Immutable X: Critical Infrastructure for GameFi Mass Adoption.

8 min readOct 11, 2022

$IMX — The Potential 30X GameFi Altcoin

BACKGROUND:

The last few years have seen huge shifts in blockchain use cases. When Ethereum first launched in 2015, it was a revolutionary step in dynamic blockchain development; a touring complete virtual machine capable of programming anything the developer’s mind could conceive of. The adoption of Ethereum since has been parabolic, and it’s blockspace congested and insufficient to accommodate the growing number of applications. First it was token ICOs, then DeFi, then Metaverse, then NFT’s and now the most demanding of them all … GameFi: a hybrid combining the elements of all the above use cases, with the addition of the most mainstream element of all: gaming. GameFi is the means of taking all the incredible and continuing blockchain innovations and adding the key missing ingredient: mass adoption through gaming.

The coveted mass adoption, however, is hindered by the lack of scaling, inadequate user interfaces (UIs) and user experiences (UXs), liquidity issues, proper software developer kits (SDKs), complexity of use, and much more. The crypto world responded with Layer 2 solutions, alternate Layer 1s, sidechains, rollups, and more. These solutions all tackled certain of these issues, but to date none has managed to tackle them all. While still a developing ecosystem and by no means perfect, Immutable X is one of the leading NFT and gaming solutions that aims to bring GameFi mass adoption by addressing these issues.

SUMMARY:

Immutable X is an Ethereum Layer-2 scaling solution built on Starkware’s Zk-Rollup technology. It is effectively a smart contract allowing transactions to occur off-chain which are then batched together. These transactions are then verified with a “validity proof” and periodically settled back to Ethereum base layer in batches (more on this shortly).

Immutable X was purpose-built for gaming and NFTs by the team from Gods Unchained, who encountered all the limitations and difficulties of deploying a crypto game on Ethereum’s base layer … slow and expensive transactions, failed transactions, prohibitive minting costs, unpredictable gas fees, and much more. They leveraged StarkWare’s rollup technology to build their own Layer-2 specifically to address these limitations.

Main Features:

Capable of up to 9,000 TPS (vs Ethereum base layer max 15 TPS)
Transactions are zero gas and very low fee
Uses Ethereum base layer security (very secure)
True Instant transactions and trading
Full EVM compatibility (wallets, dapp integrations,etc)
Deep liquidity via their Global Orderbook
Uses the $IMX token for Governance, Staking and a form of revenue share
Multiple marketplaces and 3rd party applications
Uses Ethereum Layer 1 desktop wallets with a simple “link” function

Snapshot:

$IMX Max Supply: 2B Tokens
Circulating Supply: 235M
Market Cap/FDV: $174M/$1.5B
Next Token Unlock: 152M Nov 5th, 2022
Monthly Sales Data: 2022 Range $5.8M to $53M /month
Top Marketplaces: Token Trove, IMX Native Marketplace, Aqua.xyz

IMMUTABLE-X FEATURES AND FUNCTIONALITY:

One of the main keys to the tech behind Immutable X is the way transactions function. This is the secret sauce that allows all transactions on the protocol to be instant and avoid the necessity of block confirmations, gas fees, and all the associated delays and more complex user knowledge requirements. From a user perspective, this abstraction of the more complex components of a blockchain interaction are removed from the experience and effectively dealt with on the backend, making the experience of transacting on Immutable X seamless and user friendly; for crypto enthusiasts and newcomers alike.
A user requires only an Ethereum Layer-1 wallet which is then connected to the Immutable X Layer-2 via a process called “linking”. Quite simply, this requires the wallet owner to sign a message confirming ownership of the Ethereum address. This message is used to generate a Immutable X private key. The user then deposits assets to the IMX Layer-2 with a single Ethereum base layer transaction. Settlement of this deposit is dependent only on the Ethereum network confirmations, and typically settles reasonably quickly under normal network conditions. Once the assets are on the IMX Layer-2, they are freely usable within the ecosystem with all the benefits of instant transactions and finality. Importantly, all transactions on IMX Layer-2 are done using the same network settings and wallets as the Ethereum base layer. No new network setups or wallets are needed by the user.
Once assets are within the Immutable X Zk-rollup Layer 2, all transactions are simply API calls. The importance of this cannot be overstated. This means that every transaction is a simple message, and is final in a single click … without any further blockchain interactions. No gas settings, no waiting for blockspace, no waiting for confirmations, no unpredictable gas fees, no failed or stuck transactions. This is a key differentiator of IMX versus competitors like Solana or Binance Smart Chain. In the case of IMX, a transaction is instant and final the second the API call is made. Whereas with Solana, BSC and other prominent blockchains with NFT adoption, one must interact with the blockchain and risk all the above inconveniences and inefficiencies.
In the case of gaming, the speed, simplicity and quick finality of these NFT transactions is paramount. It creates a user experience that is not only seamless and simpler, but also faster such that a player does not have to wait for the myriad of steps to occur before utilizing their NFT in-game. As long as they have assets on the IMX layer-2, they are able to buy an NFT and use it in-game in seconds.
IMX liquidity is a Global Orderbook; a protocol-wide liquidity pool. Unlike Uniswap or Opensea, NFT orderbooks on IMX are at the protocol level, and any third party applications can permissionlessly access these orderbooks directly. From a player/user’s perspective, this means that if they list their asset or make a bid, it appears on ALL marketplaces simultaneously. For developers, this means easy access to established liquidity pools and much more cost effective development. Additionally, all parties are incentivized, as third party applications can easily add their own fees on top of the protocol level fees. There is no need for arbitrage, nor marketplace aggregation, nor liquidity bootstrapping … liquidity is easily accessed at the protocol level by users, developers and games alike.
All EVM-compatible desktop wallets are also compatible with IMX without any modifications. They require only the previously mentioned “link” to function seamlessly with the Immutable X protocol.
The efficiencies above come with some shortcomings as well. As IMX is a rollup, withdrawals back to base layer Ethereum can take up to 10 hours. Additionally, IMX also currently has very limited smart contract capabilities. This is being actively worked on and an upgrade allowing full smart contract capability is on the short end of their roadmap and due out soon.
Fees: Transactions require no gas, but cost 2% for primary transactions at the protocol level. 20% of the fee must be paid in $IMX tokens, but the process is handled entirely on the backend. If a user does not have $IMX, the protocol takes the fee in the token used for the transaction and converts it on the open market to $IMX which is then redistributed to stakers.
$IMX Staking is an innovative form of frictionless staking. It is an upgrade to the conventional staking model in that it requires the $IMX tokens to be held on the Layer 2, the user must have made at least one NFT transaction in the 14 day period, and it is expected that participation in governance will also be added as a requirement in the future. This ensures that stakers are more active in the protocol and adds economic emphasis to users as opposed to strictly token holders.

CLOSING THOUGHTS:

A successful scaling solution for the next evolution of GameFi must face the reality of creating a platform that satisfies and brings together both investors and users. One cannot be successful without the other. It must solve the issues of scaling, speed, overcomplexity and security while maintaining a decentralized architecture that integrates easily with existing developers, dApps and infrastructure. Gamers, collectors, traders and more all bring adoption while the investors enable that adoption via their investments in the tech, team, partnerships and developers.

From a user’s perspective, Immutable X is fast, cheap, secure, and scalable. It has a user-friendly tech that automates and simplifies the myriad of normally complex blockchain interactions and allows the user to focus on the intended use itself … be that gaming, collecting, trading or otherwise. While IMX successfully achieves the above, it is still evolving and requires additional progress towards better user experience through its third party applications, more robust smart contract capabilities and more established decentralized app integrations.

A user wants a smooth and fast experience, one where the inner workings are out of sight and out of mind. IMX achieves this, but as importantly also offers significant advantages over competitors like Solana and Binance Smart Chain.

The investor’s perspective is somewhat more complex, and requires evaluating the team, partnerships, marketing and developer funds, tokenomics and more. In the case of Immutable X, they have an established well known team and a host of partnerships ranging from TikTok, to GameStop, to Turner Sports and others. They also have a treasury that recently raised over $200M in their Series C funding round at a remarkable $2.5B valuation, with lead investors such as Arrington Capital, Tencent and Animoca Brands.

Suffice to say, the votes of confidence in the project are well vetted and renown, they are well funded to weather a potentially prolonged bear market, and have maintained very reasonable daily active users and trading activity putting them among the top four protocols overall by NFT sales volume over the last 30 days. Despite the bear market doldrums, IMX’s gross 30d sales to market cap is also one of the most attractive ratios in the space, currently over 6x that of Solana.

These are attractive metrics as an investment, but also serve to give developers and 3rd party applications the confidence and support to build on IMX as a sustainable protocol. This will help drive adoption and innovation, and potentially enable IMX to improve on some of its less polished aspects.

The GameFi space is nascent, and evolving very quickly, and as such it remains to be seen which protocols will garner the lion’s share of user adoption. In the realm of GameFi though, we have yet to see the final iterations of Crypto Gaming and the particulars of the requirements that will embody the ideal protocol to accommodate it. In a fusion between the parabolic crypto industry and fast growing $300B gaming industry, it is likely there will exist multiple protocols with purpose-built niche markets within the crypto gaming ecosystem, and that Immutable X will be one among many acting as critical infrastructure for the future of GameFi mass adoption.

See you on the next one, good luck out there!

Sovereign Crypto

References:
1- https://token.unlocks.app/immutable-x

2- https://cryptoslam.io/blockchains/immutablex

3- https://blockworks.co/immutable-notches-2-5b-valuation-after-series-c-funding/

4- https://cryptoslam.io/

Note:
Research and analysis dated for last week of September.