Crypto business model Immutable X analysis

Immutable X is the first layer two (L2) scaling solution for non-fungible tokens (NFTs) on Ethereum, with instant trading, massive scalability and zero gas fees for minting and trading, all without compromising user or asset security.

Note: This is just a template of crypto business model (Using immutable X as a sample project)

Token Utility

1. Fees

20% of Immutable’s protocol fee must be paid in IMX tokens. This fee can either be paid directly in IMX, orImmutable will automatically swap the actual purchase currency (e.g. ETH) for IMX on the open market. This means users do not need to explicitly hold IMX tokens to be able to transact on the protocol. Note that there is no entitlement, allocation or rights to revenue of the Immutable X protocol purely on the basis of ownership of IMX tokens

2. Staking

IMX tokens received as part of the fee capture mechanism described in 6.1 will be sent to the “staking rewards pool”. At regular monthly intervals, this pool will be distributed proportionally between all users who are actively staking their IMX tokens on Immutable X. A user’s rewards will be proportional to the amount of IMX they have staked during the month, relative to all other active stakers. Staking will be activated a couple of months after the token launch.

3. Decentralized Governance

Token holders will be able to vote on token-related proposals via decentralized governance. Proposals will include topics such as how to allocate token reserves, voting on developer grants, activating daily rewards and changes in token supply. Other proposal categories may be added via the appropriate decentralized governance processes. Our goal is to continuously add to the utility and decentralization of the Token through user voting.

Token Supply And Allocation

2,000,000,000 IMX tokens, provisionally allocated to the following areas:

Ecosystem development: 51.72% Allocated portion for user rewards, developer grants, liquidity provision and marketing purposes. .

Project Development: 25% Allocated to the development of the Immutable X protocol. Development to be conducted by the service provider, Immutable. Pty. Ltd.

Private sale: 13.86% Allocated to private sale investors, both institutional and individual.

Public sale: 5.42% Allocated to the IMX public sale.

Foundation reserve: 4% Allocated to ecosystem-development related initiatives, mainly liquidity provision for exchanges (centralised and decentralised venues).

Ecosystem Development Breakdown

The ecosystem development allocation will be rewarded to those who conduct pro-network activity on Immutable X. These rewards are designed to increase activity, broaden usage application and to incentivise third party developers to use our technology to develop their projects. It consists of two main initiatives:

1. Daily Rewards

Each day, users will have the opportunity to earn points by conducting pro-network activities, such as trading, depositing or minting assets. The exact calculation of the points will be outlined at a later date and may be adjusted after the initiative has commenced. Every 24 hours, the daily IMX rewards pool will be distributed to users based on their proportional share of the total points earned by all users. Two-thirds (66.6%) of these daily reward tokens are subject to a linear unlock of six months to ensure usage and rewards are aligned with long term protocol users. User rewards will be activated at a later date via protocol governance mechanisms

2. Developer Grants

Developer grants may be given to parties interested in developing on Immutable X, with milestones to ensure developers contribute value to the protocol. Some funds will be allocated directly by the Foundation, and some will be allocated by decentralized governance on the protocol.

Token Unlocks

Tokens will be progressively unlocked for certain user groups. These tokens can be in one of three states

1. Locked: Unavailable to trade, stake or withdraw

2. Awaiting Cliff: Unavailable to trade or withdraw, but eligible to stake and vote

3. Unlocked: Available to trade, stake and withdraw

Tokens are awaiting cliff if they would have been unlocked if it were not for the cliff. For example, if a party has been allocated 10,000 tokens with a 2 year unlock length (defined below), a 1 year cliff, and a 30 day unlock frequency, whilst there will be no tokens unlocked after 1 month, they would have unlocked 1/24 if there was no cliff.

Thus 1/24 are “awaiting cliff.” After 2 months, no tokens are unlocked, but 2/24 are now “awaiting clif

The rules for token lock-ups for different segments are contained in the table below. Terms used in that table are defined as:

1. Percentage Subject to Lock: The percentage of tokens distributed which are subject to lock-ups

2. Lock Start Date: From when the cliff and unlock period are calculated

3. Unlock Cliff: Period during which no tokens are unlocked

4. Unlock Frequency: How often the unlocked amount is updated

Token Supply Schedule

The circulating supply of IMX is designed to incentivise long-term growth and sustainability. The anticipated circulating supply schedule is illustrated below (a projection based on unlock dates)

Immutable x Key strength

Protocol Architecture & Features

Rollup Design

The core of Immutable X is the zk-rollup scaling engine, developed in partnership with StarkWare using their StarkEx prover and verifier. Rollups in general: In a zk-rollup, users lock assets in an on-chain smart contract: these assets are “deposited” into L2. These assets can be traded using L2 transactions, which are ordered by an “operator” entity into a consistent historical sequence.

Transactions are then grouped into a “batch” or “block”, and a proof is generated for the validity of this batch. This proof is then published on chain and verified by a smart contract which updates the on-chain state. Using this on-chain state, users can unlock their assets (“withdrawing” from the rollup)

Features

Immutable X is the first layer two (L2) scaling solution for non-fungible tokens (NFTs) on Ethereum, with instant trading, massive scalability and zero gas fees for minting and trading, all without compromising user or asset security.

Immutable X is the most technically advanced solution for NFT scaling ever built, developed with StarkWare’s powerful STARK prover and rollup technology. The IMX token is the native ERC20 utility token of the Immutable X protocol, which users can earn by conducting pro-network activities such as trading, and which can be used to pay fees, perform governance or stake on the protocol.

Immutable X Link acts as an intermediary between Immutable X and the users’ existing Ethereum wallet. It allows the user to experience a pure NFT-focused wallet interface and experience on the Immutable X platform without needing to create a new wallet. This also allows Immutable X to support a thriving third-party marketplace ecosystem, without presenting a security risk: users can rely on the Immutable X Link to ensure they are not being deceived about the assets they are purchasing.

Immutable X’s ‘Link’ is a trustless intermediate layer that acts as the medium between any Ethereum wallet and the Immutable X protocol. This means that users do not have to switch networks in order to use the Immutable X protocol. This allows Immutable X to leverage the inherent security of Ethereum. The ‘Link’ plays a key role in two areas of the protocol- trading assets and the NFT Wallet experience

Every time a user wishes to trade on the protocol, he must sign transactions using a STARK key-pair. This key pair is generated by ‘Link’ whenever a user signs a security message while connecting to their Ethereum wallet using an Immutable X-enabled website or dApp.

Even if the STARK keypair is lost, the user can re-generate it using a fresh Ethereum signature. This "delegates" wallet security and recovery to the user's underlying Ethereum wallet. This STARK keypair is then used to sign transactions inside the Link, with the transaction type determining the precise encoding of each signature

Immutable X offers support to all Ethereum wallets and so traders can purchase or sell NFTs across multiple NFT-supported wallets without switching assets from one network to another.

Availability & Flexibility

Market

The Immutable X Marketplace exists to provide users with a default home for trading NFTs on the protocol, to ensure that users and developers shall always have at least one place to trade. The Immutable X Marketplace also lowers the entry barrier for content creators and small developers who lack the capacity to build their own marketplace platform. The marketplace also allows users to check previous transactions and trade history, a feature that is generally present in most layer-1 NFT marketplaces.

Every time you list an asset with Immutable it is instantly distributed to multiple marketplaces

Immutable is over 600x more efficient than Ethereum L1, enabling real-time minting, transferring, and trading

The IMX token is currently available on all major exchanges such as Coinbase, Binance, and Huobi Global.

While the NFT bull-run was predominantly on the Ethereum blockchain- traders, gamers, and hodlers found it becoming increasingly difficult to transact on the blockchain due to its high gas fees. NFT enthusiasts hoping to get into a project at mint had to engage in gas wars, sometimes paying double or more the cost of mint in gas to secure an NFT.

Most gamers and games on the Ethereum blockchain could no longer be profitable as on-chain games require many transaction approvals, resulting in inflated gas costs. This was a serious problem that needed solving, and that’s exactly what led to the creation of Immutable X, a layer-2 scaling solution on Ethereum for NFTs. When it comes to concerns about gas fees, Immutable X boasts of a zero-gas fee layer 2 solution.

Decentralized Governance

Token holders are also given voting rights to vote on governance proposals. These proposals cover a range of matters such as how to allocate token reserves, voting on developer grants, activating daily rewards, and changes in token supply. The weight of each holder’s vote depends on the number of tokens he holds.

Asset Minting

Minted entirely in L2 Retaining security of L1

One of the key advantages of Immutable X is that assets can be minted entirely in L2, while retaining the security of L1. Every asset can be minted with immutable metadata, also called a “minting blob” or “blueprint”, which will be passed to the L1 smart contract on asset withdrawal. This technology has already been used to mint more than 10 million NFTs on Immutable X (more than all ERC721 NFTs on L1).

Assets can also have “mutable metadata”, which will be polled from the minting application’s server at regular intervals, and each application can optionally provide a “metadata schema”, which will inform applications about the ideal representation of each asset’s mutable metadata properties.

This combination of immutable metadata and mutable metadata support allows NFTs to be used to represent every type of digital asset - from a game asset with a changing experience level to a generative artwork NFT based on an immutable seed and mutable user inputs.

Signing Transactions

Intermediate layer between any Ethereum wallet and Immutable X

In order to trade on Immutable X, users require a key pair derived from a custom, STARK-friendly elliptic curve. To solve this problem, we have built the “Link”, to be an intermediate layer between any Ethereum wallet and Immutable X.

Users sign a security message, and that message is used as the seed for the generation of the STARK keypair. This “delegates” wallet security and recovery to the user’s underlying Ethereum wallet, as even if the STARK keypair is lost, the user will be able to re-generate it using a fresh Ethereum signature. Inside the Link, this STARK keypair is then used to sign transactions, with the precise encoding of each signature determined by the transaction type.

Weakness

Beta Stage:

The Project, while not owned, operated, developed or otherwise controlled by us, is in beta stage, which means that the Project and all related software are experimental. The Project is provided on an “as is” and “as available” basis, without warranty of any kind, either expressed or implied, including, without limitation, warranties that the Project is free of defects, vulnerabilities, merchantable, fit for a particular purpose or noninfringing.

Any use of the Project shall be at your own risk. In no event shall we be held liable in connection with or for any claims, losses, damages or other liabilities, whether in contract, tort or otherwise, arising out of or in connection with the Project or its operation or use.

Uncertainity:

The Website, the Project, and the Materials may contain forward-looking statements based on current expectations that involve a number of risks and uncertainties. All opinions, forecasts, projections, future plans or other statements other than statements of historical fact, are forward-looking statements.

Any development plans and projections, business projections, future functionality and projected performance of the Tokens, the Project or us, as well as prospects and the future prospects of any industry, are forwardlooking statements.

Security:

Although we make reasonable efforts to ensure that the Tokens, the Project and their related software follow the high-security standards, we do not warrant or represent that the Tokens, the Project or any such related software are secure or safe, or protected from fishing, malware or other malicious attacks.

Further, the Tokens, theProject and their related software may contain weaknesses, bugs, vulnerabilities, viruses or other defects which may have a material adverse effect on the operation of the Tokens, the Project or any such related software or may lead to losses and damages for you, other users of the Tokens, the Project or any such related software or third persons.

Risk inherent in blockchain:

The Tokens, the Project and their related software are or will be deployed on the Ethereum blockchain main network, and later may be deployed on other blockchains. As a result, any malfunction, breakdown or abandonment of such blockchain(s) may have a material adverse effect on the Tokens, the Project or such related software.

Legal Uncertainity:

Our intended activities are subject to various laws and regulations in the countries where we operate or intend to operate. We might be obliged to obtain different licenses or other permissive documents in some or all jurisdictions where we intend to operate our business, therefore, our business in such jurisdictions shall always be subject to obtaining such licenses or permissive documents, if so directed by applicable laws.

There is a risk that certain activities may be deemed in violation of any such law or regulation. Penalties for any such potential violation would be unknown. Additionally, changes in applicable laws or regulations or evolving interpretations of existing law could, in certain circumstances, result in increased compliance costs or capital expenditures, which could affect our ability to carry on our business model

Theft:

There is no assurance that there will be no theft of your digital assets as a result of hacks, sophisticated cyber-attacks, distributed denials of service or errors, double-spent attacks, flash-loan attacks, vulnerabilities or defects of the Tokens, the Project or their related software or of the Ethereum or any other blockchain, or otherwise.

Such events may include, for example, flaws in programming or source code leading to exploitation or abuse thereof. Any of the above may lead to partial or complete theft or loss of digital assets used in transactions carried out in connection with the Tokens, the Project or their related software.

How do they earn Money

While it is true that Immutable X is a zero gas fee protocol, it earns its revenue through the collection of a 2% fee from trades executed on the protocol. Around 20% of the protocol fees collected must be paid in IMX.

This fee can either be paid directly in IMX, or Immutable will automatically swap the actual purchase currency (e.g. ETH) for IMX on the open market. This means users do not need to explicitly hold IMX tokens to be able to transact on the protocol.

Fees details

Fees are the main source of revenue for the Immutable X protocol. Currently, Immutable X takes a 2% fee

On all primary asset sales, and a 2% fee on every NFT trade (denominated in the purchase currency). As our goal with Immutable X’s fees is to align incentives between application developers, marketplaces and traders, other ecosystem participants will also be able to set fees:

1. Marketplaces can also add their own fees to every order. As Immutable X offers a shared orderbook that is accessible to all marketplaces, an order created on one marketplace (the “maker”) can be filled on another (the “taker”), with both receiving a fee.

2. An asset originator can apply a royalty to each NFT they mint to receive a fee from every subsequent purchase of that asset. The royalty is a fixed percentage of the asset sale price and cannot be adjusted after the NFT is minted.

This alignment of incentives between asset originators and marketplaces opens up entirely new revenue streams for businesses like gaming, or individual creators like artists. Never before have they been able to benefit from the ongoing appreciation of their creations. This system gives them a massive incentive to continue to make those assets valuable to those who currently hold them.

Why work with them

Activities & Progress

Immutable is an industry-leading NFT technology company, with more than 100 members with backgrounds ranging from blockchain, FAANG, finance, fintech, and management consulting. Immutable is the developer of the Immutable X protocol, as well as being the developer and publisher of popular NFT projects Gods Unchained and Guild of Guardians

IMX is an ERC-20 utility token designed to reward pro-network activities such as trading, liquidity provision, and application development on Immutable X. The token matches incentives between traders, creators, and marketplaces, ensuring that protocol activity benefits all players.

Some of the earliest projects and NFT collections launched on Immutable X include Gods Unchained, Moody Krows, Landloot, and AstroBros. The protocol has also seen adoption by commercial entities like Tiktok and Stardust.

Due to its API and SDK set, Immutable X can easily be integrated into many existing commercial platforms. This bodes well for the platform as there is already existing interest from social media giants like Facebook and Instagram to venture into the NFT and metaverse ecosystem. Some might speculate that Immutable X could very well be the protocol considered for implementing this vision.

Staking

All the IMX used to pay transaction fees is sent to a staking rewards pool. This pool will be proportionally distributed among users who are currently staking IMX. For your IMX to be considered staked, you must: Hold IMX on L1 or L2, Have voted on a governance proposal in the last 30 days, and Either: Be holding an NFT on Immutable X, or have completed a trade in the last 30 days. This staking structure ensures that holders are actively participating in the protocol.

Investors

Immutable raised a seed round in 2018 and a USD 15 million Series A in September 2019 from investors including:

Naspers

Coinbase

Apex Capital Partners

Nirvana Capital

Continue Capital

Security and Network

Immutable believes NFT users and developers shouldn’t have to choose between the security and network effects of Ethereum, and creating a world-class experience for their users. Immutable X is a cutting edge protocol for NFTs which enables projects to build on Layer 2 Ethereum with a fantastic developer and user experience. This is achieved through several core components:

ZK-Rollup Scaling Engine

Immutable X combines NFT-specific exchange and proof logic with the cutting edge rollup technology developed by StarkWare to create the most advanced tool for trading NFTs ever built. Rollups allow for world-class scalability and user experience while retaining the underlying security of Ethereum. They do this by batching large numbers of transactions, generating a “validity proof” for those transactions, and then submitting that proof to an L1 smart contract. Immutable X’s rollup allows for more than 9,000 NFT transfers, trades and mints per second, meeting and exceeding the scale required by mainstream NFT projects

API Abstraction Layer

Immutable X wraps this scaling engine in a set of powerful REST APIs. On Immutable X, every interaction, from minting to trading to transferring, is as simple as an API call. Converting complex asynchronous blockchain interactions, which can take minutes or hours, into synchronous REST API calls, is a powerful upgrade to existing blockchain development paradigms. Without the need to interact directly with smart contracts, new entrants in the space, such as established gaming and content companies can launch better projects, faster..

NFT-Enabled Wallets

Unlike other blockchains or sidechains, Immutable X currently supports all desktop Ethereum wallets without forcing the user to switch networks. The protocol provides an intermediate layer (the “Link”) which enables an NFT-specific wallet experience of world-class quality. This also allows Immutable X to support a thriving third-party marketplace ecosystem, without presenting a security risk: users can rely on the Immutable X Link to ensure they are not being deceived about the assets they are purchasing.

Platform SDKs

Platform and programming language specific software development kits (SDKs) allow partners to integrate with Immutable X more easily. Currently, a Typescript SDK implementation is available which can be used to integrate the protocol easily into websites.

The SDK allows for typed access to the Immutable X APIs and Wallet, regardless of the platform. In the future, SDKs will be offered for all common programming languages, as well as development platforms like Android, iOS, Unity and Unreal. Combined with the APIs, the Immutable X SDKs will allow partners to build NFT projects in hours rather than weeks.

Shared Liquidity & Orderbook

Unlike other NFT scaling solutions, Immutable X provides a shared global orderbook to facilitate protocol liquidity. This means that orders created on one marketplace can be filled on another, promoting more effective marketplace bootstrapping and price discovery.

This also means that NFT marketplaces can be built on Immutable X without a backend. Immutable believes that a key way to maximize the liquidity of NFTs is allowing those NFTs to be traded on different marketplaces, which target different customers - we would love to see a thriving third-party marketplace ecosystem develop on Immutable X!

Compliance & Support for World-Class Partners

Currently, some of the largest companies in the world are exploring NFTs. However, they are often concerned about the regulatory implications of NFTs, including copyright protection and AML/KYC legislation. Immutable X will offer a platform which is fully legally compliant and is capable of being the trusted partner of these larger projects, in order to retain them on Ethereum. We believe that purchasing NFTs should be as simple as shopping in traditional ecommerce, without sacrificing user custody.

Default Marketplace & Transaction History Explorer Legitimacy is a major contributor to the value of NFTs.

The Immutable X Marketplace exists to provide a default home for trading NFTs on the protocol, giving users and developers confidence there will always be a place to trade. The Immutable X Marketplace also lowers the barrier of entry for content creators and smaller developers who do not have the resources to create their own trading experience. Verifying your transaction history is important for fostering trust and legitimacy in blockchain ecosystems, and Immutable X will be no different, with a place for anyone to verify transactions and view historical state