Thor Hartvigsen, a researcher in data-driven decentralized finance (DeFi), is examination the appeal of Injective Protocol, a layer 1 platform whose creators say is designed to expressly power finance.
As of December 2023, INJ, the native currency of Injective Protocol, is one of the best performing coins, surpassing Bitcoin (BTC) and Ethereum (ETH).
Is Injective Protocol Undervalued Based on On-Chain Metrics?
Speaking to currently at seven.
According to the researcher’s analysis, the largest layer 1 dapp, Helix Protocol, a decentralized exchange (DEX), only handles a daily trading volume of around $7.4 million.
Hartvigsen states that this figure is significantly lower than other perpetual futures protocols, including the Perpetual Protocol. These competitors, the analyst notes, are valued between $200 million and $300 million based on a fully diluted valuation (FDV).
So far, based on data, there are only seven active protocols on Injective, with Helix handling over 60% of the ecosystem’s TVL, further cementing its dominance.
If on-chain activity and the number of active protocols lead, Hartvigsen wants answers that irrefutably justify Injective Protocol’s $3.2 billion valuation.
The researcher compares Injective to other blockchains, including Ethereum and Solana. These platforms generate relatively higher transaction volume and on-chain activity.
On the other hand, Solana, a competing layer 1, currently processes between $500 million and $700 million. Meanwhile, Injective Protocol cannot compete with Ethereum, which processes over $1 billion in transaction volume.
INJ Up 395%, Will Prices Continue to Rise on Investor Optimism?
In response to Hartvigsen’s analysis, yiggit, a user claiming to be a legal advisor, defended Injective protocol. The user pointed out that TVL, as cited by the researcher, cannot be the only determinant to assess the potential of a project.
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Yiggit added that the potential of Injective Protocol lies in the expected number of upcoming applications. Notably, legal counsel notes that optimism also stems from the origins of the injective protocol in Cosmos. In the Cosmos ecosystem, staking tends to catalyze participation as users seek to receive airdrops.
However, whether or not the researcher’s assessment is valid depends on time. So far, looking at the price action of INJ in the daily chart, the coin has been moving higher, registering new all-time highs.
As an illustration, INJ is up 395% from mid-October 2023, recovering as the broader crypto market recovers. At this valuation, data from CoinMarketCap watch that the project has a market capitalization of more than $2.7 billion.
Featured image from Canva, chart from TradingView
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