! I’m Eric Chen, CEO and Co-founder of Injective Protocol. Prior to Injective, I was working at hedge funds and spent a lot of time in cryptographic research at a blockchain-focused fund. Most of my time was also spent on developing new types of trading strategies and researching blockchain protocols. Before that I was also part of the NYU Blockchain Labs.
The Dude: Nice, so you were mainly an investor let’s say. Sounds good! So I won’t really go through basic stuff today. I think most people here already know Injective and we don’t need to waste time on basic stuff. So let’s just go straight…
How is the testnet so far? How many people are trading on it? What challenges have you found so far and what’s next? Also you launched Solstice V2 today. Care to explain what’s new and what’s still facing issues?
Eric: The testnet is going great! There are 10k sign-ups so far and the biggest challenge is buffing the node and subgraph infrastructure to handle all the queries!
We recently launched our v2 and will continuously make upgrades to the Injective exchange and Injective futures component to optimize the matching experience.
The Dude: Hmm. Aren’t you afraid that this can be a heavy issue once it goes to mainnet with a massive amount of users? So let’s talk a bit about the exchange. Will there be stop loss functions? Since it’s an orderbook then there will be limit orders obviously, which already is a really solid advantage to Uniswap for example.
Eric: Right now there’s only our own node in the testnet so that’s why we’re doing a lot of optimization work to handle the heavy queries done by the users. Coming to the mainnet, the traffic will be handled by a lot more nodes.
[As for stop loss functions], we have it in the backend but we’re testing it aggressively to make sure it’s ready!
The Dude: Sounds good. Will it be done in a centralized way or decentralized? And that’s true, if you are handling a lot of traffic with one Node then once it scales indeed there won’t be a problem.
Overall the DEX UI really looks like a T1 CEX.
Eric: It’ll be decentralized, the trigger will be going by the latest fills. So that’s why we want to test it before releasing it as it will be triggered by scam wicks.
The Dude: Ok! Will they be visible by others or no?
Eric: It’ll be visible on-chain.
The Dude: Yeah thought so. Don’t think there is a way of doing it different from that.
What about liquidity? What incentives will you guys provide to LP? Will there be a LP pool or MM will be like CEXes MMs running algos?
Eric: We have liquidity incentives on day 1 that’s geared more towards CEX MMs. But we’ll provide out of the box MM bots similar to hummingbot to allow general users to participate. It’ll look a lot like make order rebate with some interesting mechanisms in play!
The Dude: OK, about the INJ token now. Let’s talk about it’s use cases once the DEX launches.
Eric: The use cases intended for INJ include but are not limited to: protocol governance, exchange fee value capture, futures collateralization, liquidity mining, and staking.
Protocol Governance: The INJ token can be used to govern various components of Injective’s side chain including the futures protocol, exchange parameters and protocol upgrades via a DAO structure.
Exchange Fee Value Capture: After the relayer reward distribution, the exchange fee will undergo an on-chain buy-back-and-burn event to accrue value for INJ.
Collateral Backing for futures: INJ will be utilized as an alternative to stablecoins as collateral for Injective’s futures markets. In some futures markets, INJ can also be used for collateral backing or insurance pool staking where stakers can earn interest on their locked tokens.
Tendermint-based Proof-of-Stake (PoS) Security: To ensure the security of Injective’s chain, Injective will incentivize nodes to stake INJ and participate in the chain’s network consensus with block rewards.
The Dude: How much percent of the supply does the ecosystem hold? And good to know [about collateral backing]. Wasn’t paying attention to this one.
Eric: About 36.3% of supply. And it’s a really interesting one, but we need to first establish strong liquidity on the INJ token itself.
The Dude: Yes, I think the biggest problem for new DEXes and CEXes is always liquidity. If INJ liquidity goes to it’s own DEX and it gains adoption then there is nothing to hold it from being a well adopted DEX.
I think we are done here in the intro side! Let’s move on to community questions!
Q: I understand that Solstice Testnet has a three-stage launch campaign for early release, but is the timer shown on the Injective Protocol website really the completion time for the first stage? If so, and I couldn’t participate in it, would I no longer have the opportunity to participate in the second phase?
Eric: Ethereum 2.0 actually helps us! The increased throughput allows for a much more seamless onboarding experience and our 1 second blocktime still makes it the best avenue for derivatives DEX trading.
Q: Can you tell us more about “Golden Ticket Early Access.”? How can we acquire them? And is the promotion still active?
Eric: Check it out here: https://medium.com/injective-labs/injective-golden-ticket-early-access-1a74ff366dfd
The Dude: Do you think Uniswap will get strong enough with ETH 2.0 to compete further with Upcoming Injective launch?
Eric: I don’t think increased throughput will fundamentally change how Uniswap works. It does save some gas though.
The Dude: Gas is one of the biggest issues in Uniswap imo. Also no orderbook/limit orders. But one of them might be gone with ETH 2.0
Q: In what kind of value do you keep the partnerships with for example Binance Labs and Pantera Capital? I’m interested to hear how for example Binance is helping Injective or other launchpad projects in the growth of adoption — could you share some details regarding this please?
Eric: Binance is an exchange, we’re fundamentally an exchange haha. Honestly Binance has taught us countless growth strategies and connected us with the best resource for exchanges since 2018. Pantera is no stranger to backing exchanges and they have been extremely helpful in guiding us through building a critical mass.
Q: What are the main advantages of the Injective Protocol order book model over other DeFi projects? How can liquidity providers not lose their money?
Eric: This is the age old MM vs LP debate. Above all else in a practical manner, market makers simply have more optionality and flexibility than liquidity providers. Afterall, a good market maker doesn’t have to deal with IL.
The Dude: That’s a boost for them so I guess what Injective needs is to work hard on the additional features part to have a strong advantage over them. That’s an external view ofc. You know better than me LOL.
Eric: Haha that’s our motivation to never stop shipping.
The Dude: Cheers! Let me open up for the last round of questions here.
Q: Bots are a nuisance these days with DEXes — as a trader with the “regular methods” can honestly say this. Does Injective Protocol have some kind of mechanisms against bots, or is your vision more bot-friendly?
Eric: We need bots to provide liquidity, the same goes for any major exchange out there. We do have a protective mechanism to prevent bots from front running your orders however!
Q: What are your plans for developing mobile applications for Android and IOS? Indeed, in our time, many people follow the market and trade from the phone.
The Dude: Good one. That’s true and DEXes usually don’t have an APP. For example for Uni I gotta use Metamask app which sucks honestly.
Eric: Right now Injective is RWA. That means you can try out our testnet on mobile! But that being said, for mainnet we need to work with mobile wallets to make it more user friendly. There are already a few solutions we’re talking to 🙂
Q: Who can join the Solstice network? What skills are required?
Eric: Anyone! Long as you know the fundamentals of perpetual swap and futures, you can try out Solstice.
Q: Why is Tendermint’s PBFT Consensus the best solution for decentralized order books? What are the benefits of this?
Eric: Fast blocktime, instant finality, and flexible integrations with existing modules.
Q: I will ask now the last question before we end the AMA. CZ already admitted that DEXes should get a huge cut of the market. We know Binance invested on Injective but they used to have their own DEX. Do you think Binance will consider INJ their prior DEX in the future?
Eric: We’re focusing on derivatives so it’s an interesting complementary component in their existing ecosystem. We do have some work with BSC and INJ token itself is also a BEP20 token on BSC. Binance DEX is fairly restricted to token trading only so Injective is a nice addition to the decentralized derivatives front.
The Dude: Truly amazing AMA with Injective today. Thanks a lot for all the insights and for taking your time to come to Dude’s army community for this nice conversation. Congrats for all the work so far in the project and I wish you guys all the best with upcoming launches.
Eric: Thanks so much guys! Really enjoyed the AMA.
About Injective Protocol
Injective Protocol is the first layer-2 decentralized exchange protocol that unlocks the full potential of decentralized derivatives and borderless DeFi. Injective Protocol enables fully decentralized trading without any restrictions, allowing individuals to trade on any derivative market of their choosing. Injective Protocol is backed by a prominent group of stakeholders including Pantera Capital, one of the most renowned venture capital firms in the world, and the leading cryptocurrency exchange, Binance.
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