Article contributed by Sudarsan Karki (SuperSudar)
Follow him on Medium
If you were active in the Crypto space in 2021, you would have known the defining narrative: Layer-1 platforms/Ethereum killers.
But, in 2022, the narrative has switched to: Layer-2 platforms.
Although Layer-1 (L1) platforms still continue to attract mainstream attention, their inability to solve the scalability trilemma has led to the rise of Layer-2 (L2) platforms.
We have already seen the rise of Polygon (MATIC).
But is that the only L2 out there?
Which platform promises to be the Next Big L2?
Enter Immutable X (IMX).
Immutable X is a Layer-2 solution for trading non-fungible tokens (NFT) on Ethereum.
It offers three core features without compromising user custody:
- Instant trading.
- Massive scalability (up to over 9,000 TPS).
- Zero gas fees for both minting and trading.
Immutable X is the result of a partnership between two well established players in the blockchain and gaming development spheres: Immutable and Starkware.
Immutable, formerly known as Fuel Games, is a Sydney-based blockchain gaming and digital-asset technology company started by brothers James Ferguson and Robbie Ferguson.
They are the creators of popular blockchain games Gods Unchained and Guild of Games.
Gods Unchained currently ranks #25 in the top blockchain games with 24.13k users, 1.47 million transactions and US$16.09 million trading volume as per January statistics.
Since it started in 2018, Immutable has raised almost US$100 million in funding, and has got backing from major VC firms.
Designed by Author
Starkware Industries is an Israeli-based start-up that provides scalable blockchain technology for apps and dApps started by Eli Ben-Sasson, Uri Kolodny and Michael Riabzev.
Starkware also started in 2018, and since then, it has raised US$173 million in funding.
Designed by Author
Interestingly, Vitalk Buterin also participated in the funding on July 16, 2018.
Currently, Starkware is valued at $2 billion.
Apart from Immutable, Starkware’s scaling solutions are used by other blockchain products too.
Rising Popularity of NFTs
NFTs represent a shift in cultural values.
If I were a mathematician, my formula would have been: NFTs = digital asset ownership + rarity + cultural significance.
Well, the pointer of the compass needle has now moved to the third variable: cultural significance.
Artists from varying fields like art, music, and sports are all into NFTs because it has become a culture for celebrities to own NFTs.
Eminem, Snoop Dogg, Ozzy Ozbourne, Justin Bieber, Shawn Mendes, Timbaland, Paris Hilton, Lindsay Lohan, Emily Ratajkowski, Gary Vaynerchook, Ellen DeGeneres, Tony Hawk, Serena Williams, Reese Witherspoon, Ashton Kutcher, Jack Dorsey, Kate Moss, the list goes on.
No matter what your interests are, your top influencers are all into NFTs.
If this doesn’t indicate a cultural significance, then what else does?
Let me quote a line from Immutable X’s whitepaper.
“NFT trading volume has grown from USD 13.7 million in the first half of 2020 to USD 2.5 billion in the first half of 2021, and we have only scratched the surface of the potential depth and utility of NFTs.”
But guess what?
The NFT market generated over US$23 billion in trading volume in 2021!
That’s almost 10X already.
The first man gets the oyster; the second man gets the shell.
Your first man in NFTs is Ethereum, leaving all the other blockchain platforms with shells.
Ethereum clearly dominates the NFT market share. However, it is gradually losing ground to rivals, especially Solana.
In one year, Ethereum’s dominance has dropped from around 95% to around 80%.
A 10% drop in dominance is indeed a matter of concern.
Reasons for loss in dominance
There are four main reasons for Ethereum to lose its dominance:
- Low scalability
This is the biggest issue Ethereum has had to date. In order to solve the scalability trilemma, Ethereum has sacrificed its scalability to maintain security and decentralization. This is the same thing Bitcoin has done too.
However, with the massive NFT demand, Ethereum has constantly experienced congestion and slow transaction times.
Five to 15 transactions per second (TPS) is not doing any good to Ethereum. Instead, it has resulted in increased gas fees. Even Ethereum 2.0 is not going to solve it. Transaction throughput will still be limited.
2. Poor user experience
NFT users have been complaining about the poor user experience on Ethereum for a long time.
Sluggish transaction confirmation time, and high rate of transaction failure are enough to irritate loyal users.
NFT wallet experiences are not so good either. Their poor recovery mechanisms and lack of proper information display refrains users from making informed purchasing decisions.
3. Slow developer experience
It is not the fault of developers if they cannot improve user experience. They are just too busy learning new languages and paradigms for writing security-critical applications.
Without simple Application Programming Interfaces (API), platform-specific software development kits (SDK) and pre-built infrastructure, developers can never be able to use their energy on improving user experience.
Additionally, this creates a massive barrier to entry as new developers tend to flock to other blockchain platforms.
NFTs are illiquid compared to other fungible ERC-20 tokens due to their heterogeneous nature.
As long as NFT traders cannot flip their NFTs quickly and source the best price possible, there is low motivation for them to trade NFTs.
IMX is the solution
This is not a statement; it is a claim.
Immutable X claims to solve Ethereum’s one and only issue: scalability.
If the scalability gets fixed then who wouldn’t trade NFTs on Ethereum with the already robust security and decentralization?
But how does IMX plan to fix it?
This part is going to be a bit long, but it’s super important.
IMX plans to fix Ethereum’s scalability issue through several core components:
- ZK-Rollup scaling engine
The reason Immutable and Starkware partnered was to merge Immutable’s deep understanding of blockchain gaming and digital-asset technology with Starkware’s profound knowledge on providing scalable blockchain technology.
Zero-Knowledge Rollups (ZK-Rollups) boost world-class scalability and user experience by batching large transaction groups, generating a “validity proof” for them, and then submitting that proof to Ethereum’s smart contract.
IMX allows for over 9,000 NFT transfers, trades and mints per second.
- API Abstraction Layer
IMX’s API Abstraction Layer allows developers to build NFT applications easier than ever by converting complex asynchronous blockchain interactions, which can take minutes or hours, into synchronous REST API calls.
This removes the barrier to entry as established companies can launch better projects in an easier and faster way.
- NFT-enabled wallets
Immutable X currently supports all desktop Ethereum wallets without forcing the user to switch networks.
Through an intermediate layer (the “Link”), IMX enables an NFT-specific wallet experience of world-class quality without any compromise on security.
- Platform SDKs
IMX’s SDKs speed up the entire process as they allow developers to build NFT projects in hours rather than in weeks.
- Shared liquidity
To improve liquidity, IMX provides a shared global order book. This means that orders created on one marketplace can be filled on another.
If NFTs can be easily traded on different marketplaces, IMX can attract diverse customers and maximize liquidity.
- Compliance and support for world-class partners
IMX understands that some of the largest brands in the world hesitate to explore NFTs because they are concerned about the regulatory implications of NFTs, including copyright protection and anti-money laundering (AML) / know your customer (KYC) legislation.
This is why IMX offers a platform which is fully legally compliant, so that users do not have to worry about user custody while purchasing NFTs.
Did you know that global sensation Disney NFTs are minted using IMX?
- Default marketplace and transaction history explorer
IMX provides a default marketplace to trade NFTs, adding to the legitimacy of the protocol.
Users can easily verify transactions and view historical state.
No matter what haters say, Ethereum will continue eating the oyster while other platforms will scratch out left-overs from the shell.
No-one can point a finger at Ethereum’s security and decentralization.
And IMX was born to fix Ethereum’s scalability issues, so that NFT trades on Ethereum can receive mainstream adoption.
It is the most technically advanced solution for NFT scaling ever built, developed with Starkware’s powerful STARK prover and rollup technology.
So, if I say IMX is the “next big L2”, don’t you dare point that finger at me!
(Disclaimer: I am not a financial advisor. Please use my articles to educate yourself on cryptocurrencies, but not as a sole factor to influence you to blindly jump into cryptocurrencies).
Article contributed by Sudarsan Karki (SuperSudar)
Follow him on Medium