INJ is the lifeblood of the Injective ecosystem and has multiple, powerful utilities:
1. Governance: INJ is the governance token. Holders vote on key protocol decisions, including:
· Adding new assets to the chain.
· Changing protocol fees.
· Upgrading the network.
· Managing the token burn auction (see below).
2. Staking & Security: Users can stake INJ with validators to secure the Proof-of-Stake network. In return, they earn staking rewards (in INJ) and a share of the protocol's fee revenue.
3. Collateral & Trading:
· Collateral: INJ can be used as collateral for trading derivatives and for minting new stablecoins and other assets on Injective.
· Fee Discounts: Some dApps on Injective offer fee discounts for using INJ to pay transaction fees.
4. Deflationary Mechanism: The Burn Auction (Key Feature)
This is a unique and critical economic model. Every week, 60% of all fees generated across every dApp on Injective (trading fees, gas fees, etc.) are used to buy back INJ from the open market.
· These bought-back INJ are then put into a weekly Dutch auction.
· Participants (staking validators/delegators) can bid for this INJ using more INJ.
· All INJ used in the auction is permanently burned (destroyed).
· Net Effect: This creates constant buy pressure and a deflationary supply, directly linking the ecosystem's success (fee generation) to token value.
Tokenomics (as of late 2023/early 2024)
· Max Supply: 100,000,000 INJ (capped, no new creation).
· Circulating Supply: ~84 million INJ (burn mechanism is actively reducing this over time).
· Distribution: Allocated to early backers, team, development, ecosystem growth, and a public sale.
