The NFT market, that started out strong in 2021, has been in a relative decline in recent times. With the majority of NFTs hosted on Ethereum, the blockchain’s exorbitant transaction fees have been singled out as one of the key factors affecting the growth of the industry. ImmutableX is a Layer 2 solution that aims to provide a one-stop-shop for all things related to NFTs and NFT trade. It might just become the catalyst required to revive the NFT concept’s fortunes. In this article, we are taking a closer look at this innovative platform – a true leader of the NFT-focused blockchain world.
NFT Market – Falling Short of Grand Expectations
NFTs started out with gusto and became the main talking point in the crypto industry back in 2021. After a string of multi-million dollar sales that year, many believed that the NFT market would grow exponentially, becoming the leading force in the crypto world. While the NFT concept has become quite popular, the actual growth rates fell well short of those grandiose expectations.
Many reasons have contributed to the lack of the expected turbocharged growth, including:
· NFTs are nothing other than digital content residing on the blockchain. They have no inherent groundbreaking advantages over any image or video hosted on a plan vanilla internet server. As such, any unique or revolutionary properties ascribed to them were exaggerated to begin with.
· The actual digital art pieces represented by NFTs aren’t even stored on the blockchain. Blockchains are only capable of storing references/metadata to these digital pieces - images, videos, animation - in the form of unique addresses. Each NFT has a unique blockchain address, but the image, video, or animation referenced in the address is stored away from the blockchain, often on a centralised server or Content Delivery Network (CND).
While the digital content metadata is well-protected using blockchain’s cryptographic security, the actual content is open to the same vulnerabilities as any other item residing on the internet. This makes NFTs as vulnerable to copyright infringement as digital artwork showcased on websites and blogs.
· Being unique, non-fungible items, NFTs can never match the liquidity and trading activity of cryptocurrencies. The folk interested in all things crypto are often into active trading with the purpose of turning profit. It’s much easier to do so with the highly liquid high-cap cryptocurrencies than with even the most popular NFT collections.
· Last but not least, the vast majority of early NFTs and a significant majority of NFTs today reside on the Ethereum (ETH) blockchain, which is known for its exorbitant transaction costs. This makes both trading and minting of NFTs more expensive.
ImmutableX – Designed with NFTs in Mind
While all the above factors have put brakes on NFT adoption, arguably the cost factor has been a major, if not THE major, factor affecting the enthusiasm for NFTs. NFTs are created by digital artists, with the bulk of the NFT trade involving small-scale transactions. Ethereum’s transaction (gas) fees have made such small-scale NFT development prohibitively expensive.
Additionally, Ethereum has never been designed specifically for NFTs; it’s a general-purpose blockchain with a key focus on decentralised apps like DeFi platforms.
The arrival of Solana (SOL), with its low transaction fees, breathed new life into the NFT market. However, Solana, similar to Ethereum, is a general-purpose, large blockchain, with NFTs being only a specific sub-section of its focus. The blockchain’s frequent outages also didn’t help the NFTs based on it.
It was clear that the industry needed a platform designed with NFTs and NFT trade in mind. ImmutableX (IMX) was the best candidate to fill that role. ImmutableX is a Layer 2 protocol linked to the Ethereum blockchain and has a specific focus on NFTs. The project was founded in 2018 but launched its mainnet operations in April 2021, when the NFT mania was just starting to build up.
Instead of going through the hoops of creating a Layer 1 blockchain of its own, ImmutableX started out as a Layer 2 maintaining a link to Ethereum, where the majority of NFTs are hosted. This allowed ImmutableX to immediately leverage Ethereum’s rich NFT ecosystem.
ImmutableX, with its Layer 2 design, offers much cheaper transaction and minting costs for NFTs. It’s been steadily rising in the NFT market and currently ranks 5th by overall trade volumes. However, none of the four chains with the larger NFT trade volumes is focused specifically on NFTs. Below are the current top 5 blockchain platforms by 30-day NFT trade volumes as of 15 October.
Image source: Cryptoslam.io
Among the top 5 NFT chains above, Ethereum, Solana, and Polygon (MATIC) are general-purpose, large platforms that specialise in everything under the crypto sun. They have never been designed specifically for NFTs or NFT trade. These platforms leverage their sheer size and legacy factors to maintain high NFT trade volumes.
The second-ranked Mythos is a specialised blockchain designed for trade in gaming assets, specifically the assets of the games released by the well-known Mythical Games development studio. Mythos is all about gaming rather than purely NFTs. Its popularity is propped up by the massive armies of gamers using Mythical Games’ product line.
ImmutableX is the only top platform from the list above that has a specific focus on all things NFT. It has miniscule fees for trading NFTs, instant confirmation of NFT trades, and gas-free minting of NFTs. The platform’s development team are also active in developing outside partnerships to help creators market and trade their NFTs.
ImmutableX aims to create a comprehensive environment for NFT creators, traders, and enthusiasts. We would even say that what Ethereum is to DeFi, ImmutableX is to NFTs. With a strong, specialised focus on NFTs, we expect ImmutableX to attain an even larger share in the overall NFT trade in the future. The platform’s current 5th ranking in the NFT world might be far from the highest position it’ll achieve. The flexibility and affordability of NFT trading and minting that ImmutableX enables might also act as important factors in reviving the fortunes of the overall NFT industry. If NFTs ever pique your interest, watch this space and this platform closely!