???? Taking the NFT Crown: Immutable X Platform Overview

Exclusive breakdown of ImmutableX’s offerings and usecases including Fees, Staking, Governance & More!

DeFi Slate Fam:

Ethereum is still the king of NFTs: it does significantly more volume than the rest of the chains combined and is a host to all major collections. However, with the advancement of P2E and scaling problems of L1 becoming more and more apparent the space for NFT Level twos is heating up.

In today’s article, we have a look at the Immutable X – a scaling solution for Ethereum designed and developed with the NFTs and gaming in mind. We cover tokenomics, history, technology, security and other areas of this project that might be of interest to potential investors and users.

With millions in TVL, great products and innovative ZK technology the Immutable X seems poised to become a major player on the scene that is only starting to come out of its infancy.

Cheers,

-DeFi Slate Team

Immutable X platform overview

Immutable X is an L2 scaling chain for Ethereum designed specifically for NFTs and NFT-based games. It was initially developed for the Gods Unchained Collectible Card Game as a solution to rising fees and other scalability issues of the L1 [1] but currently offers a platform to dozens of collections with daily trading volume often exceeding millions of dollars. [2]

1. Funding and Tokenomics

IMX is a native ERC-20 utility token of the Immutable X platform. It has a supply capped at 2,000,000,000 with the primary goal of rewarding network participants (developers, artists, traders etc.) and aligning everyone’s interests. Immutable had three rounds of funding

raising $77.4M.

• Seed Round — $2.4M – Raised as Fuel Games in July 2018 to launch flagship Gods Unchained game.
• Series A — $15M – Raised for the development of Gods Unchained in September 2019.
• Series B — $60M – Raised in September 2021 to fund platform growth and further development of Gods Unchained and another game Guilds of Guardians.

Additionally Immutable conducted multiple sales for the IMX token:

• 285,200,000 tokens (14.26%) with 6-month vesting to private Investors at 0.1$ [3].
• 40,000,000 (2%) at 0.1$ with 6-month vesting and 60,000,000 (4%) with 3-month vesting at $0.15 during public sale on CoinList. [4]

The rest of the tokens are distributed the following way:

• Purpose
• Allocation
• Description
• Unlocks
• Project Development
• 25%
• 500,000,000 IMX
• Funding the development by Immutable. Pty. Ltd.
• Linear Vesting over 4 years with 1 Year Cliff
• Ecosystem Development
• 51.74%
• 1,034800,000 IMX
• Developers grants, liquidity provision, marketing
• 2-year linear vesting for grants, 6-month vesting for user rewards
• Foundation reserve
• 4%
• 60,000,000 IMX
• Liquidity provision for CEXes and DEXes
• Unlocked at token launch

2. Demand and utility of IMX

IMX token has three main use cases inside the Immutable ecosystem:

1. Fees — 20% of protocols’ fees are to be paid in IMX tokens either directly or by automatically swapping purchase currency for it on the open market. There are currently no fees but in future, 2% will be deducted from the base/listing price to support ongoing development.
2. Staking — users holding IMX in their wallets can receive their share of protocol’s fees proportional to their holdings. Staking is not yet implemented and its exact terms will be subject to governance.
3. Governance — token holders will be able to vote on grants, daily rewards and other token-related topics. At the time of writing, there is no decentralised governance and all decisions are taken by protocol developers.

3. Platform’s technology and security

Immutable X uses Starkware’s StarkEx v4 [5] as its scaling engine. It utilizes zero-knowledge Scalable Transparent Arguments of Knowledge commonly referred to as STARKs to perform transactions off-chain while inheriting the security of Ethereum’s mainnet. Compared to currently more popular Optimistic Rollups zero-knowledge solutions offer faster withdrawals (minutes instead of days) and lower per-transaction costs (as data doesn’t need to be posted on-chain) while having the downside of harder generalizability (no EVM support currently) and higher complexity (requires a very precise implementation to be secure). [6]

While being able to support ZK-Rollup mode, where it is possible to recover the state of the chain from L1 calldata, Immutable X currently operates as a Validium – user balances are not stored on the chain and are instead sent to several parties known as Data Availability Committee (DAC), who sign each batch verifying that they retained a copy of data. DAC for Immutable X consists of 8 members: Immutable, StarkWare, Deversifi, Consensys, Nethermind, Iqlusion, Infura and Cephalopod.

Immutable X is centralised as it requires a single entity to propose blocks. It is, however, censorship-resistant as if an operator fails or refuses to include user’s transactions they can still withdraw their assets by calling the L1 contract directly. It is important to note that user funds can still be lost if the data from all of the DAC members become unavailable.

There is currently ~$243M of value (excluding NFTs) locked in Immutable’s L1 contract with a majority of it being in the platform’s native tokens. [7] As the contract is currently upgradable a 14-day timelock is implemented to prevent loss of funds in case of a malicious code upgrade.

4. Immutable’s selling points and features

Immutable X aims to become the best scaling solution for traditional companies and developers not only by solving Ethereum’s scaling problems (offering up to a 600x increase in TPS) through the ZK engine but by providing them with “building blocks” to build experiences on top of without having to worry about “blockchain stuff”.

Immutable X APIs allow developers to avoid interacting with smart contracts directly while allowing them to interact with the Immutable X platform. Transactions such as mints, transfers, withdrawals and deposits can be completed through the API call. The same API allows access to the shared orderbook, which helps facilitate the liquidity of assets without fragmenting it across multiple marketplaces.

Link UI enables support for all desktop Ethereum wallets without the need for switching networks. Users can simply sign a security message with their Metamask to generate their STARK keypair.

Third-party developers can use Platform SDKs to easily integrate platforms into their sites and products, currently, a Typescript implementation is available with a promise to offer SDKs for all major platforms including IOS, Android, Unity and Unreal.

Immutable X is building a platform that is regulatory and legally compliant so that it can partner with large web2 companies and projects that are usually concerned with following AML/KYC rules and copyright protection.

5. Concerns and considerations

While from the points above it can be seen that Immutable X has a huge potential to become the leading L2 for games and NFTs as with all projects in the crypto space especially of this size there are certain things potential investors and users need to be aware of.

• “Overreliance” on the flagship projects — the majority of the platform’s trading volume and users come from a handful of projects despite having dozens of them. At the time of writing, the 7-day trading volume is $3749k with Book Games by Gary Vaynerchuk contributing $2077k (55%) and Gods Unchained taking second place with $1353k (36%) [2]. In case these and a select few collections/games would lose their popularity Immutable X would be left with a hole it is currently unable to fill.
• “Overreliance” on partnerships — as previously mentioned Immutable aims to appeal to traditional (web2) companies. This allows it to secure a few high profile partnerships, namely with TikTok and GameStop. However, both these partnerships seem to have failed to produce any lasting effect so far: the “TikTop top Moments” collection launched in October 2022 had only 244 ETH volume traded ($703,926 at the time of writing) [8] and GameStop sold a large portion of the IMX tokens it received damaging the chart and community trust in the process. [9]
• Security, centralisation, and censorship-resistance — ZK-Rollups/Validium are a new and emerging technology so it is reasonable to expect some level of centralisation. It is, however, important to keep in mind the points discussed in part 3 of this document.

6. Summary and conclusion

Despite these and other considerations, it is easy to remain optimistic about Immutable X. In the short period of its existence it was able to millions in TVL as well as lucrative partnerships with web2 and web3 creators, studios and companies (ESL, Playco, Bright Star, Enterlast etc) and while it is true that its price is down almost 80% from ATH it is still multiple times above the presale numbers. [10]

We are yet to see many of the promised features of both IMX and the platform itself, however, it has already captured its share of the L2 market which will only continue to grow as Ethereum progresses with its scaling roadmap.

7. References and Sources:

1. Immutable X AMA on Reddit.
2. Immutascan
3. Immutable X Partnership With Huobi Ventures
4. IMX public sale
5. StarkEx High-Level Overview
6. An Incomplete Guide to Rollups
7. Immutable Bridge Contract Proxy (implementation)
8. TikTok Top Moments
9. GameStop Dumps IMX Tokens Amid Partnership Announcement
10.  IMX on CoinGecko