What is Immutable X and how does it work? Everything you need to know

What is Immutable X?

Immutable X, developed by the Immutable project, stands as a prominent Layer-2 scaling solution tailored for Ethereum. It aims to optimize the efficiency of non-fungible tokens (NFTs) and their transactions. Immutable X addresses key Ethereum network challenges like high gas fees, limited transaction throughput, and subpar user experience in the NFT sector. As the demand for scalable, secure, and eco-friendly blockchains rises, Immutable offers solutions. It prioritizes instant trade confirmation, zero gas fees for NFT minting and trading, and upholding Ethereum network security. Specifically catering to the NFT market, Immutable tackles prevalent issues like high transaction costs and scalability limitations on Ethereum. With a focus on developers, creators, and users, Immutable fosters a seamless and cost-efficient trading ecosystem.

How does Immutable X work?

Immutable X relies on Zero-Knowledge (ZK) rollup technology at its core, consolidating multiple NFT transactions into one on the Ethereum blockchain. This approach notably reduces gas fees and improves transaction throughput by offloading computation and storage off-chain while maintaining Ethereum's security standards.

Unlike traditional validation methods, ZK rollups aggregate numerous transactions into a single Zero-Knowledge Scalable Transparent Argument of Knowledge (ZK-STARK) proof. ZK-STARK ensures transaction privacy and security by proving possession of specific data without revealing sensitive information, leading to significant gas fee reductions.

By consolidating transactions into a ZK-STARK proof, Immutable X minimizes the computational and memory resources required for blockchain validation. Consequently, it lowers gas fees and increases transaction throughput, effectively addressing Ethereum's major challenges.

Moreover, Immutable X offers robust developer tools. Its REST APIs facilitate blockchain interaction, enabling users to create and transfer NFTs seamlessly without direct interaction with smart contracts. The platform's Software Development Kit (SDK) streamlines integration for developers, allowing swift creation of NFT-based projects.

Comparing ZK-STARK and ZK-SNARK technologies

In the field of cryptographic proofs, two prominent technologies stand out: ZK-STARKs and ZK-SNARKs, each with unique advantages. ZK-SNARKs, or Zero-Knowledge Succinct Non-Interactive Argument of Knowledge, enable transaction validation without disclosing all inputs or repeating complex computations. Their succinct nature allows for quicker verification compared to the original computation, along with minimal communication requirements. However, ZK-SNARKs rely on a trusted setup, introducing potential security vulnerabilities if the setup data is compromised.

On the contrary, ZK-STARKs provide a more transparent and quantum-resistant solution without the need for a trusted setup. While they incur higher verification overhead, ZK-STARKs excel in handling large-scale transactions, offering scalability and potentially faster processing times for extensive datasets.

What is the IMX token?

At the heart of Immutable's ecosystem lies the IMX token, an ERC-20 token crafted to support the protocol's economy and incentivize its users. Collaborating with Digital Worlds NFTs Ltd., the distribution and issuance of IMX tokens aim to enhance the platform's adoption and functionality.

IMX serves as a governance tool, empowering token holders to vote on pivotal decisions regarding the platform's development and trajectory. Moreover, it acts as a key incentive for platform engagement, with users earning IMX tokens for various network activities like trading and NFT creation. This incentivizes an active ecosystem and fosters user participation.

The tokenomics of IMX tokens

The IMX token's tokenomics are intricately designed to uphold its sustainability and functionality within the Immutable ecosystem over the long term. With a fixed total supply, the token's scarcity has the potential to drive value, especially if the platform expands and demand for the token rises.

At present, approximately 1.39 billion IMX tokens are in circulation, out of a maximum supply cap of 2 billion tokens. The token allocation strategy is strategically crafted to support ecosystem development and growth.

Over half of the allocation, specifically 51.74%, is earmarked for ecosystem development initiatives, including user rewards, marketing endeavors, and liquidity provisions. This allocation aims to ensure the Immutable platform's long-term viability and competitiveness in the ever-evolving blockchain landscape.

Additionally, 25% of the tokens are dedicated to platform development, while 4% is allocated to the foundation's reserve. Furthermore, 14.26% of the tokens distributed through private sale are vested over a period of two-and-a-half years.

This distribution strategy aims to strike a balance by rewarding contributors to the platform's success while ensuring broad token distribution to maintain a decentralized and engaged community.

The functions and uses of the IMX token

The IMX token boasts a diverse range of features and utilities that play pivotal roles in supporting the operations and governance of the Immutable platform. Its primary function revolves around platform governance, empowering token holders to shape decisions regarding upgrades and ecosystem alterations.

Protocol fees, transaction fees, and incentives

Immutable has devised a distinct fee structure to streamline transactions within its ecosystem. Developers leveraging the platform are subject to a 2% fee payable in IMX tokens. This fee can be settled directly with IMX or alternatively with ETH through automatic conversion from the transaction's currency. This mechanism ensures seamless engagement on the platform without necessitating users to hold IMX beforehand.

Moreover, Immutable employs IMX tokens to incentivize user engagement via a rewards system. Users accumulate points by participating in activities like NFT trading on the platform, which can then be exchanged for IMX tokens, further embedding the token into the platform's daily operations.

Staking and rewards

The IMX token offers a staking feature accessible to all holders meeting specific criteria related to engagement and participation within the Immutable ecosystem. By staking IMX tokens, participants can earn rewards based on their active engagement and contribution to the protocol, disbursed every 14 days.

Eligibility for staking rewards necessitates holding IMX tokens, active involvement in governance through voting, and either possessing an NFT on Immutable or having conducted a recent trade. This system not only cultivates a deeper connection between users and the platform but also encourages sustained activity and contribution to the ecosystem's vitality.

Governance participation

Governance plays a pivotal role in IMX tokenomics, granting holders the authority to influence significant decisions within the Immutable ecosystem. Token holders can vote on various proposals, spanning token reserve allocation, adjustments in the token supply, and the activation of daily rewards. The governance framework is designed to be inclusive and decentralized, accommodating a diverse array of proposal categories introduced through the governance process.

The Immutable platform ecosystem

The Immutable ecosystem is composed of several interconnected components aimed at providing a comprehensive solution for developers, creators, and users in the NFT domain. Key elements include the Immutable Marketplace, where NFTs can be bought, sold, and traded without gas fees, and Immutable SDKs, which enable developers to seamlessly integrate their applications or games with the Immutable platform.

At the core of its infrastructure are Immutable X, a Layer-2 scaling solution powered by StarkEx ZK rollups for building fast and secure NFT applications, and Immutable’s Zero-Knowledge Ethereum Virtual Machine (zkEVM), a fee-free blockchain developed in collaboration with Polygon, focusing on Web3 gaming.

Other revenue-driving components and player experience enhancers in the Immutable ecosystem include Immutable Passport, offering simplified user onboarding and wallet creation, Immutable Orderbook for sharing NFT orders across marketplaces, and Immutable Checkout for streamlined transaction management.

Furthermore, the ecosystem boasts partnerships and integrations with prominent NFT projects and marketplaces, augmenting its utility and accessibility. Dapps such as Illuvium, Gods Unchained, and Guilds of Guardians are among those built on Immutable, highlighting its role in fostering innovation and growth in the NFT space.

In conclusion, Immutable stands as a significant advancement in the blockchain and NFT landscape, providing a scalable, secure, and user-friendly platform within the Ethereum ecosystem. By leveraging innovative ZK rollup technology and a comprehensive suite of development tools, Immutable addresses Ethereum's limitations, offering an efficient environment for NFT transactions and game development. As the platform evolves, it is poised to play a crucial role in fostering broader adoption and growth in the NFT and blockchain gaming sectors.

Immutable's solution to the challenges confronting the NFT market on Ethereum offers scalability, security, and sustainability. The IMX token plays a pivotal role within this ecosystem, driving governance, user engagement, and platform growth. As the blockchain and NFT sectors continue to progress, Immutable and the IMX token emerge as key contributors to the future of digital asset trading and creation.