Ethereum has been the most favoured blockchain in the crypto space, hosting a ton of promising DAPPS, NFTs and play-to-earn games. Infact the top NFT projects like Crypto Punks & BAYC are built on the Ethereum network. Everything looks perfect but there’s the problem of scalability and higher gas fee. To help users transact with near-zero cost on a highly scalable network we have Immutable X. A layer 2 solution for NFTs on Ethereum. After reviewing the famous layer-2 projects in the past like Celer Network (CELR) and since NFTs are in trend, its make perfect sense to review Immutable X for our readers –
What is Immutable X crypto?
Immutable X or IMX is the first layer 2 blockchain for NFTs on Ethereum. It emerged as the top scaling solution for Ethereum NFT transactions with features like instant trading, zero gas fees for peer to peer trading and higher tps.
Immutable X is the most advanced layer-2 chain that uses STARK prover and rollup technology. The chain is secured by the Ethereum network and any NFT that is minted or traded on it is 100% carbon neutral.
Immutable X can process up to 9000 transactions per second
In the last 3 years, NFT trading volume has grown from $13.7 million in Q1, 2020 to $2.5 billion in Q1, 2021. The majority of NFT projects are being developed on the Ethereum network, making it the most favoured chain with the market cap hitting more than $300 billion this year. Immutable X is here to take some load off the Ethereum network and address the following limitations –
The biggest problem with Ethereum is its limitation in processing transactions. It can process up to 15 transactions per second and with the current load on the network, many transactions are bound to be delayed which results in network congestion and higher gas fee.
Poor User Experience:
NFTs aren’t yet ready for mainstream adoption. The reason is the slow transaction process. Due to network congestion, it may take minutes or hours to settle an NFT (ERC-721) transaction which should’ve been possible within seconds.
This frustrates the user and dilutes the credibility of blockchain technology. To add to it, the existing NFT wallets aren’t designed for better user experience. From complex recovery mechanism to showcasing limited information, a lot is to be done on improving the user experience.
The developer’s experience & illiquidity are some of the other limitations addressed by Immutable X.
Immutable X Architectural Components:
The network has the following core components –
ZK- Rollup Scaling:
ZK rollup or Zero Knowlege proof rollup enhance scalability and user experience while utilizing the security of the Ethereum blockchain. It helps bring down the gas fee by batching a large number of transactions and submitting them to an L1 smart contract after verifying and validating them.
APIs & SDKs:
Every activity on the network i.e from minting NFT to transferring them is like calling an API function. This means, without having to interact with complex codes, protocols or smart contracts, new and existing projects can easily onboard & develop on the Immutable X blockchain.
Users don’t have to switch networks while using Immutable X. It supports all desktop Ethereum wallets by providing an intermediate layer protocol (Immutable X link) which enables a better NFT wallet experience compared to the existing options. Moreover, IMX link can also support third-party ecosystems like the NFT marketplace without compromising security.
Immutable X Marketplace:
The network has its own marketplace to facilitate NFT transactions on the network. It also provides a global orderbook that allows orders created on one marketplace to be filled on another promoting NFT liquidity and price discovery.
A look into Immutable X Architecture:
As explained earlier in the post, Immutable X uses ZK rollups in which users lock assets in an on-chain smart contract, which are deposited into layer-2. These assets are traded using L2 transactions and later grouped in a single batch and published on-chain after being verified by the smart contract which updates the on-chain state. Using the on-chain state, users can unlock their assets.
Consider it as an import & export business, Shipping one container from one country to another amounts to a huge cost but transporting the same in one ship as a batch of 1000 containers can reduce the shipping cost drastically.
Immutable X uses STARK proofs as opposed to SNARK proofs
In an unprecedented scenario, if Immutable becomes unresponsive, users will need data of their transactions in order to withdraw their assets. Immutable X (intermediate layer) supports two data availability modes i.e rollup & validium.
In rollup mode, each batch is published to L1, retaining L1 security but adding a small linear cost to each transaction. In validium mode, a Data Availability Committee (DAC) signs each batch to indicate that they have retained a copy of the data. If one member is honest, users will be able to withdraw the assets.
Assets can be entirely minted on L2 while retaining Ethereum’s L1 security. Minting blob or blueprint is the immutable X metadata used to mint the assets which will be passed to L1 smart contract during asset withdrawal.
More than 10 million NFT assets are minted on Immutable X
Signing Transactions and Fees:
There’s an intermediate layer i.e IM-Link between any Ethereum wallet and Immutable. Users sign the security message which is used as seed for the generation of STARK keypair. Inside the Link, STARK Keypair is used to sign the transactions.
At the time of writing, Immutable X charges 2% fee on all primary asset sales and 2% fee on every NFT trade.
Fees are the main source of revenue for Immutable X
Immutable X Marketplace:
Immutable X has its own marketplace for the users which has all the features similar to any layer-1 NFT marketplace. It lowers the entry barrier for creators and project developers who’re lacking the resources to launch their own NFT marketplace.
As explained earlier, it has a global orderbook that allows orders to be filled irrespective of the marketplace on which it is created, promoting effective marketplace bootstrapping and price discovery.
The marketplace supports ERC721 & ERC1155 NFT tokens
What is Immutable X token?
Immutable X token or IMX is the native ERC20 token of Immutable X. The token has the following utilities –
IMX token holders will have the right to vote on token-related proposals. Proposals include but are not limited to topics like token reserve allocation, voting on developer grants, change in token supply etc. Token holders need to hold a certain threshold of IMX tokens if they wish to submit a proposal for voting. Protocol governance is performed on L1 with balances sourced from both L1 & L2.
The more tokens a user holds, the greater will be the voting power.
Fee is the major source of revenue for Immutable protocol. A minimum of 20% fee must be paid in IMX tokens. This means there’s no obligation for users to explicitly hold IMX tokens to be able to transact on the protocol. Moreover, 2% transaction fee is collected on primary asset sales & only every NFT trade.
Tokens collects from the fees will be deposited to the staking rewards pool. A user’s rewards is proportional to the amount of token staked relative to all the active stakers. There’re three conditions to be met by the user in order to receive staking rewards –
- Hold IMX on L1 or L2
- Have to vote on governance proposal in the last 30 days
- Either holding an NFT or have completed a trade in the last 30 days
Rewards are distributed on L2, therefore linking L2 wallet with L1 wallet is must to receive rewards
IMX has a total supply of 2 billion tokens. 51% of the token supply is allocated to ecosystem development and the remaining allocation can be seen below –
The token vesting schedule can be seen from the image shared below –
Immutable X Team:
Immutable was previously a blockchain gaming company founded in 2018 by James Ferguson & Robbie Ferguson. Both are the known for their work in developing the famous game “Gods Unchained”
Immutable X Benefits:
Scalable & Cost effective:
Immutable X is highly scalable solution to Ethereum miseries. It can process upto 9000 transactions per second and process transactions at a much lower cost compared to layer-1. Moreover, no gas fee is charged for minting or peer to peer trade on the network.
Immutable helps onboard emerging blockchain games by providing affordable pricing and transparency.
First Mover Advantage:
Immutable is the first Layer 2 solution focused on NFTs. There’re no other layer-2 blockchains who’re primarily working on NFTs and Play-to-Earn blockchain games, helping them with scalability and reducing high gas fee at the same time. This is indeed an attractive feature in the first place.
Immutable X has its own NFT marketplace which provides a platform to the new and emerging projects who wishes to promote and sell their work to the users. It has all the features of a typical L-1 marketplace and allow anyone to publish his work without worrying about gas fee.
Immutable X Drawbacks:
There are number of projects working on dominating the Layer-2 space. Projects like Polygon (MATIC), Celer network and Zilliqa are some of the famous names in this space. Only time and users will decide who will win the battle.
ETH 2.0 is scheduled to go live this year. It is speculated to bring down the issues of high gas fees and scalability. This may turn out to be a threat for layer-2 chains including Immutable X, who’re relying on the inefficiency of L-1 chain.
Immutable X Token Price:
Please check the latest price of Immutable X token, shared below –
IMX Token Price Prediction:
Launched in 2022, IMX token was off to a booming start. It hit an all-time high of $3.70 in the first month of launch and later fell back to below $1.10 price level in the market crash. At the time of wirting, the token is stable and trading in the range between $2.00 -$3.00.
IMX is fairly volatile in price action and has good fundamentals backing it. Since layer-2 is a crowded space, expect it to hit the level above $5 in the upcoming bull run and stablize in the region $5-$10. We’re reaching the launch date of ETH2.0 which may negatively impace IMX price, atleast for the short run.
How to buy IMX token?
IMX can be bought from leading token exchanges like Coinbase, Binance & Crypto.com.
Is IMX a Good Investment?
From the fundamentals standpoint, IMX is a stable and low-risk investment. The project has targeted the NFT market and it helps drive the transactions on the platform along with supporting emerging NFT and other blockchain gaming projects. It has raised a seed round of $15 million in 2019 from top investors like Coinbase, Nirvana capital etc
It also has its own marketplace to drive the price of IMX tokens, once the platform gains traction from the mass audience. Overall, the project is genuine and has high growth potential. The only problems are the competitors and ETH2.0 which may negatively impact the price action of the token.
If you’re an investor and looking to invest in layer-2 chains, Immutable should be on your list.
This completes my review of Immutable X. In the next post, I will talk about CENS World & Cryowar. If you’re a fan of blockchain technology then do share this post on your social handles and educate everyone around you. Remember to subscribe to my YouTube channel for more informative content, released every week.
Cryptocurrency is a highly volatile market. All the information shared in the post is for knowledge purpose only. By no means, it’s financial or investment advice. Readers are responsible for their own investment decisions and should only invest in cryptocurrency after proper research.
An MBA in Marketing. Paras have a decade long experience in the corporate world. He is done with office politics and corporate life, therefore decided to move on and jumped on building Katoch Tubes. He is a crypto fanatic and has the vision to bring cryptocurrency knowledge to every household in the simplest form possible using the power of internet. His area of expertise includes online marketplace, cryptocurrency and content strategy. Reach out to him on Twitter & YouTube.