I used to love gaming, probably still do, but won’t go anywhere near a game nowadays, as I get too addicted. Playing World of Warcraft is about building up a character and equipping it with rare items that have to be collected via quests, dungeon raids and player vs. player competitions. The collected items end up in the inventory of the character, but the player does not really own the items. The player and his character have them for the time the gaming subscription is paid for or as long as the game exists, but keep nothing beyond that. The items usually cannot be traded or even sold for real money outside of the game.
Digital asset ownership has the potential to change this and give any player ownership of the items collected and built ingame. The ownership is recorded on a blockchain and the technology to do so is called NFT. A non fungible token is a unique token of an image, a video or an ingame item, that can be owned by someone via a wallet. It enables users to take these digital ingame assets outside of a game, potentially use them in other games and trade them on marketplaces for real money. Non fungible means the tokens are not interchangeable (fungible) between each other. If you change one non fungible token for another you don’t end up with the same thing. It’s like trading houses. Each one of them is unique.
This technology has been all the hype in the last couple of months, including Bored Ape Yacht Club, Crypto Punks and Axie Infinity. NFTs go beyond just jpegs for digital bragging rights and expensive twitter profile pictures. They can form communities among owners or find use within games like Axie Infinity. Axie’s are little creatures with unique features that duel each other in a game. Axie’s can also be bred to create new unique creatures and of course, because they are NFTs on a blockchain, they can be sold by the owner.
Axie Infinity marketplace
Games like these have gained popularity and Ethereum quickly came to its limits. The Axie Infinity Studio built its own sidechain to support minting and trading a much larger amount of Axie’s and reduce transaction fees so that users would actually enjoy playing the game.
But not every gaming project would be willing to build the infrastructure on their own and this is exactly where Immutable X steps in. It builds the first layer 2 solution for NFTs on Ethereum and this at a scale ready for gaming. From their docs:
The network currently supports approximately 150,000 non-fungible token transactions per day at 30% network usage. Our plan is for Immutable X to support more than 200 million trades per day while consuming less than 30% of Ethereum’s capacity.
Layer 2 means running a bunch of transactions outside of layer 1, in this case the Ethereum blockchain, and then summarizing them back onto layer 1 at a later stage. This means a lot of transactions can be executed with low transaction fees, but can keep the security of the main chain. Immutable X uses rollups to achieve this.
Below is a great video generally explaining rollups, the technology summarizing the transaction that happened off-chain:
Check out this great intro to rollups
Rollups are just one possible option, but have emerged as the most common scaling technology — Vitalik goes into more detail. Here is the diagram from my post on Tokenomics 101: in between chains:
Rollups bridging from layer 1 to layer 2
Layer 2 enables the best of both worlds, security of the layer 1 blockchain and high scalability of an auxiliary system.
Immutable X makes use of zero knowledge rollups or ZK-Rollups. The rollup uses cryptography to generate a cryptographic proof of all transaction data when rolling up back to layer 1. This is also called a validity proof since the math involved in this process proves that all transactions that occurred on layer 2 are valid and once they are accepted onto the layer 1 blockchain they become immutable like all other layer 1 transactions.
In comparison to other rollup technologies, ZK-Rollups require a lot of computation power, but enable — via validity proofs — immediate withdrawal back to layer 1, creating a seamless user experience.
Immutable X is built using StarkEx technology by Starkware. The diagram below gives an idea of how StarkEx enables transactions to be executed outside of the blockchain, on layer 2, and then updated and proven back onto the layer 1, main chain (here is a great little clip walking through the high level process).