Institutional Weekly #9 — IMX Jumps 60% Following zkEVM Announcement

Presenting you with weekly insights into what the crypto community is buzzing about!

Bitcoin fell early in the week, but rebounded strongly as the Fed’s dovish stance buoyed the market. In the meantime, the Dow Jones hit a historic high, and other equity indices hovered at two-year highs.

Weekly Macro Overview

The last Fed meeting of the year drew the close attention of the market. Fed Chair Jerome Powell’s first dovish remarks since the beginning of this rate-hiking cycle signaled an end to the year-long restrictive monetary policy. Independent estimates of targeted Fed fund rates by Fed members (dubbed the “dot plot”) point to a potential 75 bps cut.?

Token of the Week

The token of the week is IMX. As the native token of Layer 2 gaming platform Immutable, it brought home a weekly 60.1% return in the past week.?

The outperformance is clearly linked to Immutable’s zkEVM announcement on December 8, 2023, as zkEVM enriches its product by offering an EVM-compatible gaming platform with the help of Polygon’s technology. In our view, zkEVM’s existing platform with StarkWare limits itself to gaming platforms only, as its offline computation feature weakens the security and connectivity of DeFi products.

Now, however, zkEVM could enhance its smart contracting ability and integrate DeFi with gaming on Layer 2, although in the process zkEVM brings gas fees back to the platform’s on-chain transactions.

In addition, the continuous collaboration with Web 2.0 gaming giants like Ubisoft and web3 gaming studios will drive its future adoption. In particular, the partnership with the top gaming DAO, Merit Circle, might attract strong traffic to the Layer 2 platform. Indeed, there’s been a clear rebound in the existing Immutable X Layer 2 network’s on-chain transactions.?

That said, investors need to be aware that Immutable’s network still relies on Gods Unchained as its most active gaming application, despite many reputable partnerships announced in the past years. Illuvium and other Web 2.0 partnerships have seemingly failed to produce a killer game.

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