What if you could own, trade, and earn real value from your in-game assets across any game or marketplace? Immutable is making this vision a reality by bringing the power of NFTs to the gaming world in a scalable, user-friendly way.
Built on Ethereum, Immutable uses ZK-rollup technology to enable gas-free NFT minting and near-instant, low-cost transactions. This solves the major challenges that have held back blockchain adoption in gaming - slow speeds, high costs, and poor user experience. By providing the infrastructure for game developers to easily integrate NFTs, Immutable is positioning itself as the go-to platform for the next generation of web3 games.
Major gaming companies like Ubisoft, Konami, and GameStop have already partnered with Immutable, paving the way for NFTs to transform how players interact with and derive value from their favorite games. With a focus on scalability, sustainability, and interoperability, Immutable is set to bring digital asset ownership to the masses and unlock a new era of player-driven gaming economies.
Is Immutable a good addition to your cryptocurrency portfolio?
This article will examine specific aspects of the token in the form of investment hypotheses (including risks), aiding you in the token assessment of Immutable.
Investment hypotheses
Immutable is building a comprehensive web3 gaming ecosystem that will onboard the next billion gamers by providing the infrastructure, tools, and user experience needed to make blockchain gaming mainstream.
Immutable's focus on scaling NFTs specifically for gaming will allow it to become the leading NFT platform for blockchain games as that market segment grows rapidly in the coming years. The gaming-optimized features like zero gas fees, instant transactions, and high throughput will be key differentiators.
Immutable is well-positioned to benefit from the overall growth of NFTs in areas like metaverse and decentralized gaming, which are projected to become enormous markets. Even capturing a small share would represent immense upside.
The partnerships with major players like Ubisoft and integration with Amazon Web Services could potentially drive significant adoption of Immutable by game developers and studios, cementing its position as the go-to NFT solution for gaming.
Immutable's first-mover advantage in zk-rollup scaling technology for NFTs gives it a 6-9 month technical lead over competitors. This head start will allow it to build a robust developer/gaming ecosystem that will be difficult for later entrants to overcome.
The IMX token's use for paying fees and staking rewards will create demand and value accrual as transaction volume on the platform increases. The requirement to use IMX for 20% of transaction fees is an effective token sink
The experienced team, strong VC backing, and ties to Ethereum provide Immutable with the resources and credibility to execute on its ambitious roadmap and weather crypto market volatility as it builds for the long-term.
However, the biggest risks for Immutable are:
Immutable's ability to capture significant market share will depend on strong execution and the stickiness of their platform for developers and users.
Competition from other NFT-focused Layer 1s and Layer 2s. Can Immutable stand the test of time?
Failure to achieve sufficient adoption by game developers.
The possibility that blockchain gaming falls short of growth expectations.
Let’s dive in the protocol assessment.
Immutable’s solution
Context
Gamers should have the ability to trade, craft, gather resources, steal loot, win items in competitions, and participate in a robust virtual economy. For this to happen, optimal gaming blockchains should possess several characteristics:
Transaction costs: For a game economy to thrive, transaction costs should be free or just a fraction of a cent.
Transaction speed: Transactions must be processed within seconds as gamers dislike waiting.
Throughput: The network should be capable of supporting hundreds of thousands of transactions per minute.
Network security: A blockchain should be safe, secure, and decentralized for smooth operation.
While the technical aspects of a blockchain ecosystem are crucial, other factors are also significant. The software available greatly impacts onboarding and the user experience.
Questions to consider include:
How straightforward is it to acquire crypto on that chain?
How does one create a wallet?
Software developers play a crucial role in creating gaming blockchains that appeal to gamers.
Problem
The main challenges facing blockchain gaming adoption are:
High transaction costs and slow speeds on Ethereum make it difficult to scale games and provide a good user experience. Gas fees for minting NFTs and making in-game transactions are prohibitively expensive.
Complicated wallet setup and login processes create friction for mainstream gamers unfamiliar with crypto wallets. Requiring a separate wallet login upfront causes many players to bounce.
Lack of interoperability prevents players from moving their NFT assets between different games and marketplaces. Assets are siloed in each game.
Concerns around the security, authenticity and true ownership of in-game NFT assets.
Immutable’s solution
Immutable is solving these issues by:
Using ZK-rollup technology to enable gas-free NFT minting and near-instant, low-cost transactions while still leveraging Ethereum's security. This makes it viable to build scalable games with a mainstream-friendly UX.
Launching “Immutable Passport”, a non-custodial wallet and authentication system that lets players create an account and log into any game/marketplace in the Immutable ecosystem with just an email or social login. This abstracts away the complexity of crypto wallets.
Providing an open, shared NFT ecosystem where any NFT minted on Immutable can be integrated into other games and marketplaces, enabling true interoperability of assets.
Securing digital asset ownership by storing NFTs on Ethereum, providing an immutable record of each item's history and ownership that players can verify. Immutable also has an AI-based system to detect and prevent fraudulent transactions.
Market opportunity / potential
Contrary to buzzword narratives such as Zero-knowledge proofs and Layer 3s, the gaming narrative is simple and easier for retail investors to comprehend. This simplicity is vital as retail investors favor narratives that are straightforward and digestible.
The gaming sector is a behemoth, surpassing the combined revenues of the film and music industries. With an annual expenditure of $150 billion by gamers on in-game items (e.g., coins and skins) and a projected market size of $321.1 billion by 2026, the gaming sector presents a massive opportunity for the integration of blockchain technology.
The integration of blockchain into gaming can transform the creation and exchange of value in the gaming world, offering tangible benefits to gamers and new investment opportunities:
Verifiable Ownership of In-Game Assets: Blockchain technology enables players to have indisputable ownership over their in-game items, such as skins and virtual goods. This is a significant departure from traditional gaming, where players spend billions annually on in-game items without having real ownership
Financial Rewards and Benefits: Unlike traditional games that operate within a closed economy, blockchain games can offer financial rewards to players. This model not only enhances the gaming experience but also creates a more equitable ecosystem where players can earn from their participation and contributions to the game
Source: Chainlink
Funding in the gaming sector
Between 2019 and 2023, the blockchain gaming sector attracted substantial investment, with its market value estimated to be around $15 billion. However, the development of blockchain games is inherently slow due to the complexity and innovation involved. Games typically take 2-4 years to build, which creates a lag between the time of funding and the actual release of the game.
Competitors
Immutable operates within the gaming infrastructure domain, encompassing L1s, L2s and more. This covers all the technology needed to support cryptocurrency games and their ecosystems. Immutable is a Layer 2 scaling solution for Ethereum, specifically tailored for gaming. It forms the foundation for high-budget games like Illuvium and Guild of Guardians and has distribution partners like GameStop.
Immutable's main competitors include BEAM, WAX, Solana, Ronin, Polygon, and Avalanche.
Hosting several AAA games on its platform, Immutable implements token models that resist easy farming and ensure enjoyable gameplay. These games, backed by over $100 million in funding and years in development, are slated for a 2024 release. They have the potential to draw in players on a scale comparable to traditional AAA games, such as Starfield (Solana), which, in its first two weeks following an earlier release this year, attracted 10 million players.
Ecosystem development
Immutable's commitment to the gaming community is further evidenced by its partnerships with a.o. leading blockchain games and marketplaces, its environmentally friendly platform, and the introduction of the IMX token for fees, staking, and governance.
This comprehensive ecosystem supports the seamless integration of NFT marketplaces, increasing liquidity and trade volume, and underscores Immutable's vision of fostering a vibrant, sustainable, and interconnected gaming world.
Several games are currently in the pre-launch phase. Immutable plans to release a few games in March-April and approximately 30 games by the end of July.
Volume traded
The table below provides the NFT market's trading activity, highlighting which collections are most actively traded. The top 15 collections already entail a whopping $562m volume traded (all time).
Gods Unchained Cards is the top collection, with the highest trading volume across all time frames. This indicates a strong and sustained interest in this collection, which could be due to its utility, rarity, or community engagement. The game's design, led by the former game director of Magic The Gathering: Arena, emphasizes competitive play, requiring players to strategically outsmart their opponents by building decks capable of combating a wide variety of tactics.
Technology
Platform
At the core of Immutable's offering is its platform layer, which includes tools that streamline game development, enhance liquidity and monetization, and offer seamless player onboarding and native gameplay experiences.
This platform is designed to address the challenges of game development in the blockchain space, making it easier for developers to bring their visions to life while providing players with total ownership of their in-game digital assets.
Immutable’s products and associated roadmap are highlighted below.
Liquidity strategy
The platform's liquidity strategy is another cornerstone of Immutable's approach, addressing liquidity fragmentation at three levels:
Marketplaces,
Rollups and chains
Wallets
By focusing on unified wallets through the Immutable Passport, linking buyers and sellers across different marketplaces via the Immutable Global Orderbook, and unifying liquidity across various Layer 1 and Layer 2 solutions, Immutable aims to ensure users get the best price for their assets wherever they trade.
This strategy is designed to optimize the operation of the Immutable Marketplace ecosystem, making it more efficient and user-friendly.
Immutable’s products and roadmap
Immutable's products consists of four key pillars:
Player experience
Revenue engine
Developer experience
Infrastructure
Player experience
Within the player experience pillar, they currently developing key features within the Immutable Passport and Checkout products.
Passport: A non-custodial wallet and authentication solution that streamlines user onboarding through passwordless sign-on and automated wallet creation.
Passport dashboard on Immutable zkEVM with on-ramping, bridging, and swapping functionality.
Enriched Confirmations to help gamers confirm or decline transactions on Immutable zkEVM with confidence by providing the transaction summary and all its details
Checkout: A complete payment solution that manages the entire checkout process for games or marketplaces.
Storefront functionality for games (primary sales)
Direct NFT purchase with fiat currency
L2 to L2 asset transfers on Immutable zkEVM
Revenue engine
Minting: Allows minting millions of carbon-neutral NFTs with Ethereum security.
Orderbook: Enables marketplaces and creators to increase liquidity by sharing NFT orders across leading marketplaces. The following features are in development:
Verified collections to protect players from fraud
ERC-1155 Orderbook support on Immutable zkEVM
Minting API to simplify the complexities of minting at scale on Immutable zkEVM
Developer experience
Immutable provides a comprehensive suite of developer tools and products to make it easy to build web3 games and applications on their layer 2 solutions:
Software developer kits (SDKs): Immutable offers SDKs for various programming languages that provide convenient access to their APIs and smart contracts, allowing developers to leverage their web3 infrastructure quickly from familiar development environments.
APIs: A set of powerful APIs give developers access to on-chain data to build games, including minting APIs, orderbook APIs, and more.
Developer Hub: Serves as the primary touchpoint for builders, providing access to code samples, live support, and educational content.
Infrastructure
Within the infrastructure pillar, Immutable is developing their zkEVM chain, which enables games to increase their revenue streams, protect their community, and create frictionless experiences for their users.
The tools are built on Immutable’s foundational layer 2 solutions
Immutable X (Starkware): A zk-rollup offering zero gas fees, instant transactions and streamlined gameplay mechanics. Recommended for less complex games.
Immutable zkEVM (Polygon CDK): An upcoming EVM-compatible rollup enabling advanced gameplay, economies and interoperability with Ethereum. Recommended for more complex games utilizing smart contracts.
Immutable is developing the following features:
Immutable zkEVM Prover Integration - Immutable will continue to assess waitlisted projects as we progressively open deployer access to the chain
Immutable zkEVM General Availability - The deployer allowlist is removed and all developers can deploy custom smart contracts on Immutable zkEVM Mainnet
Investors / Funding
Immutable X has raised significant funding ($319.9m) and has a strong focus on gaming, which has allowed them to compete effectively in the space.
Furthermore, the protocol had $230 million across Immutable balance sheet in cash and more than a billion tokens on the Immutable balance sheet.
Team
Immutable, co-founded by James Ferguson, Robbie Ferguson, and Alex Connolly in 2018, is based in Sydney. The company boasts a team of over 240 leading technologists, creators, and innovators.
Tokenomics
The total supply of IMX tokens is capped at 2 billion, distributed over various segments to support the ecosystem's growth and development
Ecosystem Development: 51.72% is allocated for user rewards, developer grants, and other initiatives to encourage ecosystem growth.
Project Development: 25% supports the ongoing development and operational costs of the Immutable X project (see product roadmap above).
Private Sale: 13.86% was distributed through private funding rounds.
Public Sale: 2.94% and 2.48% were allocated to two public sales, respectively.
Foundation Reserve: 4% is reserved for the foundation to ensure long-term sustainability.
Immutable implements a 2% "protocol fee" on all secondary trades within its ecosystem. This fee is not a gas fee but an exchange fee paid in the currency of the trade. From this fee:
20% is converted to IMX tokens and distributed to the staking rewards pool.
Stakers and active participants on the network receive these rewards, aligning their interests with the long-term success of the platform.
The IMX token serves multiple purposes within the Immutable ecosystem
Fees: A portion of transaction fees is converted to IMX and allocated to stakers.
Staking: Holders can stake IMX tokens to earn rewards, participating in the ecosystem's growth.
Governance: IMX holders have the right to vote on key proposals, influencing the direction and policies of the Immutable platform.
In summary, the IMX token plays a crucial role in incentivizing participation, ensuring the sustainability of the Immutable ecosystem, and providing a mechanism for governance and rewards. Its tokenomics are designed to align the interests of all stakeholders—traders, creators, and marketplaces—towards the collective growth and success of the platform.