Back in December last year Injective Protocol launched the testnet for its DeFi protocols for cross-chain derivatives trading, with backing from giant crypto exchange Binance. It has now raised $10 million in a “party” funding round. Participating in the round was Pantera Capital, BlockTower, Hashed, Cadenza Ventures (backed by 100x Group), CMS and QCP Capital. Billionaire NBA team owner and Shark Tank judge Mark Cuban has also made a strategic investment into Injective, according to my sources.
Injective’s main competitors (centralized and decentralized exchanges) include CME Group, BitMEX, LedgerX and OKEx, among others. The advantage of the approach used by Injective (it says) combines the advantages of decentralized exchanges: resistance to front running, scams and hacks, with the speed, low transaction fees and no gas fees associated with centralized platforms. Developers also can create their own derivatives and markets to trade.
Eric Chen, CEO of Injective Protocol said in a statement: “Legacy institutions and practices create a number of artificial delays and middlemen that prevent innovation in the financial markets ecosystem. At Injective, our goal is to enable an unparalleled decentralized trading experience, whereby retail traders globally can for the first time access limitless markets without the typical predatory fees and slow transaction times”.
The background to this is that Injective is essentially trying to build a decentralized competitor to Robinhood, because their platform allows the creation of synthetic tokens that represent stock in public companies like Apple and indices like S&P 500. This means meaning trading can happen 24/7 with instant finalization, as DeFi promises.
“Why do I invest in Injective: the whole stop out because of the capital requirements, Robinhood didn’t do it on purpose to hurt traders, they just didn’t have enough equity and they would have gone bankrupt because they had too many customers. But if you’re doing it in a decentralized manner every investor gets to see how much Injective has of all of this, there’s no hiding it and that creates an opportunity”, said Mark Cuban on his investment in Injective.
The potential here is that brokers wouldn’t be able to block trades on certain stocks, as they did with GameStop, as pointed out by Cuban above.
Injective’s team, drawn from Stanford University, came up with its project in 2018, when Chen was working at hedge funds and worked in cryptographic research at a blockchain-focused fund.