Injective Doubles Deflation with INJ Supply Squeeze Vote

The recently passed IIP-617 proposal, dubbed the INJ Supply Squeeze, represents the latest evolution in Injective’s multi-year strategy to engineer token scarcity. Since its mainnet debut in 2021, the Layer-1 blockchain has employed frequent token burns and, as of October 2025, a Community BuyBack program. These measures have already led to the permanent removal of 6.85 million INJ from existence. The new Supply Squeeze does not replace these existing mechanisms but works in tandem with them, permanently increasing the rate at which INJ’s circulating supply is reduced.

According to the announcement from the blockchain’s development team, this integrated approach is designed to shift INJ’s tokenomics toward what they term “a structurally enhanced deflationary model.” The overwhelming 99.89% community vote underscores strong governance support for this aggressive monetary policy. By systematically accelerating supply contraction, Injective joins a cohort of crypto projects leveraging deflationary mechanics in an attempt to bolster the underlying value of their native assets through enforced scarcity.

Injective’s co-founder, Eric Chen, has framed the Supply Squeeze as a pivotal development for the network’s monetary design. “The INJ Supply Squeeze spearheaded by the Injective community represents a decisive step in the evolution of Injective’s monetary design,” Chen stated. He emphasized that by doubling the rate of deflation and pairing it with systematic token buybacks, the project is “reinforcing its scarcity and positioning INJ as a long term deflationary asset aligned with the growth of the ecosystem.”

This vision connects tokenomics directly to ecosystem health. The rationale is that as the Injective platform grows and sees more usage—potentially in areas like decentralized finance (DeFi) applications or the speculated staked exchange-traded fund (ETF) business—the intensifying scarcity of INJ could create a powerful value accrual mechanism. The strategy bets on fundamental supply-and-demand economics: a growing utility for a rapidly shrinking asset should, in theory, support price appreciation.

Despite the concerted push toward deflation, the market response for INJ has been muted in the near term. At the time of the announcement, the token was trading at $4.64, a price point that has not yet experienced a notable bullish uptrend directly attributable to these supply-reduction mechanisms. This disconnect highlights a common challenge in cryptocurrency markets: engineered token scarcity does not automatically or immediately translate into sustained price increases, as investor sentiment, broader market conditions, and competitive pressures play significant roles.

Nevertheless, the Injective team and community appear focused on the long-term structural play. The belief is that these deflationary foundations must be laid before major ecosystem breakthroughs can fully impact valuation. The mention of a potential staked ETF business in the original text suggests that Injective is exploring traditional finance bridges, which could serve as a future catalyst. For now, the INJ Supply Squeeze stands as a clear statement of intent, hardening the asset’s deflationary properties in anticipation of future demand.