# Injective Token Economics

# 1. Proof of Stake Security

To ensure the security of our sidechain, we inflate the supply of our token to incentivize nodes to stake INJ and participate in the Injective network.

The tentative initial supply of INJ will be set to 100,000,000 tokens and shall increase over time through block rewards.

The target INJ inflation will tentatively be 7% at genesis and decrease over time to 2%. Over time, the total supply of INJ may be lower than the initial supply due to our deflationary mechanism detailed in the Exchange Fee Value Accrual section below.

# 2. Governance

The INJ token also serves as the native governance token for the Injective Chain.

INJ is used to govern all aspects of the chain including:

Full details on the governance process can be found here.

# 3. Relayer Incentives

The exchange protocol implements a global minimum trading fee of rm=0.1%r_m=0.1\% for makers and rt=0.2%r_t=0.2\% for takers. As an incentive mechanism to encourage relayers to source trading activity on the exchange protocol, relayers who originate orders into the shared orderbook are rewarded with β=40%\beta = 40\% of the trading fee arising from orders that they source..

# 4. Exchange Fee Value Accrual

The remaining 60%60\% of the exchange fee will undergo an on-chain buy-back-and-burn event where the aggregate exchange fee basket is auctioned off to the highest bidder in exchange for INJ. The INJ proceeds of this auction are then burned, thus deflating the total INJ supply.

More details on the auction mechanism can be found here.

# 5. Collateral Backing for Derivatives

INJ will be utilized as an alternative to stablecoins as margin and collateral for Injective's derivatives markets. In some derivative markets, INJ can also be used as collateral backing or insurance pool staking where stakers can earn interest on their locked tokens.