Layer 2 scaling solutions (L2s) have become an important development for Ethereum because they help increase the transaction rate while lowering the gas fees, making it more efficient to use the blockchain. These solutions are especially important for projects that rely on multiple, frequent transactions—like blockchain gaming. Imagine if every decision, move, and purchase of in-game items incurred gas on the main Ethereum chain, it would quickly become too costly to play even the simplest of games.
This is the reasoning behind the creation of Immutable X, an L2 based on zk-STARK technology. One of several zk-rollups, Immutable X was designed to make web3 gaming and the creation and trading of non-fungible tokens (NFTs) less expensive and more practical.
The Immutable group has also expanded to offering multiple other products, including a crypto wallet, marketplaces, data APIs, and several blockchain developer tools. It has even partnered with Polygon to develop a second zk-rollup, zkEVM, to join Immutable X.
IMX is the native cryptocurrency of Immutable X and is used for three primary purposes: paying transaction fees for the use of Immutable X’s zk-rollups, staking to receive additional rewards, and community governance.
How was Immutable developed?
Immutable was co-founded in 2018 by James Ferguson, Robbie Ferguson, and Alex Connolly under the name “Fuel Games” before rebranding in 2019.
The Ferguson brothers are known for creating the blockchain-based card game Gods Unchained in 2018.
Due to the popularity of the game and its effect on Ethereum gas fees, the founders saw a need for a better blockchain gaming experience and eventually landed on the zk-rollup technology solution. They eventually partnered with Israel-based StarkWare Industries, building Immutable X with StarkWare’s StarkEx technology.
In 2021, Disney announced it would be releasing NFTs on a platform built on Immutable X. In March 2022, Immutable went through a funding round let by Chinese giant Tencent and blockchain gaming pioneer Animoca Brands that valued the company at $3.5 billion, making it among the most valuable private tech companies in Australia at the time.
How does Immutable work?
Immutable X was created out of the need for cheap, fast, and frictionless transactions of NFTs as adoption of the technology caught on. As its flagship project, the Immutable X L2 has garnered the most attention of Immutable’s suite of products.
Immutable X was intended as a solution for the creation and broad use of NFTs as digital goods—especially in blockchain gaming. With it, developers could freely mint in-game assets as NFTs, facilitate cheap transactions, allow users to hold their own assets in crypto wallets, and exchange digital assets on open marketplaces.
There are three main components of Immutable X’s design:
- StarkWare’s zk-rollup – All zk-rollups attempt to increase blockchain efficiency by batching together many transactions and relaying them to the main chain, helping decrease gas fees. StarkEx’s “prover and verifier” method generates computational proofs that transactions are valid, and then communicates them to a smart contract on Ethereum that verifies the validity of that proof.
- Link – Mediator that helps the communication between Ethereum and Immutable X, enabling users to sign transactions using their Ethereum wallets. The Link ensures that the secure transaction will be routed through Immutable X’s STARK-based infrastructure with unique crypto keys.
- Fee structure – In addition to the 2% fee incurred with every NFT trade on Immutable X, the platform allows market participants to set “maker” and “taker” fees and NFT creators to add royalties.
Immutable’s other L2, zkEVM, incorporates the functionality of Ethereum’s Virtual Machine to add features such as writing and interacting with custom smart contracts and leveraging more integrated compatibility with Ethereum tools.
In contrast, launching a smart contract on Immutable X actually involves launching them on Ethereum’s L1 chain and registering them with Immutable X.
However, while Immutable X could claim zero gas fees, using the Immutable zkEVM generates small gas fees to use Ethereum smart contracts—albeit ones that are almost negligible compared to the Ethereum main chain.
How is the IMX token used?
IMX is an Ethereum-based token based built using the ERC-20 token standard and is primarily used to pay for protocol fees, staking and governance.
The IMX used for fees goes to the “staking rewards pool,” which is the source of IMX tokens that are distributed to stakers every 14 days. Stakers are defined as users who hold IMX (either on the Ethereum L1 chain or on the Immutable X L2), have voted in a governance proposal in the last 30 days, and either hold an NFT on Immutable X or have completed a trade in the last 30 days.
The maximum supply of IMX is 2 billion tokens. In total, 51.74% of tokens were allocated for ecosystem development (including user rewards and developer grants), 25% were allocated directly to Immutable for project development, 14.26% were allocated for fundraising through private token sales, and 5% for fundraising through public token sales. The issuer of the IMX token, Digital Worlds NFTS, is a non-profit foundation and received 4% of all IMX tokens to be used for initiatives such as liquidity provision to crypto exchanges.
- Immutable provides a number of tools for blockchain developers, most of which are targeted at those dealing with non-fungible tokens (NFTs) and web3 gaming.
- The Immutable X layer 2 solution for Ethereum was created to facilitate the free, gas-free creation and trading of NFTs for use in blockchain games.
- The IMX token supports the Immutable X protocol through NFT transaction fees, and it also can be used for staking and to participate in community governance.