Since the creation of blockchain technology, the industry characteristically goes hand in hand with cryptocurrencies as well as exchanges. Major exchanges such as Binance, Coinbase and Huobi are well-known across the cryptocurrency space; In fact, it is arguable that major exchanges are better known and more popular than some leading blockchain projects — which is justifiable.
Exchanges are important part of the cryptocurrency space since they provide a very crucial functionality to the market — access. Exchanges unlock the access for people to onboard cryptocurrencies. Cryptocurrency exchanges are a requirement to enter into the crypto world. This is because exchanges are designed to serve as gateways into market so users can trade variety digital assets. Beside the provision of access by crypto world, majority of big exchanges have complemented the features with more services that bolster their traffic and attract userbase. However, while crypto exchanges have become very lucrative such that they design attractive user interface, the kind of services and user experience offered to their users is a little below standard. It is important that crypto exchanges learn to adopt a more appealing, customer-focused and intuitive user experience to attract more masses.
Exchange features that facilitate the DeFi movement
The hottest trend currently in the cryptocurrency world is decentralised finance (DeFi). It is reported by that the market capitalisation of DeFi tokens and coins is in excess of $1billion. This is huge for a market that is getting so much adoption on daily basis with even institutional enterprises coming onboard. The market holds the potential for high returns even for exchanges that offer DeFi oriented features such as synthetic, derivatives and leverage trading for users. These are the services that Injective Protocol is focused on offering the crypto community.
Injective Protocol has grown its product portfolio to offer the traders across the world the ability to make leveraged trades on both crypto and fiat together on one platform. although the exchange market segment is competitive, Injective Protocol is one of the few platforms to offer the following features;
- Cryptocurrency and fiat contract for difference (CFDs),
- Creation and trading of arbitrary synthetic/derivative market with up to 1:500 leverage on the Crypto trades.
- A completely decentralised peer-to-peer protocol
Injective protocol Vs market
Injective Protocol against the market (Completion analysis)
BitMEX is one of the most popular crypto exchanges that is lauded for providing leveraged trading for its users. However, BitMEX protocol is vastly different in terms of margin, fees and leverage. Which exchange offers the best value? Let’s review the details.
Against BitMEX
Currently, only very few exchanges provide margin to traders, and most of them can only offer a maximum w of 1:10 or even below. BitMEX had been the only exception in the market as its protocol can support a 100x leverage on derivatives
The high leverage has allow BitMEX to monopolise the market and even get away with low support mechanism and poor service for the traders.
Despite providing only derivatives on its exchange, BitMEX offers far higher leverage than any spot exchange available, it has helped the exchange attract users on large scale. The exchange has rode on this status and its insurance fund has increased The reason is because BitMEX continues to liquidate positions even before their true point only in an effort to boost the size of its insurance fund.
Injective protocol is not only providing cryptocurrency traders a platform to trade Crypto assets at 5 times the maximum leverage available at BitMEX, the trade system of Injective Protocol is built with a native protocol that is designed to protect users’ from negative account balances. Thus, Injective protocol will enable users to trade with far greater margin than what's available on BitMEX.
Beyond dYdX
dYdX is a popular DeFi solution provider. However their protocol offer margin trading but have to borrow money to establish the leverage position that they provide. The platform also has a centralised orderbooks with a very slow matching and settlement process. They do not have a token system which essentially transfer all the fees, earnings and profit to the company.
Injective protocol has come to offer real competition as the system is completely decentralised — censor resistance. Injective protocol has a fully fledged and transparent orderbook with a holistic go-to-market approach instead of protocol heavy.
Against IDEX
IDEX is still lauded as one of the most popular decentralised exchanges out there. It's rather old but offer a true experience of DEX. The system is basic and fast — providing deposit, trade, and withdraw functionalities. However, IDEX is basic and does not offer any form of DeFi oriented features other than spot trading. Also the fast speed is due to the centralised nature of the protocol the exchange uses. Injective protocol is a king in the DEX arena — with a huge improvement on the offerings of IDEX and further DeFi features that IDEX lacks.
Vs Synthetix
Arguably the most popular DeFi project out there. The protocol adopted uses oracle to enable people mint derivatives. However, theinyed derivatives are backed by collateral which is either the project's own token or a stablecoin. The Montessori derivatives on Synthetix can easily be traded as a normal ERC-20 token.
One of the major problems with the Oracle used by synthetic is that, minted tokens become almost worthless if they are not well backed by collateral. The offerings of Injective protocol is far advanced than what Synthetix is already providing.
Against Market protocol (MCDEX)
Market protocol is another prospective DeFi project aiming for the same market as injective protocol. MCDEX plans to compete with Injective protocol in the derivatives and futures market segment. However, Injective protocol is way ahead of this competition since MCDEX is designed to support only capped derivatives — this is not so good because the cap put a limit on how much gains a trader can make from a position.
Furthermore, the leverage protocol used by MCDEX is inverse. This means that; the more leverage a trader uses, the more the ceiling in is gains narrow. Another very notable disadvantage of MCDEX is that the Oracle is completely centralised. It doesn't seem like the exchange will have a solution to this problem anytime soon.
Beyond FutureSwap
FutureSwap is very similar to Uniswap. And just like Uniswap the instant exchange uses an AMM for its underlying pool system. FutureSwap does not offer real derivatives as people actually believe. Itvwas a funding rate that is closer to interest rate than actual perpetual swap rate.
Transactional speed is a very important component of any trading platform. FutureSwap is particularly lacking in this aspect since they operate an on-chain protocol and is slow. Injective protocol on the other hand boast of an incredible speed. Which offer an upgrade to FutureSwap. The platform is practically a margin trading exchange because whenever a leveraged position is established, the notional value is allocated from the pool, which effectively means borrowing it. Injective protocol has a faster system and can launch a faster market.
Injective Protocol Market Thesis
High demand for an exchange offering that emphasizes:
● Market Participation & Censorship-Resistant Access (in particular, Asia-Pacific)
Traditional centralised finance such as bonds, forex and indices are all operated under censorships. Which limit the access of users to certain features or how the platform can be utilised. Blockchain technology is lauded for providing mediums and platforms where people can do things without being censored. Injective protocol as a next generation layer-2 decentralised exchange aims to provide a decentralised finance (DeFi) experience to the users without any kind of restriction or censorship.
● Custodial Risk
Injective protocol is providing DeFi features such as leveraged margin/future trading, derivatives and Synths. These kind of trade comes with huge risk to user assets. The exchange will provide a costodiap risk management tools that will help users make safe trades
● Product Offering
Injective protocol has a wide range of DeFi oriented products tailored to give users the best experience.
● Speed/UX
The best exchanges such as Binance, Huobi and KuCoin are successful because of the kind of transactional speed they offer on their platforms. Most of the existing DeFi providers have very slow protocols which put traders at a disadvantage because they could miss some position due to slow system. One of the best features of Injective protocol is it's speed. A completely decentralised Oracle protocol that can process high transactions per second. Keeping the traders in the gains all the time.
Beyond the speed of a crypto exchange, the user experience is equally important. Injective protocol is designed to offer the best kind of experience to its users.
A Better system
Another major problem with BitMEX contracts is that, despite providing a highly time-sensitive trade markets, its system often fails to handle the amount of in-bound trade requests; hence fails to quickly fulfill trade placements or cancellations. Some of the traders who have had to wait for the optimal entry and exit points fail to claim their profits simply because BitMEX is unable to process a high traffic of traders.
Read on: How Injective protocol ushers new interest into decentralised finance
Injective protocol has a robust and strong back-end architecture that can easily handle the vast amount of orders that would be created by the users. Traders are able to strike positions and cancel and make new orders without any experiencing issues of missed opportunities. Since trading of digital derivatives such as CFDs requires some amount of patience, Injective protocol has built a system that makes the experience worth the wait.
Injective protocol has well optimised features that allow users to smoothly execute DeFi
Since Injective protocol is several tiers ahead of existing cryptocurrency spot and derivative exchanges, it is tailored to offer traders with all the necessary tools and features they would need to execute optimal analysis to enter their trade positions.
- Crypto market News
Injective protocol platform has designed a native stream of crypto market news that ensures traders are kept up to speed with the trends happening in the industry without ever having to leave the platform.
- Market Sentiment Data
Sentiments drive the crypto market just as much as news— maybe even more than news. Hence, Injective Problem provides traders with access to market sentiments so that they'd be able to strategize their entries not only based on news, but also aggregate sentiment across the crypto space
- Tools
Raw data alone isn’t enough for traders to build the r strategies. They also need to create charts that match their trading strategies. Injective protocol provides an in-built solution for charting where users can perform technical analysis before making trade decisions
- Liquidity
Beside general volatility of the crypto market, liquidity is there major problem that digital assets on exchanges suffer. Major DEXs like Binance DEX, Bancor and IDEX suffers liquidity problems. However, by providing deep liquidity for assets, the problem can easily be solved. Injective protocol is built to provide high liquidity for the users to enjoy trading.
- Lending
Injective protocol will integrate a compelling staking structure for them to receive low-risk return. Injective protocol is building a sidechains on cosmos, however the team aim to integrate other chains such as Binance chain (and it's token protocol BEP-2) to its protocol
While the above features seem great, Injective protocol has integrated some protocols that facilitate liquidity in asset pools. The exchange has also implemented deposits of cryptocurrencies so that traders can maintain the anonymity of trading on DEX.
Wrap Up
In conclusion, it is important to note that many exchange users and traders venture in other markets too, especially when leverage trading is on the rise and they have the opportunity to trade synthetics and derivatives at a leveraged positions of around 1:500 rate. Injective Protocol accommodates the needs of exchange users who desire a diverse menu of trading options. Hence, the platform doesn't only provide CFDs for a variety of Crypto asst pairs, it also offer traders the opportunity to take leveraged positions in synthetics and derivatives markets.
Injective Protocol is an example of how cryptocurrency exchanges can integrate features and tools that provide decentralised finance (DeFi) experience for users. The project disrupts BitMEX’s monopoly on the derivative market also providing far greater leverage on a much wider range of digital assets, while keeping a powerful trade engine that is enhanced by a set of high-utility trade support features and tools.
Cryptocurrency exchanges need to become more conscious of the market. If there is any new service service offered by their competitors that is favored by the market, they should also adopt it — this has been the only reason why Binance has become so successful. And while most existing exchanges have failed to embrace change or adopt the features that are loved by the market, Injective protocol has stepped up to integrate the most important and well-accepted features of all existing crypto exchanges into its own platform to form a multi-layered and multipurpose exchange that will pioneer the DeFi market.