INJ 3.0: Injective Tokenomics UPGRADE

Introduction

Since its inception, Injective has rapidly ascended to the forefront of blockchain finance, powered by its native token, INJ. This token serves a multitude of functions within the Injective ecosystem, including staking for network security and governance. Notably, Injective introduced token burn auctions upon its mainnet launch, reducing the INJ supply weekly. The evolution continued with INJ 2.0, which expanded the token burn auctions to any dApp on the network, significantly increasing the amount of INJ burned. To date, nearly 5.9 million INJ has been burned, totaling approximately $190 million.

Now, in pursuit of creating the ultimate version of INJ, a proposal for INJ 3.0 is underway, representing the most significant upgrade to Injective’s tokenomics. This proposal aims to make INJ even more deflationary by reducing on-chain parameters for new token minting.

Rationale

The rationale behind INJ 3.0 is twofold. First, Injective stands as one of the largest Proof of Stake (PoS) Layer 1 chains, secured by billions of dollars in assets. This security foundation allows for a reduction in INJ supply without compromising network integrity. Second, the aim is to imbue INJ with the qualities of “ultrasound money,” akin to Bitcoin’s sound money properties, achieved through its immutable supply cap and halving schedule.

Drawing inspiration from Bitcoin’s halving events, the proposal seeks to decrease INJ token inflation over two years while enhancing responsiveness to staking activity. By accelerating the timeline for reducing INJ supply, the goal is to make INJ the most deflationary crypto asset in existence.

Proposal Details

1. Decrease of Inflation Rate Bounds:

• Lower Bound: Currently set at 5%, proposed to decrease by 25% over two years on a quarterly basis.

• Upper Bound: Currently set at 10%, proposed to decrease by 30% over the same period.

• The proposed schedule for [lower bound, upper bound]:

• End 24Q1: [5%, 10%]

• End 24Q2: [4.875%, 9.625%]

• End 24Q3: [4.75%, 9.25%]

• End 24Q4: [4.625%, 8.875%]

• End 25Q1: [4.5%, 8.5%]

• End 25Q2: [4.375%, 8.125%]

• End 25Q3: [4.25%, 7.75%]

• End 25Q4: [4.125%, 7.375%]

• End 26Q1: [4%, 7%]

• End 26Q2+: Re-evaluate inflation parameters for further decreases

2. Adjustment of Inflation Rate Change:

• Increase the inflation rate change parameter from 0.1 to 0.5 to enhance responsiveness to staking activity.

Expected Outcomes

1. Optimized Tokenomics:

• By decreasing INJ inflation rate bounds, Injective aims to surpass Bitcoin’s disinflationary characteristics, creating a more deflationary asset over time.

2. Ensuring Future Sustainability:

• Controlled reduction in inflation rate bounds maintains INJ as ultrasound money, balancing participation incentives with token scarcity to sustain the ecosystem.

3. Enhancing Emissions Responsiveness to Staking Activity:

• Increasing the inflation rate change parameter ensures swift adaptation to staking fluctuations, amplifying deflationary properties as staking activity grows.

Conclusion

With the introduction of INJ 3.0, Injective embarks on the next phase of growth, poised to create the most robust deflationary asset in the crypto sphere. Through reductions in inflation rates and heightened responsiveness to staking, INJ aims to foster a sustainable ecosystem, rewarding stakeholders and securing its position in the ever-evolving crypto landscape.