Have you ever thought about whether a blockchain project can have a self-reinforcing 'growth flywheel' like a top-tier internet company? Today, I want to set aside the cumbersome technical parameters and discuss Injective and $INJ from the perspective of 'economic model design.' In my view, the most fascinating aspect of Injective is not a single technology, but the carefully designed powerful 'value flywheel,' and INJ is the axis and driving force of this flywheel.
How is this 'value flywheel' started and accelerated?
Let’s break down this ingenious cycle step by step.
First driving force: 'breaking the ice' for developers
In any ecosystem, the cold start is the hardest. What is the biggest pain point for new developers? It's starting from zero in liquidity. Investing huge amounts of capital to 'mine' liquidity incentives may only yield fleeting effects and high costs.
Injective's solution is 'shared liquidity' and 'shared order book'.
Imagine a developer wants to build a new derivatives trading platform on Injective. They don't have to worry about initial liquidity issues because their platform can directly tap into the deep liquidity that already exists across the entire Injective network, shared by all dApps. This greatly reduces the startup threshold and capital requirements for developers.
This is the first gear that kicks off the flywheel: attracting the first batch of innovative Builders with excellent infrastructure.
Second ring: Value creation and capture
Value is created when developers successfully deploy their dApps based on Injective's low-threshold advantage and attract users to trade.
· Transaction fees: Each transaction incurs a fee.
· Network fees: On-chain activities require gas consumption.
The key here is: all these fees must be paid in INJ. This creates a fundamental value foundation for INJ based on real business needs. The more prosperous the ecosystem, the more frequent the transactions, and the stronger the demand for payments in INJ.
This is the second gear of the flywheel: the prosperity of the ecosystem directly leads to rigid demand for INJ.
Third ring: Value reinvestment and feedback
A healthy economy cannot just take without giving back. Injective deeply understands this. It feeds back the captured value to the contributors of the ecosystem through two core mechanisms:
1. Feedback to builders: Protocol revenue sharing
When developers' dApps contribute trading volume to the network through a shared order book, they and the relayers behind them can share a portion of the protocol's revenue. This means that Builders are not only running their own business but also contributing to the entire network and are rewarded for it. This creates a strong positive feedback loop: the greater the contribution, the higher the returns -> more motivation to build and innovate.
2. Feedback to all holders: Deflation and scarcity
This is the famous 'burn auction' mechanism. The network will use a portion of the collected fees to repurchase INJ on the open market and permanently destroy it.
The significance of this process is that it directly translates the growth of the network into the scarcity of INJ. The more active the ecosystem, the more INJ is destroyed, and the stronger the value endorsement corresponding to each stock of INJ.
This is the third gear of the flywheel: accurately feedback the captured value to builders and asset holders, incentivizing them to stay and contribute continuously.
The perfect closed loop and acceleration of the flywheel
Now, let's assemble these three gears and see how this value flywheel spins and accelerates:
[Lowering the threshold] → Attracting more developers → [Creating value] → Explosion in the number of dApps and trading volume → [Capture and feedback] → More revenue shared with developers + more INJ destroyed → [Enhancing confidence] →
· Developers become more active due to receiving returns and create more quality applications;
· Traders are more willing to trade due to more applications and better experiences;
· Holders/stakers have more confidence in the long-term value of INJ due to seeing the deflation mechanism and ecosystem prosperity and are more willing to hold and stake long-term.
Staking itself further enhances network security and reduces market circulation, adding extra stability and upward momentum to the flywheel.
Thus, the flywheel completes a perfect cycle and begins the next spin with stronger potential energy. Growth brings stronger growth momentum.
What role do we play in this flywheel?
· If you are a developer, you are not fighting alone. You are joining an 'economy' that has already paved the way for you and promised to share the results with you.
· If you are a trader, you enjoy the best products, tools, and liquidity provided by a prosperous developer ecosystem.
· If you are a long-term holder of INJ, your role is more like a 'shareholder' of this 'economy'. You participate in network security through staking, decide the development direction through governance, and ultimately share in the dividends brought by the continuous operation of this value flywheel.
Final thoughts
Of course, to translate this ingenious flywheel theory into reality still relies on execution, market timing, and a bit of luck. But it showcases a higher-dimensional project design philosophy: from building a 'product' to designing an 'ecosystem', and ultimately launching an 'economy'.
Injective does not stop at solving a single technical problem; it tries to use INJ as a core regulator to design a set of self-driving, self-reinforcing economic rules. As more developers, users, and capital get involved in this flywheel, the network effects and moats it builds will be hard to surpass by mere technical replication.
This is the fundamental reason why I think $INJ and Injective are worth long-term attention. It is not just building but 'nurturing' a future city belonging to decentralized finance.
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