Fixing Ethereum [email protected] a Time

This article is about another scaling solution for Ethereum, in the same category as MATIC. This token focuses primarily on NFTs and aims to assist Ethereum in cost reduction and speed.

Ethereum Doesn’t Have to do it Alone

Now one thing we realized this past year is that Ethereum does not need to be perfect. If you have read our articles last year, you know we hold Ethereum instead of Bitcoin primarily. Our article [here] explains our thesis. When Ethereum was first created, the founders probably never expected such a massive explosion of mass adoption to occur so soon. Ethereum was not inherently created to deal with the volume we are seeing today. In fact, 30% of Ethereum volume is spent on NFTs, this is great because Ethereum supply is burned with every transaction these days. It is also not great because it congests the highway that is Ethereum, and heavily increased fees. If you have read our writings on MATIC you will know that we believe Ethereum was never meant to solve this problem alone. The beauty of blockchain technology is interoperability, some chains or apps solve problems others cannot.

Say you would like to purchase an NFT for 200$ in Ethereum, you might pay 250$ in gas fees on a given day. This makes Ethereum quite unusable for the average person looking to get involved. Now NFTs will have much more utility and use case than just trading or holding jpegs. NFTs since they are unique could easily represent a ticket for a sporting event, or the ownership of your vehicle.

ETH gas fees NFTs, 32$ NFT, 1300$ gas fees LOL

Enter Immutable X

You know we are bullish on MATIC, since it provides a scaling solution for Ethereum. Once you have funds on MATIC everything goes from 25-100$ trade fees, to only a few cents per trade. Immutable X aims to do the same, but homing in on the NFT market. Immutable provides a marketplace with ZERO gas fees, this is huge for Ethereum. IMX also offers up to 9,000 transactions per second, hundreds of times faster than Ethereum. Users get to keep the custody of their tokens and NFTs. The minting founder of an NFT chooses the fees and royalties. Trades are instant, and IMX is NOT a sidechain. Sidechains offers scalability but lack the inherent security of Ethereum. IMX, focusing on ZK rollup technology, (check our article from MoC about scaling solutions for more information) can provide the Layer 2, but with the Layer 1 (Ethereum) security and reliability.

IMX is also carbon neutral, taking up almost no energy for its blockchain process [1]. The main founder of Ethereum, Vitalik Buterin even stated “The Ethereum ecosystem is likely to be all-in on rollups as a scaling strategy for the near and mid-term future”.  This alone is very bullish on the crypto asset class of Layer 2s. Layers 2s are essentially solutions for Ethereum that aim to solve the pitfalls of slow transactions and high fees.

IMX was able to raise over 100 million dollars in several fund raising rounds from interested venture capitalist firms. They have partnered with Starkware (over 2 billion dollar valuation) to implement the ZK rollup technology for the network. IMX already has several successful and reputable NFT collections. Tiktok is perhaps the most famous one with Tik tok top moments NFTs[2]. They also have a partnership with Superfarm, a project we have held throughout all of 2021.

IMX marketplace, Tik tok top moments

Thesis

Using the same thesis of MATIC is helpful for looking into IMX. IMX is younger and has less partnerships but looking at the main picture of this article the ecosystem is a strong one. IMX appears to be a great way to get some Ethereum and NFT exposure without having to buy either. IMX will generally scale as Ethereum shows strength, and certain NFT drops have the potential to pump IMX price. IMX tokens are used in several ways. If you hold their tokens in a connected wallet, whenever you buy an NFT or participate in swaps, the tokens are automatically staked. IMX is also used for 20% of the fees on the platform, this is done automatically even if you don’t hold IMX tokens. IMX will auto swap whichever currency you are using into the IMX you need for you, with no additional fees to the user.

Thesis

IMX has a game called Gods unchained that they have created, it uses NFT technology and mixes it into the gaming experience. Since this game is on Immutable, the experience is gasless. Gods unchained is similar to hearthstone, but brings true ownership of the in-game items, which can be traded and used in game. The game is free to play, and players can slowly earn cards that have real value in game and in USD terms. Players spent 87 billion dollars on in game items in 2019 alone! IMX brings players value, some of that money can be held as an investment through usable NFTs.

Tokenomics for IMX are great, with initial allocations very favorable for rewards and the project treasury for growth. Unlocks for the private round investors are fairly spread out and this will help for price action. Since the token has utility for staking, fees, and governance, they serve a useable purpose for investors. IMX is backed by Coinbase ventures which is bullish, and its partnership with starkware cannot be overstated. I believe that IMX will provide amazing returns these next 6 months for those willing to risk some Ethereum opportunity cost. Please remember, none of this is financial advice, these are my opinions. Please use this article to assist in your OWN thesis, and to help with research. Stay safe out there!

[1] https://www.immutable.com/

[2] https://market.x.immutable.com/assets?collection=0xe8e1b3125372e4912773357691aeb7c305584751

[3] IMX Whitepaper pdf

Patrick O’Neil

About Patrick O’Neil

Co-Founder

Patrick is an avid technology and gaming enthusiast. Patrick taught himself how to assemble computers in 2010 and was always fascinated with the gaming market. In 2019 he decided to sell his grayscale Ethereum funds and dive into the world of crypto firsthand. 

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