1. Background

Compared with other tracks (DeFi, content, etc.), games are a key area for the large-scale application of blockchain technology, because games have a large audience, and well-designed tokens are more easily used and supported in games, and are also less affected by regulation.

However, games also have high requirements for blockchain technology, such as the requirement for scalability. If the scalability (TPS) cannot keep up, the game may experience lag, which will seriously affect the user's gaming experience. For example, the CryptoKitties game that appeared in 2017 once caused severe congestion on the Ethereum network, which not only affected the user experience but also further led to high gas fees for the entire Ethereum network.

Scalability (TPS) and gas fee issues have become key inhibiting factors for the landing of blockchain technology in the gaming industry.

Since the launch of the CryptoKitties game, exploration of the application of blockchain technology in the gaming industry has never stopped. Web3 games have gradually become one of the main tracks for the application of blockchain technology, and more and more mainstream game manufacturers have begun to use blockchain technology to develop game products. Immutable, the Web3 game infrastructure, has emerged in this context.

2. What is Immutable

Immutable is a leading Web3 game project in the industry. The platform simplifies the creation process of Web3 games through pre-built solutions.

Immutable X is a second-layer solution designed specifically for GameFi, developed in collaboration by Immutable, the developer of the well-known blockchain game Gods Unchained, and Starkware, one of the four giants of Ethereum Layer2. It is Ethereum's first ZK-rollup second-layer protocol for trading and transferring NFTs, with instant transaction confirmation, zero gas fees, and huge scalability, capable of processing 9,000 transactions per second.

Immutable X is a project focused on NFT and GameFi in the Ethereum Layer2 protocol. For both game users and developers, Immutable is an excellent infrastructure platform. Game developers can quickly build Web3 games using the tools provided by Immutable. Currently, more and more well-known projects are joining Immutable, making it the preferred choice for many game developers.

3. Advantages of Immutable

As a project based on Ethereum, focusing on NFT and GameFi infrastructure, what makes Immutable the first choice for game developers? What are its main advantages?

1. High Scalability

It is well known that the scalability (TPS) of the Ethereum mainnet is relatively low, especially for projects with high real-time requirements (such as games, NFT projects), the user experience on the Ethereum mainnet is relatively poor, which severely limits the development of the Ethereum ecosystem. The emergence of Ethereum Layer2 can to some extent make up for the lack of scalability on the Ethereum mainnet.

Immutable, a second-layer Ethereum project focusing on NFT and Gamefi, can provide transaction speeds of up to 9,000 TPS, much higher than other mainnets, through the powerful functionality of StarkEx zero-knowledge rollup (ZK rollup). This lays the foundation for its adaptation to the higher transaction volume that more game players may bring in the future.

The reason why Immutable has such high scalability (TPS) is that it uses related Rollup technology. The main principle is to batch and package a large number of computationally and storage-intensive transactions off-chain, and then uniformly verify the data on the Ethereum mainnet, which can greatly improve scalability.

2. Zero Gas NFT Minting and Trading

The high gas fees on Ethereum have reduced the user experience of Web3 games. For example, minting and trading NFTs in games require paying a certain amount of gas fees, and almost every step requires signing and paying gas fees, which is still a high barrier for players familiar with Web2 games.

As a Web3 game infrastructure platform, Immutable takes a different approach. It does not charge gas fees for the issuance and trading of NFTs.

For a user, using Immutable X allows them to pay zero gas fees when trading NFTs, which greatly reduces the entry process for players unfamiliar with Web3 transactions, lowers the threshold for players, and helps promote the explosion of Web3 games.

High scalability and zero gas fees are important factors for many game developers to choose the Immutable platform.

3. Security

Security is becoming one of the main problems faced by the blockchain industry. For example, there have been continuous reports of asset theft on exchanges, cross-chain bridges, etc., causing great losses to platforms and users.

Although some projects choose to launch their own blockchains or sidechains as a means to enhance the scalability limitations of Ethereum, these alternative solutions do not inherit the security of Ethereum, and their security is lower than that of Ethereum, and their degree of decentralization is also lower than that of Ethereum.

Especially for Web3 games, the platform tokenizes users' in-game items. In Web3 games, users' in-game assets can be traded, so it is an urgent need for the platform to securely store users' in-game assets.

Although there are currently many public chains, Ethereum is still the best in terms of overall security, decentralization, and ecosystem development. Immutable is built on Ethereum and inherits the underlying security of the Ethereum mainnet. In addition, Immutable has chosen zkRollup technology. Unlike Optimistic Rollup, zkRollup uses validity proofs to achieve instant withdrawals, making it more optimal in terms of immediacy and privacy.

4. Protocol Order Book Integration Liquidity

By building an order book function at the protocol level, Immutable can provide collective liquidity across games, which is also a significant advantage of Immutable.

Through this function, orders for buying or selling assets on one NFT market will be listed on all NFT markets supported by Immutable. When a user places an order on one NFT market, the order will also be displayed on other NFT platforms supported by Immutable.

Platforms supported by Immutable include the NFT market of the US video game retailer GameStop, and game markets registered on Immutable. This liquidity integration can increase trading depth and provide users with a better trading experience.

Listing NFTs from newly launched games on existing game NFT markets is a powerful marketing advantage, as it significantly increases their exposure. This cross-game liquidity integration is particularly attractive to new developers.

Moreover, this liquidity integration will become even stronger as more projects join the Immutable platform, and network effects will make the Immutable platform more and more attractive. In the future, platforms with high scalability and security like Immutable may emerge, but users may not necessarily switch from one chain to another unless there are special advantages, which is the power of network effects.

Thanks to the protocol order book, game NFT trading volume and revenue doubled in 2022 compared to the previous year, and with the development of the ecosystem, the resulting network effects are expected to further promote liquidity integration.

5. Credit Card Payments

On the Immutable platform, in addition to zero gas minting, it also attracts mainstream game players by supporting credit card payments, greatly reducing the entry barrier for the mainstream player market.

For example, at the end of last year, Immutable X announced a partnership with the payment company MoonPay to launch the NFT Checkout feature, allowing users to mint and purchase NFTs using debit or credit cards.

When minting or purchasing NFTs on Immutable X, users can log into their wallets and choose "card payment" to complete the transaction, and the NFT will be transferred to the user's wallet.

In addition, for builders, Immutable X provides professional and simple APIs and SDKs to allow for faster game launches.

4. Team

Immutable was co-founded by a pair of young brothers from Australia. The older brother, James Ferguson, serves as CEO. He studied law at the University of Sydney from 2011 to 2016, and after graduating, he founded three companies before starting Immutable in 2018. The younger brother, Robbie Ferguson, also studied at the University of Sydney but dropped out due to the establishment of Immutable and now serves as the general manager. CTO Alex Connolly is also a like-minded individual who dropped out of the University of Sydney and co-founded Immutable with the Ferguson brothers.

In addition to the IMX infrastructure, Immutable also has a game studio responsible for the operation of Gods Unchained and game distribution. Another game project promoted on the platform, Guild of Guardians, is also distributed by the Immutable game studio.

Although the core team is young, they have attracted many industry veterans and have solid capital strength behind them.

5. Financing

So far, Immutable has announced 5 rounds of financing, with a total financing of 280 million US dollars.

1) In July 2018, two rounds of financing were announced successively, both led by Continue Capital and Nirvana Capital, with a single amount of 2.4 million US dollars each.

2) In September 2019, Immutable completed a Series A financing of $15 million, led by Galaxy Interactive and Prosus Ventures.

3) In September 2021, Immutable completed a Series B financing of 82 million Australian dollars, led by BITKRAFT Ventures and King River Capital.

4) In March 2022, Immutable completed a Series C financing of $200 million, led by Temasek.

Immutable has more than 20 investment institutions, including Coinbase, Galaxy Digital, Nirvana Capital, Continue Capital, and others.

Six, Token Economy

IMX is the native ERC20 token of the Immutable X ecosystem, with a total supply of 2 billion tokens.

1. IMX Token Allocation Scheme:

1) 51.72%: For ecosystem development, these tokens will be used for user rewards, developer rewards, liquidity provider rewards, and marketing activities.

2) 25%: For project development expenses, these tokens will be used to support the development of Immutable X by immutablepty.ltd.

3) 19.28%: For private placement and public sale.

4) 4%: Reserved as a fund reserve, which will be used for ecosystem development initiatives in the future, mainly for exchange expenses, marketing activities, and other initiatives that the foundation deems beneficial to the ecosystem.

2. IMX Token Utility

IMX tokens can be used to reward users and pay transaction fees. People can stake their IMX assets in the staking pool to earn generous staking rewards. IMX token holders can also participate in governance voting, with the voting power determined by the amount of IMX tokens held.

The following are the three core functions of the IMX token:

Fees:

20% of the protocol fees for each Immutable transaction must be paid in $IMX. Users can choose to directly use IMX tokens to pay this fee. If there are no $IMX tokens available, Immutable will convert the fee by purchasing $IMX on the open market (ensuring a seamless user experience). This means that you do not need to hold IMX tokens to transact on the protocol.

Staking:

All fees paid in IMX are sent to the "staking rewards pool." By staking your IMX tokens, if you meet the eligibility requirements, you have the opportunity to earn rewards from this pool.

Governance:

IMX holders can vote on governance proposals, including how to allocate token reserves, developer grants, and the future development direction of the Immutable X protocol. Voting power is proportional to the amount of tokens held, with more tokens resulting in greater voting power.

3. Token Price Performance

According to Coinmarketcap data, the current market value of the IMX token is over $600 million, ranking 54th in market value. The circulating IMX tokens account for 56% of the total circulation, with a total circulating market value of $1.1 billion. The highest historical price of the IMX token was $9.5, and it is currently at $0.57, a decrease of 93.94% from the peak.

Seven, Ecosystem Development Status

According to an official blog post, in June last year, Immutable X development company Immutable launched a $500 million development fund, Immutable Ventures, dedicated to supporting Web3 games and NFT projects based on Immutable X.

The fund will allocate grants and investments in a combination of IMX tokens and cash to game projects built on the Immutable X platform, and will collaborate with developers, IP holders, and strategic partners to provide support, thereby promoting the development of the Immutable X protocol.

1. On-Chain Data Shows Active Platform Activity

Revenue:

Based on the advantages mentioned earlier, Immutable has launched games such as Gods Unchained and Illuvium, both of which have generated stable revenue.

At the beginning of 2023, Immutable's monthly revenue was around $300,000, reaching nearly $600,000 in May. Recently, due to the impact of the overall crypto market, revenue has decreased, but in July, revenue still exceeded $400,000. This level of revenue is quite good considering the overall downturn in the NFT/GameFi market.

Due to Immutable confirming 2% of NFT transaction volume as revenue, this also indicates high activity on the Immutable platform.

Compared to other competing protocols, Blur's revenue fluctuates significantly, while Immutable's revenue is steadily increasing.

IMX Holdings:

Since the launch of the IMX token, trading volume has been steadily increasing.

The surge in trading volume coincides with the launch of notable games or NFTs. The most recent surge occurred on July 31st when the RPG game Ember Sword launched its Alpha Land Sale, attracting widespread attention and participation from over 12,000 players from more than 50 countries.

The number of IMX token holders is also continuously increasing.

In addition to Ember Sword, the Web3 game Cross the Ages is also popular in Web2, ranking first in the strategy game category in the French App Store and maintaining a top 5 position for over 4 weeks. Immutable continues to launch interesting games, bringing new users into the ecosystem.

TVL:

According to data from defillama, in the NFT marketplace TVL, ImmutableX is second only to Blur Bids, and the TVL has been growing in the past 7 days and 1 month.

According to data from l2beat, in Ethereum Layer2, Immutable X ranks seventh in TVL.

Over 150 games have been launched.

The mentioned advantages are conducive to bringing many games to their platform, and Immutable is also developing Web3 games. In addition to Web3 games, Immutable has also partnered with top Web2 companies such as GameStop, Warner Games, iLogos, and Mineloader to bring Web2 games to the platform.

These new additions include IMVU with 7 million monthly active users, Cross the Age, which ranks first in the App Store, Undead Block, Kiraverse (beta), Aglet, and Immortal Game.

According to data from Immutable's Twitter, the number of games in the ecosystem has exceeded 150, covering a wide range of game types including RPG, FPS, and more.

Despite the current bear market in the cryptocurrency market, Immutable is still actively developing new products. For example, in March of this year, they announced a collaboration with Polygon to develop zkEVM compatible with EVM. Additionally, Immutable is committed to improving user UI/UX, which is a continuous barrier to the widespread adoption of Web3 games.

3. Immutable has launched the Immutable zkEVM testnet

Immutable has launched the Immutable zkEVM testnet. Existing smart contracts and Solidity code can be migrated for free directly to Immutable's zkEVM testnet environment.

Immutable plans to continue improving the testnet experience while pushing for the mainnet release. The Immutable zkEVM mainnet is currently scheduled for release in the fourth quarter of this year.

According to Immutable, over 20 game companies have partnered with Immutable to support this release, including GameStop, TokenTrove Marketplace, online game publisher Kongregate, game designer iLogos, and others.

At least 12 games have already started building their Web3 games on zkEVM, including CoinArcade, Galaxy Commanders, Medieval Empires, MetalCore, Meta Toy, DragonZ SAGA, Rune Realms, Shardbound, Infinite Victory, EF Defense, and SimWin Football. MetalCore announced the beta release on Immutable zkEVM on September 15th.

Eight, Conclusion

In conclusion, Immutable's high scalability, strong security, gasless NFT minting/trading, and integrated cross-game liquidity have attracted more and more game projects to the Immutable platform. Currently, over 150 different types of Web3 games are being built within the ecosystem.

Despite the bear market, Immutable continues to work on launching new products, optimizing the platform's user experience, and has launched the Immutable zkEVM testnet. The release of zkEVM will bring more games to this ecosystem and promote the long-term development of the platform. Immutable will become one of the most important Web3 game infrastructure platforms.

Immutable is a project worth paying attention to, and HotairballoonCN will continue to monitor and share the latest information in a timely manner.

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