How exactly does the Injective Burn Auction function? 🤔

It’s evident that Injective boasts one of the most substantial token burning rates in the entire crypto industry, with a specific portion of all exchange fees being burned on a weekly basis through the auction interface. But what’s the actual process behind it?

Each week, 60% of the exchange fees collected within the protocol will be subjected to a buyback and burn process, overseen by a community-led auction. This arrangement was established by the Injective community as a key element of the canonical mainnet rollout. Let’s delve into the process with this illustration;

Fees collected on Injective are funneled into an auction. For instance, if there’s a pool of $200, consisting of $100 in ETH and $100 in WBTC:

Users can participate in the auction by placing bids using INJ. For instance, User 1 bids $180 in INJ, and User 2 bids $190 in INJ. User 2 secures the bid with $190, effectively obtaining a $200 asset basket for a reduced cost of $190, potentially creating arbitrage opportunities.

The $190 paid in INJ will be promptly burned.

A new auction cycle will commence right after the burn process is finalized.

No you’re conversant with the process right? Stay glued for more!📌