$INJ TOKENOMICS HITS A NEW MILESTONE: Have a look at all You Need to Know!
At the Token Generation Event (TGE) on October 21, 2020, INJ had an initial supply of 100 million. This supply was strategically allocated across various categories to ensure balanced growth and community engagement.
By January 2024, the entire initial supply of $INJ was 100% unlocked and circulating, marking a significant milestone.
INJ, the native asset of Injective, is revolutionizing tokenomics with dynamic supply mechanisms and a strategic token burn system. “INJ: A Programmable Token Economy for Deflationary Acceleration” is a comprehensive paper that dives deep into INJ’s economic design, exploring its utilities, supply mechanics, and token burn system. Most notably, the paper illustrates how the recent INJ 3.0 upgrade significantly enhances the token economic design, driving deflationary acceleration and propelling a thriving Web3 ecosystem.
This article breaks down the paper’s key points, providing a snapshot of how INJ stands out in DeFi.
What is INJ?
INJ serves as the native asset of Injective, facilitating various operations within the network. It acts as the default asset to facilitate the purchase and sale of goods and services between parties on the blockchain (transaction fees, buying/selling NFTs, collateral, etc.). Additionally, INJ secures the network through staking, where validators and delegators earn rewards in return for maintaining network security and producing blocks. Lastly, INJ is utilized for community-led governance across all parameters of the chain, allowing for a decentralized environment in which all stakers have a voice in the evolution of Injective.
Supply Dynamics
Injective leverages its mint module to dynamically adjust supply parameters based on the network’s bonded-stake ratio. This mechanism, known as the Moving Change Rate Mechanism, is designed to engineer network activity that is responsive and adaptable, ensuring that the supply aligns with demand and network security needs. When more INJ is minted per block as the block reward, participants are incentivized to stake more INJ to benefit from increased rewards. Conversely, when the block reward decreases, stakers are incentivized to unbond staked INJ due to decreased rewards. This adaptive framework enables programmatic control based on objective economic indicators as inputs, promoting a balanced and stable network by constantly adjusting supply rates to meet staking targets.
$INJ is Highly Deflationary:
Injective employs a novel Burn Auction system to reduce the total supply of INJ. This deflationary mechanism operates through weekly auctions where participants bid on a basket of tokens using INJ. The highest bid wins the basket, and the winning bid amount of INJ is burned, effectively reducing the supply. The Burn Auction is powered by the exchange and auction modules. The exchange module facilitates shared liquidity across the network, generating revenue from transaction fees and other activities. The exchange module revenue share is structured to allocate 60% of revenue to the Burn Auction, with the remaining 40% retained by applications. Recent Burn Auction upgrades expanded this, allowing universal participation and uncapped contribution percentages from dApps. The auction module manages the entire process, from collecting tokens to coordinating bids and burning the winning INJ amount. This system not only supports deflation but also incentivizes active participation within the ecosystem.
Dynamic Economy in DeFi:
The synergy between dynamic supply adjustments and the Burn Auction creates a robust economic architecture for INJ. The mint module’s ability to adjust supply rates in real-time, combined with the regular burning of INJ through auctions, ensures a controlled and deflationary token supply. This architecture fosters economic stability by balancing supply and demand while promoting long-term network security and value appreciation. As the ecosystem grows, the Burn Auction’s impact scales, continually reinforcing the deflationary nature of INJ and supporting sustainable network growth, i.e., Deflationary Acceleration.
Other Notable Events:
Completion of Genesis Supply Unlock
The INJ token generation event (TGE) occurred on October 21, 2020, with an initial supply of 100,000,000 INJ. The completion of the vesting schedule in January 2024 marked a significant milestone in INJ’s lifecycle, ensuring that all planned allocations were distributed according to the predefined schedule. This full unlock allowed for the creation of a truly decentralized ecosystem in which network participation is fully open and accessible to all.
Burn Auction Milestones
Enhancements to the Burn Auction allowed any application and individual users to participate, expanding beyond just applications using the exchange module. This broadened participation boosted the auction’s effectiveness and scalability.
Injective is set to hit a major milestone this week, achieving the mark of 6,000,000 INJ burned, equating to over $176,000,000.
Gas Compression
Gas optimization reduced transaction fees to approximately $0.0003, equating to an annual gas savings of over $239,000,000 for Injective users.
INJ 3.0 Upgrades
The introduction of INJ 3.0 marked a significant advancement in the tokenomics of Injective, focusing on enhancing its deflationary properties and optimizing the economic structure.
Mint Module Parameter Adjustments
INJ 3.0 involved crucial changes to the mint module parameters to support a deflationary economic model. The primary adjustments include:
Increased Supply Rate Change: The Supply Rate Change parameter was raised from 10% to 50%, accelerating the responsiveness of supply adjustments based on the bonded-stake ratio.
Scheduled Decreases in Supply Rate Bounds: The upper and lower bounds of the Supply Rate decrease quarterly over the next two years. The lower bound will decrease by 25%, from 5% to 4%, and the upper bound will decrease by 30%, from 10% to 7%. This schedule aims to gradually reduce the overall supply rate, increasing INJ’s rate of deflation by a factor of 400%.
Deflationary Effects:
The INJ 3.0 upgrade significantly enhances the deflationary properties of the INJ token through the following mechanisms:
-Reduced Minting: By tightening the supply rate bounds and increasing the rate of adjustment, the overall supply of newly minted INJ decreases, reducing inflationary pressure.
-Increased Burn Auction Size: As the ecosystem grows, the size of each Burn Auction is set to increase. This means more INJ is burned regularly, continuously reducing the supply.
The dynamic interplay between the reduced minting and increased Burn Auction size creates a feedback loop that perpetuates deflationary acceleration. This mechanism allows for the total supply of INJ to decrease over time, promoting long-term stability and horizontal scalability within the Injective ecosystem.
Injective’s innovative approach to tokenomics, characterized by dynamic supply control and strategic token burns, exemplifies a robust model for managing the economics of blockchain networks. The introduction of INJ 3.0 has significantly enhanced the deflationary properties of the INJ token, ensuring a controlled and continuously decreasing supply. This comprehensive system supports ecosystem growth and promotes active community engagement. By carefully balancing supply and demand, Injective maintains long-term stability and positions itself as a resilient and vital player in the blockchain industry.
Injective is a lightning fast interoperable layer one blockchain optimized for building the premier Web3 finance applications. Injective provides developers with powerful plug-and-play modules for creating unmatched dApps. INJ is the native asset that powers Injective and its rapidly growing ecosystem. Injective is incubated by Binance and is backed by prominent investors such as Jump Crypto, Pantera and Mark Cuban.
FOR MORE INFO:
Website: https://injective.com/
Injective Bridge: https://hub.injective.network/bridge/
Ecosystem dApps: https://injective.com/ecosystem
Stake $INJ: https://hub.injective.network/staking
All Official Social Channels: https://linktr.ee/injective
Testnet Faucet: https://testnet.faucet.injective.network/
How to create Injective Wallet: https://blog.injective.com/how-to-create-an-injective-wallet-2/
