An exploration into Injective, an L1 built with the Cosmos SDK.

Greythorn Asset Management
8 min readJul 31, 2023


Injective is a Layer 1 blockchain built upon the Cosmos network. Its architecture is designed to reduce congestion and utilise a gas-free model for users to trade. All market maker and taker fees are to be paid with INJ, its native token.

Injective Bridge allows users to easily transfer their tokens from Ethereum to the Injective chain. This helps create a link between Cosmos and Ethereum.

Injective does not use Automated Market Makers. Instead, it uses the order book model found on centralised exchanges to reduce latency. This is in line with its mission to bring together scalability and decentralisation to the cryptocurrency derivatives market.

How does it work?

There are several financial applications already offered through Injective, including:
1. Auctions: INJ token holders may bid on baskets of tokens. Users can hence receive/sell at fairer prices based on the demand for the group of assets.

Figure 1. Auctions on Injective, Source: Injective Auction

2. DEX: Exchange applications built upon Injective (such as Helix), where users can trade both spot and derivative products.

Injective also contains a built-in solution to eliminate trade front-running called a Trade Execution Coordinator, which organizes delays to prevent new orders from being able to be placed ahead of old ones.

3. Insurance: Watch derivative market is required to have an insurance fund, and underwriters in creating these. Users can put forth the amount that they would like to underwrite and request redemption for the insurance product.

Figure 2. Insurance Markets on Injective, Source: Injective Insurance Fund

4. Oracle Feeds

5. Peggy: The Injective Bridge. When it was first released, INJ experienced a >100% gain in its trading

Figure 3. Peggy, Source: Injective Bridge

Token Summary

  • Token: $INJ
  • Market Cap: ~$661m
  • FDV: ~$790

Tokenomics (Initial)

Figure 5: Injective Tokenomics, Source: Greythorn Research Team, Data: Coin98

~80% of the token supply has already been unlocked, with the following upcoming vesting events:

  • August 21st 2023: 3.02% of supply.
  • January 21st 2024: 3.67% of supply.

Project Roadmap

2023 Q3:

  • Multi VM Chains
  • Volan Upgrade

2023 Q4:

  • Injective Orbital Chains

2024 Q1:

  • Mesh Chain Network
  • Carcosa Upgrade

Bullish Fundamentals

  1. Automated Market Makers (AMMs) are usually preferred over traditional order books for reasons of decentralisation, however, order books can be preferred as they reduce slippage for larger orders.
    Injective uses these order books while still offering decentralisation, which is likely to hold a degree of attractiveness in a market that is oversaturated with AMMs and less so with order book DEXs.D
  2. Growing user base.
Figure 6: Total Injective Users, Source: @mzs8 Dune Analytics
Figure 7: Total Addresses, Source: @mzs8 Dune Analytics
  1. LT Deflation: As a deflationary mechanism, Injective burns 60% of all exchange fees every week in the form of INJ tokens.
  2. Its solutions around preventing trade front-running may assist in a more welcoming regulatory stance for its exchange products.

Bearish Fundamentals

  1. Injective has seen a drop since late 2020 in the amount of weekly active users. Its growth this year does not necessarily indicate that the number of users will continue to grow as only around half of the users are old, suggesting that Injective potentially may have difficulty retaining users.
Figure 8: Weekly Active Users, Source: @scaneth Dune Analytics
  1. INJ inflation was targeted to be 7%, with a slow decrease to 2% over time. However, its current supply inflation is 23.08%. This appears to be due to significant inflation in the past few months, with the market cap increasing at a significantly higher rate than the price. This follows the fact that the protocol unlocked 3–4% of the total supply during three separate events on the 21st of January, February, and May (~9.71% in total). This may potentially indicate that the increased amount of addresses with INJ was simply due to an increased supply of INJ, which may not be sustainable from a user base perspective.
  2. Within the token distribution, there is only 9% allocated for public sale. The rest of the allocation is generally to reward ‘insiders’, including contributors, team members, and private investors. This may that the allocation of the token is quite centralised.

Closing Remarks

Injective offers a range of financial applications, including auctions, DEX trading, insurance markets, and an innovative solution to prevent trade front-running through the Trade Execution Coordinator.

While the project shows bullish fundamentals such as a growing user base and LT deflation through fee burning, it also faces challenges. The drop in weekly active users since late 2020 raises concerns about user retention. Additionally, the current supply inflation is higher than initially targeted, and the token distribution may be perceived as centralised.

Looking ahead, Injective has a promising roadmap, with planned upgrades and multi-chain implementations in the coming quarters. As the platform evolves, it will be crucial to address the challenges while leveraging its unique offerings to solidify its position in the competitive DeFi space.


Important notice and disclaimer

This presentation has been prepared by Greythorn Asset Management Pty Ltd (ABN 96 621 995 659) (Greythorn). The information in this presentation should be regarded as general information only rather than investment advice and financial advice. It is not an advertisement nor is it a solicitation or an offer to buy or sell any financial instruments or to participate in any particular trading strategy. In preparing this document Greythorn did not take into account the investment objectives, financial circumstance or particular needs of any recipient who receives or reads it. Before making any investment decisions, recipients of this presentation should consider their own personal circumstances and seek professional advice from their accountant, lawyer or other professional adviser. This presentation contains statements, opinions, projections, forecasts and other material (forward-looking statements), based on various assumptions. Greythorn is not obliged to update the information. Those assumptions may or may not prove to be correct. None of Greythorn, its officers, employees, agents, advisers or any other person named in this presentation makes any representation as to the accuracy or likelihood of fulfillment of any forward-looking statements or any of the assumptions upon which they are based. Greythorn and its officers, employees, agents and advisers give no warranty, representation or guarantee as to the accuracy, completeness or reliability of the information contained in this presentation. None of Greythorn and its officers, employees, agents and advisers accept, to the extent permitted by law, responsibility for any loss, claim, damages, costs or expenses arising out of, or in connection with, the information contained in this presentation. This presentation is the property of Greythorn. By receiving this presentation, the recipient agrees to keep its content confidential and agrees not to copy, supply, disseminate or disclose any information in relation to its content without written consent.



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