What To Know Of Immutable X, The ETH Layer 2 Player That Gamestop Partnered With

Gamestop, the giant video game retailer that brought about the meme stock mania, announced Thursday that it has partnered with the Ethereum Layer 2 network developer Immutable X, and not with Loopring, which was the previously rumored partner, to launch its own NFT marketplace.

Gamestop said the Immutable X-powered NFT marketplace will launch in the latter part of 2022. The partners have set up a $100 million grant fund to back developers who will debut their NFT games on the marketplace. According to Gamestop's regulatory filing, the majority of the grant fund is in Immutable X's IMX token, which is precisely 56,209,850 tokens, or worth more than $200 million based on current price.

While the specifics of the new NFT marketplace are still unclear, it looks like Gamestop has huge plans for its new business. While it has chosen Immutable X over Loopring, Wall Street Journal had revealed last month that the video game retailing giant was reportedly inches away from signing a partnership with two companies with the likelihood of getting into the same collaborations with several other crypto-centered entities soon.

"GameStop also is close to signing partnerships with two crypto companies to share technology and co-invest in the development of games that use blockchain and NFT technology, as well as other NFT-related projects, the people said. The retailer expects to enter into similar agreements with a dozen or more crypto companies and invest tens of millions of dollars in them this year, the people said," Wall Street Journal reported in January.

Interestingly, Gamestop's regulatory filing clearly shows that it is still working with Loopring.

So what is Immutabe X and why did Gamestop choose to collaborate with it instead of Loopring for this project?

The Ethereum network is known to have high gas fees and slow transaction confirmation times, apart from its struggle to scale. Immutable X was launched to solve these issues plaguing Ethereum, particularly the low-cost minting and trading of non-fungible tokens.

Immutable is an Ethereum Layers 2 network specially designed for Non-Fungible Tokens or NFTs. It is developed with the help of StarkWare's ZK-rollup technology and among its selling points is "instant trade confirmation, massive scalability, and zero gas fees" without compromising user custody.

Immutable X resolves these challenges in the Ethereum network by utilizing two different Layer 2 solutions called Validium and ZK-rollups. The latter helps Immutable X process thousands of off-chain trades by creating a proof that all transactions are valid, then publishes the proof on-chain, where it is later verified by a smart contract.

When asset owners sign off on the transaction, the transaction's validation takes place. Because the Ethereum network hosts the proof in smart contracts, along with the increased speed, the network's security is captured.

Validium, on the other hand, is much like ZK-rollups but its resulting proof is not published on Layer 1. Although it speeds up transactions, it still relies on a trusted group to hold authority. Validium is yet to be implemented.

In its statement, Gamestop said it used the Layer 2 system because of Immutable X's "zero gas fees for trading and minting NFTs in a carbon-neutral environment." The video game retailing giant intends for its NFT marketplace to feature "billions of low-cost, in-game assets that can easily be bought and sold," particularly noting in-game skins and digital real estate to be included.