Injective Protocol, a layer-1 platform designed for decentralized finance (DeFi) applications, has been gaining attention in the cryptocurrency market. Thor Hartvigsen, a data-driven DeFi researcher, has raised doubts about the platform’s appeal despite the fact that its native currency, INJ, has outperformed top cryptocurrencies like Bitcoin and Ethereum. Hartvigsen points out that Injective Protocol has a relatively low total value locked (TVL) of $11 million and only seven active protocols. The largest project on the platform, Helix Protocol, has a daily trading volume of $7.4 million, which is significantly lower compared to its competitors like Perpetual Protocol.
Hartvigsen’s analysis raises questions about the valuation of Injective Protocol, which stands at $3.2 billion. He compares the platform to other blockchains like Ethereum and Solana, noting that they have higher trading volumes and on-chain activity. For instance, Solana processes between $500 and $700 million daily, while Ethereum handles over $1 billion in trading volume. Injective’s lower on-chain activity and trading volume could suggest that it is overvalued compared to its competitors.
In response to Hartvigsen’s concerns, a user named yiggit defended Injective Protocol, pointing out that TVL alone should not determine a project’s potential. Yiggit emphasized that the platform’s value lies in the number of upcoming apps and its origins in the Cosmos ecosystem. Staking in the Cosmos ecosystem often encourages participation as users can receive airdrops. The optimism surrounding Injective Protocol’s future growth potential may be a key factor in its current valuation.
Despite the debate surrounding Injective Protocol’s valuation, the coin has seen a significant increase in price, rising by 395% since mid-October 2023. This surge in price coincides with a broader recovery in the crypto market. CoinMarketCap data shows that the project now has a market cap of over $2.7 billion. Whether this uptrend will continue or if Hartvigsen’s concerns will impact the project remains to be seen. Investors will need to monitor on-chain metrics and trading volumes to assess Injective Protocol’s true value in the competitive DeFi landscape.
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