Fundamental Analysis Assessment — Injective $INJ [The Lite Version]
Disclaimer:
- Accuracy and Currency of Information:
While The Birb Nest has exerted due diligence in ensuring the accuracy of the information contained in this report at the time of its publication, its accuracy, completeness, and current relevance are not warranted or guaranteed. We strongly recommend users to verify any critical information independently.
- Purpose of the Report:
The principal aim of these Fundamental Analysis reports is solely to provide general information. They are intended purely for informational purposes and, do not have any other specific applications.
- Regulatory and Auditing Compliance:
This document should not be construed as a resource for regulatory compliance or for meeting certified auditing standards such as, but not limited to, ICO9000.
- Licensing and Professional Affiliation:
The Birb Nest, TBN, and all affiliated entities & stakeholders are not licensed financial advisors, nor are they registered with any professional financial or auditing organisations.
a) Prior to making any investment decisions, we highly recommend consulting with an independent and qualified financial advisor attuned to your individual financial needs and goals.
- Risk Awareness in Cryptocurrency and Digital Assets:
a) Regulatory Considerations: Investments in cryptocurrencies, digital assets, or other financial systems based on blockchain technology operate largely outside of established regulatory frameworks. As a result, they do not benefit from protections offered by authorities such as the UK’s Financial Conduct Authority (FCA), including, but not limited to, those provided under the FCA Financial Services Compensation Scheme and their equivalent organisations in other jurisdictions.
b) Market Volatility: The market for digital assets is subject to significantly higher volatility compared to traditional financial markets, such as those involving S&P 500 stocks. Whilst this heightened volatility presents an opportunity for greater returns, it also increases the risk of financial loss.
c) Market Operation and Crisis Management: Unlike traditional markets, which operate during specific hours within their respective time zones and can be temporarily closed in times of crisis, the digital assets market operates continuously, 24/7 throughout the year. This non-stop operation can impact the ability to manage investments during periods of extreme volatility or market disruption.
d) Liquidity Risks: Digital asset exchanges may experience issues related to liquidity, potentially leading to challenges in buying or selling digital assets. These issues can result in the entrapment or forced liquidation of your digital assets under adverse market conditions.
e) Potential for Complete Loss: All investment and trading activities in the digital assets sector carry the risk of total and irreversible financial loss. Investors should be aware that recovery of lost funds in this sector is often not possible.
- Promotional Activity:
The Birb Nest have no affiliation with the organisations mentioned within this document. No payment or financial compensation has been discussed, agreed, or paid for this publication.
- Liability Exemption:
The Birb Nest, TBN, and all affiliated entities & stakeholders expressly disclaim any liability or responsibility for financial, investment, or trading decisions made based on the content of this report.
a) All financial actions and decisions should be undertaken after thorough personal due diligence and sound judgment.
- Acknowledgment and Agreement:
By proceeding further, you confirm that you have read, understood, acknowledged, and agreed to all the terms outlined above.
Fundamental Analysis Assessment — Lite Version
Concept:
Injective Protocol is an innovative player in the decentralised finance (DeFi) landscape, operating as a Layer1 DeFi chain and ecosystem developed on the Cosmos SDK. It is designed to facilitate a fully decentralised peer-to-peer trading experience, offering a diverse range of financial instruments. The protocol’s architecture is unique, leveraging the strengths of the Cosmos ecosystem to offer high throughput and low transaction costs, while also ensuring compatibility with the Ethereum network.
Unique Selling Propositions (USPs):
Injective stands out in the decentralised finance (DeFi) sector with its unique selling propositions (USPs) that stem primarily from its innovative hybrid architecture. This architecture ingeniously melds the scalability and interoperability features of the Cosmos network with the robustness of the Ethereum and Solana DeFi ecosystems. This fusion not only augments Injective’s capabilities but also carves out a niche for it in the market, offering a high-performance trading experience that is arguably unmatched by its competitors.
At the core of Injective’s distinctive offering is its ability to deliver an array of high-quality DeFi products, which are rare or even non-existent in other platforms. These offerings include:
- Token Auctions: Injective has introduced an innovative mechanism for token auctions, allowing for a unique burning protocol whilst encouraging active user engagement.
- Derivative Insurance Funds: By incorporating derivative insurance funds, Injective enhances the security and reliability of trading in complex financial instruments.
- Tokenised US Treasuries: The platform has broken new ground by offering tokenised versions of US Treasury securities, providing a bridge between traditional finance and DeFi.
- Pre-IPO Stock Derivatives Market: This unique market segment allows users to engage with the stocks of companies before they are publicly traded, a feature not commonly found in the DeFi space.
- Decentralised Perpetual and Expiry Futures: Injective has also expanded its product suite to include both perpetual and expiry futures in a decentralized format, offering traders more flexibility and options.
Our comprehensive analysis, which encompassed competitors like Cosmos Hub, Osmosis, Kujira, Curve Finance, and Chainge Finance, underscored Injective’s strengths in its current operational state. However, it’s noteworthy that despite the uniqueness and appeal of these products, they remain largely underutilised among Injective’s active user base. This underutilisation signals a substantial opportunity for growth, suggesting that the platform could benefit from increased marketing efforts and user education to fully capitalize on its offerings.
Perhaps the most striking achievement of Injective is the deployment of its inEVM/inSVM architecture. This groundbreaking innovation marks the first instance where a network has been built with native compatibility across Cosmos, Solana, and Ethereum ecosystems simultaneously. The implementation of this architecture is exemplified by Celestia ($TIA), highlighting Injective’s role in pioneering a new frontier in blockchain interoperability. This inEVM/inSVM architecture not only symbolises technical prowess but also signifies Injective’s commitment to a seamless, integrated DeFi experience. By enabling native compatibility, Injective effectively bridges gaps between major blockchain networks, facilitating a more cohesive and efficient ecosystem for users and developers alike.
This remarkable blend of cross-chain compatibility, along with its suite of exclusive financial products, positions Injective Protocol as a formidable entity in the DeFi landscape. It not only meets the diverse needs of modern traders and investors but also paves the way for future innovations in the sector. The platform’s ability to offer such a diverse and sophisticated range of services is a testament to its vision and technical expertise.
In conclusion, Injective’s unique selling propositions are a confluence of technological innovation, strategic market positioning, and a deep understanding of the evolving DeFi landscape. While there is an evident need to increase user engagement and utilisation of its unique offerings, the foundational groundwork laid by Injective is solid. The platform’s forward-thinking approach, especially its inEVM/inSVM architecture, sets a new standard in the industry and offers a glimpse into the future of decentralised finance.
Whitepaper Quality:
The Injective Protocol whitepaper is a comprehensive document that clearly outlines its technical architecture, use cases, and the overall vision. It demonstrates a deep understanding of blockchain technology and DeFi challenges, proposing innovative solutions to enhance trading experiences and market accessibility. However, it lacks depth and guidance in key areas to assist people in leveraging their unique products effectively. With multiple documentations the pertinent information of Injective is fragmented, diluting their impact.
Verified Contract:
Injective’s smart contracts are integral to its operation, providing the framework for decentralised trading. The verification of these contracts is crucial for ensuring transparency and trust in the protocol. Verified contracts mean that the code is open for scrutiny, allowing users and developers to verify its integrity and functionality, which is a vital aspect of any DeFi project. However, the data provided by CoinMarketCap and CoinGecko is inaccurate, likely due to the APIs not being updated since deflationary measures were introduced in 2021. The longer the APIs stay as they are, the more inaccurate critical data points such as Circulating Supply become.
Security Audit:
Whilst the original security audit Injective had completed in 2021 yielded positive results, they’ve not been updated despite the wide range of products released since then. All Cosmos chains have security funding as part of the Cosmos SDK revenue distribution model. So whilst default security measures are enhanced compared to chains built on Ethereum, independent validation of security is always a good idea. Coupled with this, there is apparent centralisation risk of the Validators to-date with the top 10 controlling over 50%. Albeit these Validators are commercial entities and ecosystem partners, not retail individual users, marking them as mor reliable than typical Validators. Despite this, we recommend Injective use creative measures to encourage delegators to use smaller validators, elevating the security of the network with greater decentralisation.
Team Skillset:
Albert Chon and Eric Chen are recognised as innovative leaders in the tech industry, especially in the blockchain and crypto domains. Their journey from academia to the creation of Injective Labs showcases their ability to identify systemic issues and develop transformative solutions.
Christopher Choi’s addition to the Injective team has brought a significant boost in product development and strategy execution. His diverse background, encompassing finance, technology, and entrepreneurship, has contributed to the rapid development and success of Injective’s suite of DeFi services.
Jenna Peterson, leading the Open DeFi Foundation, brings a wealth of experience in IT and finance. Her leadership and strategic oversight of the Treasury have been instrumental in Injective’s financial growth, although greater transparency around the foundation’s operations would enhance public understanding and trust.
KYC Audit:
A KYC (Know Your Customer) audit is essential for a DeFi project to ensure compliance with regulatory standards and to instil trust among users. It involves verifying the identity of the project’s team members and ensuring that they meet the necessary legal and ethical standards. For Injective, a thorough KYC audit would add an extra layer of credibility and security.
Doxxed Leadership:
Having doxxed (publicly known) leadership in a DeFi project like Injective is vital for transparency and trust. It means that the project leaders are not anonymous and are accountable for the project’s direction and operations. This transparency is key in the DeFi space, where trust is a major factor in user adoption and investment.
Tokenomics:
In the Injective Ecosystem, the native cryptocurrency $INJ plays a multifaceted role, enhancing both platform utility and user engagement. It is integral to protocol governance, allowing token holders to influence the platform’s direction and policies through participation in crucial governance decisions. $INJ also finds its utility in unique token basket auctions, where holders can bid on diverse token collections, and it is instrumental in capturing a portion of the protocol fees, adding to its intrinsic value. Furthermore, $INJ is used for transaction fees on Injective applications and for incentivising developers, ensuring continuous innovation within the ecosystem.
The revenue distribution strategy of Injective is carefully structured to foster a sustainable and growth-oriented ecosystem. A significant 60% of trading fees are allocated towards purchasing $INJ from the open market, which are then auctioned weekly. This mechanism is pivotal in maintaining a high burn rate, thereby reducing the total supply, and increasing token scarcity. The remaining 40% of trading fees are channelled as rewards to various DeFi applications built on Injective, incentivising development and enhancement in both user interface and experience. Moreover, the upgradeable contract system of Injective is governed by a DAO consensus mechanism, ensuring community-driven and secure updates.
Injective’s tokenomics also encompass an effective deflationary mechanism, key to its long-term growth. The platform has implemented multiple burning methods, including weekly auctions and governance proposal deposits, with the recent addition of burning revenue shares from Space.ID Injective domains. These mechanisms have led to Injective having one of the highest burn rates in the crypto space, with over $175 million worth of $INJ burned since February 2022. The Total Value Locked (TVL) in Injective is transparent and robust, further supported by a variable emission rate and a healthy reward rate for staking. This approach, combined with consistent rewards and incentives for validators and stakeholders, underscores Injective’s commitment to long-term sustainability and active ecosystem participation.
Marketing:
Injective has cultivated a strong and thriving community, underpinned by effective branding and product development. The foundation laid in the early years has yielded significant benefits, turning their community and marketing efforts into a self-sustaining ecosystem. However, there’s always room for improvement, and establishing a YouTube channel could be a valuable addition to their marketing arsenal.
Ecosystem:
The Injective ecosystem encompasses a range of services and partnerships that enhance its functionality and appeal. This includes integrations with various decentralised exchanges, support for multiple blockchains, and collaborations with other DeFi projects. The strength of its ecosystem lies in its ability to offer a seamless, interoperable, and diverse range of DeFi services, making it an attractive platform for traders, developers, and investors.
Roadmap:
Injective Labs’ current lack of a published roadmap for the upcoming period stands out in the fast-paced and competitive DeFi sector. This absence is particularly notable given Injective’s status as an established entity in the blockchain space, having achieved significant milestones. While it may be nearing the pinnacle of its current developmental phase, which could explain the delay in outlining new targets, the importance of continuous innovation and growth in the technology-driven DeFi market cannot be understated. Historical trends in the sector emphasize the necessity for constant evolution to maintain relevance and competitiveness. Consequently, the absence of a roadmap for 2024 or beyond is a notable gap in Injective’s current strategic communication. However, this assessment is subject to change, as there are indications that the roadmap is a work-in-progress and may soon provide the much-needed insight into Injective’s future plans and developmental milestones.
Summary:
Injective emerges as a notable innovator in the DeFi landscape, operating as a Layer1 chain and ecosystem built on Cosmos SDK and designed for decentralised peer-to-peer trading. Its architecture uniquely leverages the Cosmos ecosystem’s strengths, offering high throughput and low costs, while maintaining compatibility with Ethereum and Solana. However, despite its advanced features like token auctions and derivative insurance funds, there’s a noticeable underutilisation of these products among its active users, indicating significant growth potential. The whitepaper, while comprehensive, lacks depth in guiding users to effectively leverage these unique offerings, and the fragmented documentation dilutes the impact of Injective’s innovations.
Injective’s tokenomics play a multifaceted role, with $INJ integral to governance, transaction fees, and incentivising developers, fostering continuous innovation. The revenue distribution strategy, with a significant portion allocated to purchasing and auctioning $INJ, supports a sustainable ecosystem and a high burn rate, enhancing token scarcity. However, the platform’s security audit is outdated, and despite the inherent security benefits from Cosmos SDK, there’s a noticeable centralisation risk in its validator network. Encouraging the use of smaller validators could enhance network security through greater decentralisation. The team’s diverse skill set in blockchain, and finance bodes well for the project’s success, and a thorough KYC audit adds an extra layer of credibility.
The ecosystem’s strength lies in its seamless, interoperable range of DeFi services, enhanced by partnerships and support for multiple blockchains. Marketing efforts have built a self-sustaining community, though avenues like YouTube could further bolster their reach. A significant concern is the current absence of a forward-looking roadmap, a gap in Injective’s strategic communication in the dynamic DeFi sector. This lack of a roadmap could impact the project’s perceived commitment to innovation and growth, although there are indications that a roadmap is in development, which could soon provide clarity on Injective’s future direction and milestones.
Overall, Injective has achieved major milestones to earn its place amongst crypto’s elite ‘blue-chip’ offerings, but our analysis clearly shows there are various areas of improvements they can develop, which bodes well for Injective’s potential growth heading into the next bull market and beyond.
Comprehensive Injective Guide & Assessment
To gain a comprehensive understanding of Injective and its multifaceted ecosystem, we highly recommend accessing the complete 65 page version of our report available to our premium community on Discord.
This detailed document not only elaborates on the key areas discussed in this summary but also offers specific guidance on how to engage with the various facets of Injective’s platform. Whether you’re a trader, investor, or enthusiast in the DeFi space, the report provides invaluable insights into navigating and maximising the benefits of Injective’s ecosystem.
Particularly for those interested in airdrops and other incentives, the full report is an indispensable resource. It delves into the strategic aspects of participating in these events, ensuring that readers are well-equipped to make the most of the opportunities presented by Injective. By reading the full report, you will be positioned to better understand the intricacies of the platform, the potential rewards, and how to effectively leverage the unique features Injective offers.
In essence, the complete report is not just an expansion of the topics covered in this ‘Lite’ summary, but a key to unlocking a deeper and more nuanced understanding of Injective’s innovative DeFi ecosystem. It is tailored to provide both breadth and depth of knowledge, catering to a wide range of interests within the Injective community and beyond.
Recommended Actions for Injective
- Update the Injective Hub to include:
- Current emission rate as a percentage (and the quantity of tokens minted that epoch).
- Current combined burn rate for the previous week, include both the quantity of tokens and their percentage of circulating supply.
- An historical archive of weekly burns in total, not just for auction burns.
- A Net counter showing the percentage of inflation or deflation, balanced against each other, dependant on emissions vs burning.
- The current percentage of circulating supply against the total supply, automatically updated weekly.
- Update APIs on CoinMarketCap and CoinGecko to accurately reflect crucial data, such as circulating supply and total supply post-burning and post-emissions.
- Release a Roadmap for 2024 (and ideally beyond).
- Updated independent Smart Contract Security Audits for the entire suite of products.
- Offer Bug Bounty Scheme from Treasury funding.
- Implement incentives for greater decentralisation of the network.
- Greater transparency of the Open DeFi Foundation.
- Who are the Foundation members?
- How is the Treasury secured?
- What is the process of funding authorisation and release?
- Complete internal audit of all products and services, then update the whitepaper appropriately. This should be an ongoing process.
- Update Whitepaper on GitBook, incorporate information from Notion, include links to original version of whitepapers.
- Provide more depth of the DeFi products and how they work, including real world example explainers.
- Native support for Injective on Coinbase.
- Expand into Base, Linea, & Telos EVM networks.
- Create a YouTube channel and populate it with educational and tutorial content.
- Injective already uses competing cross-chain architecture with Axelar and Wormhole, so why not explore a LayerZero integration?
Assessment Rating
Determining our final grading involves a scoring system that meticulously recognises the crucial aspects of a blockchain project’s success and security.
In this method, a PASS symbolises full adherence to our assessment criteria granting full points.
A TBI [To Be Improved] or NR [Not Required] secures ½ of the available points, illustrating areas requiring improvement or those not fitting the PASS or FAIL categories.
A FAIL indicates an urgent need for rectification and action, and failing to garner any points.
We place a heightened focus on Security Audit, Team Skillset, and Tokenomics — all integral pillars that form the bedrock of a project’s success. We award double the potential points for these areas, emphasising their immense significance. Despite this preferential scoring, a FAIL in these areas will still not accrue any points, reinforcing the uncompromising standards we uphold in these critical components.
FINAL GRADE RATING: [4.0*]
Key Links and Information Sources
Please click on any of the URL links below for more information, or access to the various platforms of Injective.
· Whitepapers:
o Whitepaper v2 (Notion) URL Link
o Binance Launchpad Research Paper URL Link
· Coinmarketcap (CMC) URL Link
· The Open DeFi Foundation URL Link
· Injective Ecosystem URL Link
· Injective Testnet Faucet URL Link
· Injective Testnet Status URL Link
· Injective Governance URL Link
· Injective Insurance Fund URL Link
· Social Media Linktr.ee URL Link
· X (formerly known as Twitter) URL Link
Contact Us
At The Birb Nest (TBN), we are committed to providing our members with the most comprehensive and insightful investment resources. If you have found the insights in this report valuable and are keen to deepen your understanding of the investment landscape, we invite you to explore a range of opportunities to further enhance your investment journey.
- Join Our Discord Community: For exclusive access to our extensive library of Fundamental Analysis content, including airdrop guides, top picks for promising altcoins, and over 100 other assessment reports of small-cap and blue-chip crypto projects, visit The Birb Nest Discord.
- Explore Our Technical Analysis Services: The Birb Nest is renowned for its market-leading Technical Analysis. Discover our range of services to suit your needs:
- Calls Only: For those seeking focused trading signals.
- Birbicator Pro: Our advanced indicator suite for traders.
- Exclusive Nest Club: For premium, personalised technical analysis guidance.
- Private Mentoring: One-on-one coaching with our expert team.
- Stay Informed and Engaged:
- YouTube: Subscribe to The Birb Nest YouTube Channel for free videos on advanced trading techniques and market insights.
- Twitter: Follow us on Twitter for live market updates and exclusive opportunities.
- LinkedIn: Get to know our team and stay updated on company news by visiting The Birb Nest on LinkedIn.
- Learn More About Us: For a comprehensive overview of all our services and the latest updates, visit The Birb Nest Homepage.
We are here to support your crypto journey every step of the way. For any inquiries or further information, do not hesitate to reach out to us. Let’s soar together in the world of trading & investing, combining both disciplines to maximise your potential!
