Highlights:
- Injective Protocol’s goal is to offer users decentralized, cost-free business transactions .
- Although the upgrade is primarily meant for developers, people who utilize the dApps built on Injective will also gain from it.
Early in July, Injective Protocol underwent a “CosmWasm mainnet” upgrade to offer enhanced functionality and efficiency for its users and developers. Injective Protocol is an Ethereum-compatible blockchain utilized in the decentralized finance (DeFi) and derivatives industries.
The Injective Protocol, a protocol that enables the full potential of decentralized derivatives and borderless DeFi, facilitates derivatives trading across blockchains using financial products, including perpetual swaps, smart contracts, and spot trading. Injective Protocol’s goal is to offer users decentralized, cost-free business transactions. Injective integrates the Ethereum and Cosmos blockchain ecosystems to offer a “cross-chain transaction architecture” without adding transaction charges known as “gas fees.” This results in a reliable, openly verifiable network.
CosmWasm is a library of code that contains elements required to build more intricate smart contracts on the Cosmos blockchain. As the name implies, smart contracts are self-executing agreements where the blockchain’s Ts and Cs between buyer and seller are described in lines of code. Transactions are traceable and irreversible, and that code regulates their execution.
With the upgrade, developers will be able to build more complex applications. It also introduces negative maker fees, which are returned to traders who offer liquidity (or tokens) to a market, and the ability to create multi-chain smart contracts and self-executing smart contracts.
To put it in context, a mainnet upgrade is when a chain-level update is received by a blockchain that introduces new features that expand the capabilities of the blockchain. The Injective community decides which upgrades the system will receive through governance recommendations.
According to Eric Chen, co-founder and CEO of Injective Labs, the mainnet upgrade to Injective Protocol adds many new features, which developers and users will find exciting.
“CosmWasm is a much more resource-efficient smart contract environment compared to a traditional Ethereum virtual machine,” he said. “And more importantly, this chain upgrade added a big feature where it can self-execute smart contracts at the beginning of every single block.”
Self-executing smart contracts reduce the workload of developers and transaction costs as well. A smart contract usually needs an outside agent to be executed – be it a person or a computer program. A smart contract is now managed automatically rather than having to be watched over, executed, and updated. The CosmWasm integration accomplishes this without raising petrol prices or transaction times.
Injective’s Inter Blockchain Communication (IBC) protocol allows developers to design multi-chain smart contracts, enabling interoperability between blockchains and self-executing smart contracts. The CosmWasm upgrade’s other key feature is negative manufacturer fees.
According to Chen, “[Negative maker fees are] a highly sustainable sort of rebate or compensation for those who contributed liquidity to the market.” “There is a significant incentive there since institutions won’t be paying trading fees but rather a portion of the maker volume or liquidity they supply. It also brings a ton of extra advantages for organizations using the Injective API and for programs creating on-chain marketing algorithms.”
All decentralized exchange applications or dApps built on Injective for approved markets will enable negative maker fees. Negative maker fees are given to market makers who provide Injective liquidity rather than being withheld from the maker.
Although the upgrade is primarily meant for developers, people who utilize the dApps built on Injective will also gain from it.
Chen said, “If the application or contract that [users are] interacting with does a good enough job, [users] won’t see the increase in complexity or have to deal with the headache of learning to deal with these complex features and offerings that are enabled by this upgrade. I think that’s one of the most important parts of the product. To be able to serve the user and abstract away a lot of the complexity,” he added.
In the future, the mainnet upgrade will also enable additional functionality within the dApps already available on Injective.
Traders might use stop-loss or take-profit orders on Injective Pro, a decentralized exchange where they can trade cryptocurrency futures and spots. Before these functions are used, though, it can take some time. According to Chen, the current existing dApps are benefiting right away from the negative manufacturer fees.
