Most recent update: [June 26, 2023]
What is ImmutableX?
ImmutableX is a layer-2 scaling solution on Ethereum for NFT projects. It purports to solve challenges related to accessibility, scalability, and decentralization often associated with the scaling of NFT projects. In the process, it enables transactions that are cheaper, faster, and more energy-efficient.
As one of the most hyped NFT platforms, ImmutableX provides an unmatched experience through its ease of use and interoperability between heterogenous blockchains. If the network continues to evolve as intended, it may be able to reach a whopping 9,000 transactions-per-second (TPS) all the whilst providing real-time access to a global order book – in other words, worldwide NFT trading at near-instantaneous speeds.
While the project may have started with a focus on the NFT-based card game “Gods Unchained”, its stated mission today is to utilize the power of immutable NFTs to revolutionize digital commerce and asset ownership. According to the firm’s chief executive, Robbie Ferguson, the Australian unicorn is an early-mover into an industry ripe with market opportunities.
Who is behind ImmutableX?
Immutable — an Australian company behind the ImmutableX network — was founded in 2018 by James and Robbie Ferguson. Their inspiration for the project came from the concept that underpinned the 2017 CryptoPunks trend: the ability to trade and own in-game items by using NFTs.
After experimenting with various types of layer-1 NFT infrastructures, they quickly realized limitations associated with scaling and liquidity that could impact the user experience. This prompted them to explore alternative solutions, and they eventually settled for a model that would rely on ZKsync for support. By opting for this model, the Ferguson brothers inadvertently created the first layer-2 scaling solution for NFTS.
How does it work?
The ImmutableX network is based on a technology called Zero-Knowledge Rollup (ZK-Rollup). Instead of immediately adding confirmed transactions to the layer-1 blockchain, they’re batched together on the layer-2 side, also known as off-chain transactions. The batch method – which relies on a verification process known as the zkSTARK proof – allows the ImmutableX network to process up to 9,000 TPS while providing cheap transactions in a carbon-neutral environment.
On top of these attributes, the ImmutableX network gains its interoperability features through a set of REST APIs (Representational state transfer application programming interface) that bypass the need to directly interact with smart contracts. By simplifying these blockchain interactions, the end-user can seamlessly use a variety of wallets with the platform without having to switch between networks.
The ImmutableX Token and Tokenomics
IMX tokens are currently available for sale on multiple exchanges. The maximum supply is capped at 2,000,000,000 tokens, and as of March 9th 2023, the market cap for IMX amounted to US$770 million. The current circulating supply of IMX tokens is 849,352,746, and it is expected to reach peak capacity around February 2025.
The initial allocation for IMX is broken down as follows:
- Ecosystem Development: 51.7%
- Project Development: 25.00%
- Public Sale: 5.0%
- Private Sale: 14.0%
- Additional Community Growth: 0.3%
- Foundation Reserve: 4.0%
The IMX token is purported to serve as a utility token for activities such as staking and voting. It is also used to facilitate transactions on the network since 20% of protocol fees must be paid in IMX. All fees paid in IMX are in turn sent to a staking reward pool, thus encouraging healthy participation in the network.
The CTO and co-founder of Immutable, Alex Connolly, explains the robustness of the network by analyzing its consensus and bridge security. With regards to consensus, Connolly explains that even if Immutable’s systems were to be compromised, no invalid transaction could be inserted since all state transitions are ultimately verified on a layer-1 smart contract. This is a security mechanism made possible thanks to the network’s reliance on StarkWare’s StarkEx prover/verifier system, also known as STARK proof.
For bridge security, Connolly highlights the need for a verified state to pre-emptively include either deposits or withdrawals when bridging funds, which discourages multisig attacks and prevents “fake” state transitions that could be submitted by compromised validators.
Drawbacks and risks
In terms of technical characteristics, the network’s consensus mechanism relies on Immutable as a single operator, which means that the latter could extract Maximal Extractable Valuable (MEV) by reordering and frontrunning transactions.
With regards to the industry at large, the total volume of NFT sales have dwindled just as the most recent cryptocurrency “winter” started to settle in. This means that the ImmutableX Network could experience a prolonged decrease in usage and traffic that may affect its competitiveness. Further, NFTs continue to struggle with public perception outside of the industry, with a number of criticisms boiling them down to “JPEGs” that people buy and sell.
Before listing IMX on the VirgoCX Platform, VirgoCX performed due diligence on IMX and determined that IMX is unlikely to be a security or derivative under Canadian securities legislation. VirgoCX’s analysis includes reviewing publicly available information on the following:
- The creation, governance, and location of IMX and/or its primary development team;
- The supply, demand, maturity and liquidity of IMX; and
- Legal and regulatory risks associated with IMX.
Statutory Rights under Securities Legislation
VirgoCX is offering Crypto Contracts on crypto assets in reliance on a prospectus exemption contained in the exemptive relief decision Re VirgoCX Inc. dated May 30th 2022 (the Decision). Please be aware that the statutory rights in section 130.1 of the Securities Act (Ontario) and, if applicable, similar statutory rights under the securities legislation of each other province and territory in Canada do not apply in respect of the Crypto Fact Sheet to the extent a Crypto Contract is distributed under the prospectus relief in the Decision.
To learn more about the technology behind ImmutableX, check out these in-depth resources here:
- The official site of ImmutableX
- Coinmarketcap’s overview of ImmutableX
- Coingecko’s tokenomics overview of IMX
- Coinbase’s overview of ImmutableX, along with the relevant news and blogs related to IMX.