Understand Immutable X in 3 Minutes: The First Layer 2 Scaling Solution for Ethereum NFTs

Source: Coinlist Blog

Compiled by: Dong Yiming, Chain Catcher

Immutable X is the first Layer 2 scaling solution for NFTs on Ethereum, offering instant transaction confirmations, high transaction throughput, and zero gas fees, all without compromising Ethereum's security. The project completed over $12.5 million in funding on CoinList in September.
Recently, Coinlist discussed with the Immutable X team about the content and application scenarios they are building. The following is a compilation by Chain Catcher:
1. What is Immutable X? Who is it built for? What problems does it solve?
Immutable X is a protocol that allows developers to easily create successful NFT projects. Despite the recent surge in NFT trading volume and interest, there are still many issues that hinder the adoption of mainstream NFTs by developers and users, especially on Ethereum (where the vast majority of NFTs are traded).
Immutable X enables any developer to create world-class NFT projects without sacrificing Ethereum's liquidity and network effects. With this in mind, we set out to address the following issues:

• Poor user experience: Immutable X provides users with the best trading experience through a shared global order book, allowing for zero gas fees, instant transactions, and high liquidity.
• Low scalability without compromising security: The Immutable X protocol supports extremely high transaction throughput (9,000+ TPS) without requiring users to compromise their asset custody.
• Slow developer experience: The Immutable X developer suite (SDKs and APIs) provides developers with a permissionless gateway to build a mainstream NFT game, dapp, or marketplace in days instead of months.
  2. What do you think are the advantages of building a Layer 2 protocol on Ethereum?
  One key decision we made when building Immutable X was to choose the underlying scaling solution and blockchain infrastructure. We are not interested in switching to another blockchain or sidechain because the value of NFTs depends on the blockchain they reside on.
  Ethereum is by far the most dominant smart contract blockchain, and as a true zk-rollup Layer 2, Immutable X inherits Ethereum's security directly. Users can move their assets between Layer 1 and Layer 2 in a trustless manner, meaning there are no custodial or security risks like those seen with hacks on Poly Network. NFTs on Immutable X will never leave Ethereum.
  Another significant advantage of Ethereum is its mature and rapidly growing network effects. Ethereum has a thriving developer ecosystem that can create useful applications and integrations across the ecosystem; it also has an enthusiastic end-user community and a network protected by a massive market, making the adoption of Immutable X easier as we can integrate existing Ethereum tools such as stablecoins, DeFi protocols, and wallets.
  Finally, the Ethereum community has provided tremendous support for our project, for which we are very grateful.
  3. Why create a native token IMX? What are its use cases?
  IMX is an ERC-20 utility token designed to accelerate the growth of Immutable X by rewarding network activities on Immutable X (such as trading, providing liquidity, and building applications). The token aligns the incentives between traders, creators, and the marketplace so that everyone benefits from protocol activity.
  The three main use cases of the IMX token are:

1. As transaction fees: 20% of the protocol fees for each transaction on Immutable X must be paid in IMX. If users currently do not have IMX, Immutable will convert the fees by purchasing IMX on the open market (maintaining a seamless user experience).
2. Governance rights: As active members of the Immutable X community, users can vote on the future of the protocol with IMX-weighted votes.
3. Staking rights: All IMX used to pay transaction fees is sent to a staking rewards pool. This mining pool will be distributed proportionally to users currently holding IMX. The more shares a user holds, the more rewards they receive. Here is an example of how staking works:
   
   4. The NFT ecosystem became hugely popular in 2021, receiving increasing adoption and media attention. What misconceptions do people have about NFTs?
   Newcomers often have negative impressions of NFTs due to two main misconceptions:
   NFTs are just "jpegs." NFTs are not just "jpegs" (images). They are unique digital tokens that can represent ownership of any item, including videos, in-game items, music, fashion, memberships, real estate, and other significant assets. Due to the trustless and transparent nature of blockchain, the public can easily verify the true ownership of these assets, making these NFTs far more valuable than the images associated with them.
   NFTs are terrible for the environment. As underlying blockchain technology improves, the energy usage of NFTs will significantly decrease. In fact, Immutable X is at the forefront of this initiative, using a fixed amount of energy (less than 1% of the standard Ethereum energy cost) regardless of scale. We even purchase carbon offsets for any minimal remaining emissions, and as a company, we are carbon positive.
   5. Immutable X has several strategic partners integrating with its infrastructure. Can you share some notable examples?
   Currently, we have dozens of world-class partners building on Immutable X, with hundreds more on our waitlist. While most partners come from gaming, collectibles, marketplaces, and DeFi, we will soon position Immutable X as a successful solution for large mainstream experiences. Here are some notable partners integrated with our protocol:

• OpenSea: The world's largest peer-to-peer marketplace for crypto collectibles and NFTs, with NFT trading volume on the platform reaching billions of dollars. By integrating with Immutable X, OpenSea will enable users to conduct instant, gas-free transactions on Ethereum without compromising asset security.
• Illuvium: A decentralized NFT collection and auto-battle game based on Ethereum. By using Immutable X's ultra-scalable protocol, Illuvium users will enjoy various benefits, including increased NFT liquidity for all traders.
• ECOMI: Their app VeVe has over 350,000 active users and provides the most comprehensive digital collectibles experience, including licensed NFTs from partners like Marvel. Immutable X is the chosen blockchain partner for ECOMI's VeVe digital collectible NFTs.
  6. What NFT trends and use cases are you most interested in?
  At Immutable, we believe that all unique and tradable items, including artwork, in-game assets, and physical ownership, will ultimately be represented as NFTs on public blockchains. The significant growth in NFT trading volume this year only confirms this argument. We love seeing NFT avatars spread on Twitter, and NFT art becoming mainstream—NFTs are here to stay!
  In specific verticals, Immutable loves gaming. The gaming industry is currently valued at $300 billion and is expected to grow by about 10% annually from 2021 to 2025, surpassing the combined size of the sports, film, and music industries. This content presents a great opportunity for tokenization: if each of these game assets is represented by NFTs, they will be more valuable to users.
  Games like Axie Infinity have already gained over 350,000 daily active users and have tokens worth billions of dollars. The total market cap of "utility NFTs" has significantly increased this year, and this is just the beginning. Only Immutable X can handle this scale without compromising asset security.