Shalini Nagarajan

Web3 gaming company Immutable has established itself as a major player in the blockchain space.&nbsp;



The Sydney startup places a strong emphasis on layer-2 solutions to improve scalability and affordability within the Ethereum NFT ecosystem — critical aspects to any smooth gaming experience.



After five years of operation, Immutable considers Web2 its primary competitor over any crypto peer.



In March, the firm <a href="https://blockworks.co/news/immutable-and-polygon-join-forces-to-attract-web3-game-developers" target="_blank" rel="noreferrer noopener">teamed up with Polygon</a> to streamline onboarding processes for game studios and developers keen on enabling crypto in their products.



Alex Connolly, co-founder of Immutable, explained the endeavor to create a gaming ecosystem centered around Ethereum and Polygon&#8217;s <a href="https://blockworks.co/tag/zkevm" target="_blank" rel="noreferrer noopener">zkEVM technology</a> that can stand up to Web2 gaming’s best. 



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Blockworks: How does zkEVM utilize zero-knowledge proofs to enhance transaction speeds and reduce gas fees?



Connolly: zkEVM is the holy grail of Ethereum scaling because it combines the EVM environment, which lets you run Ethereum smart contracts. So nine out of the top 10 chains are all EVM chains, which means that developers that write Solidity smart contracts, they’re used to the developer tools. There are thousands of people who already know how to program for those chains, as opposed to new chains like Aptos or Sui, where you need to learn a new language, or where the execution environment is really different.&nbsp;



So you get access to the same Ethereum environment. But if you use Ethereum itself, you&#8217;ll find that transactions are slow and costly, which is impactful for domains like gaming. Some chains take this approach and they do a very low-cost EVM chain where it looks like Ethereum, but you can do faster transactions. That comes at a big trade-off because the security and the decentralization of the chain is heavily reduced.&nbsp;



What zkEVM lets you do is have the same EVM execution environment with high speeds, with the security of Ethereum. The way you do that is through a rollup where you batch a number of transactions together, generate a proof that those transactions represent a valid state change, and then publish that proof to Ethereum layer-1.&nbsp;



A smart contract on Ethereum layer-1 verifies that proof. Let&#8217;s say you have ETH on layer-1, you move it into a zkEVM on layer-2, you can interact with layer-2 smart contracts, you can go participate on that chain, and then you can bridge that ETH back to layer-1 and you won&#8217;t have to worry about it being stolen by a malicious chain.



Blockworks: What is the distinction between Immutable X and Immutable zkEVM?



Connolly: Immutable X was our first application-specific rollup. That is basically a rollup that doesn&#8217;t support all the functionalities of the EVM, which is the smart contract execution environment. Immutable X only supports exactly the things that you need to do to build a game. So it supports trading, minting and transferring NFTs. And it supports all those things in a hyper-optimized way. It&#8217;s just an API interaction with immutable and it&#8217;s built on Stark technology.&nbsp;



Immutable zkEVM offers an environment to developers which is more flexible. You can have custom smart contracts, it’s more composable, you can interact with other people&#8217;s smart contracts. It has slightly less performance because it has to cover a wide variety of customer interactions. But at the moment, Immutable offers both to developers.



Blockworks: What are some lessons learned from the architecture of Starkware that may have influenced your approach?



Connolly: One thing that we definitely learned from Starkware is that many customers only need those basic functions, so they need minting, trading and transferring. Immutable X is perfect for them, because it means that you can build a game really simply and have access to amazing scaling.&nbsp;



What zkEVM gives you is compatibility with Ethereum which means that for a lot of games that are already on Ethereum, or Polygon or Avalanche, it&#8217;s much easier for those games to come and take advantage of the rest of the Immutable platform without having to leave the EVM behind.&nbsp;



Blockworks: Does the concept of superchains factor into Immutable’s framework and what role do they play in enhancing scalability?



Connolly: &#8220;Superchains&#8221; is not a very well-defined term as things stand. There are a lot of people talking about infrastructure for spinning up new additional app chains (application-specific blockchains). In our context, a particular game might want or need its own chain or rollup because it needs either some degree of customization, or it needs its own sort of horizontal scale, like it doesn’t want to compete for block space with any other game. 


<div class="wp-block-image">
<figure class="alignright size-large is-resized"><img decoding="async" loading="lazy" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/07/AlexConnolly.jpg?w=1024&amp;h=1024" alt="" class="wp-image-61303" width="180" height="180" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/07/AlexConnolly.jpg?w=1280 1280w, https://blockworks-co.imgix.net/wp-content/uploads/2023/07/AlexConnolly.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/07/AlexConnolly.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/07/AlexConnolly.jpg?w=150 150w, https://blockworks-co.imgix.net/wp-content/uploads/2023/07/AlexConnolly.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/07/AlexConnolly.jpg?w=257 257w, https://blockworks-co.imgix.net/wp-content/uploads/2023/07/AlexConnolly.jpg?w=261 261w, https://blockworks-co.imgix.net/wp-content/uploads/2023/07/AlexConnolly.jpg?w=219 219w, https://blockworks-co.imgix.net/wp-content/uploads/2023/07/AlexConnolly.jpg?w=80 80w" sizes="(max-width: 180px) 100vw, 180px" /><figcaption class="wp-element-caption">Alex Connolly, Immutable co-founder </figcaption></figure></div>


We believe there is a potential future for app chains and more customized blockchains. At the same time, most games at the moment don&#8217;t need their own chain, in terms of their scaling needs. And in terms of customization, they&#8217;re actually better off benefiting from the network effects of building on a shared chain. So when you build on Ethereum, there are lots of users that already have ether in their wallets. 



Most games in our view should start on a shared chain and eventually, when they actually have mainstream traction, that&#8217;s then the point where they go to their own app chain.&nbsp;



Blockworks: In what ways does Immutable plan to further expand and evolve its offerings to meet the needs and demands of the community?



Connolly: The opportunity for games to have their own chain is incredibly exciting. But to get it right, you need a few things. Firstly, you need the demand and you need people to want to use the block space on that chain. Secondly, you need a user experience that actually makes sense.&nbsp;



Imagine if you&#8217;re a gamer, and you have a Call of Duty chain, World of Warcraft chain, a FIFA chain and then you have a wallet on each of those chains. It sounds complex even just describing it, let alone for average people who are interfacing with it. We operate in a unique position in the industry, in that we both offer technology at the rollups layer with Immutable X and Immutable zkEVM. And also we offer up-the-stack products like Immutable Passport and Immutable Checkout, which help developers build games that make sense to Web2 players. 



We’re working with the Polygon team to offer additional app chains using Polygon supernets. We are in a position to make sure the user experience of interacting across those chains is smooth and makes sense to gamers.&nbsp;



Blockworks: Who do you consider key competitors offering similar solutions to the community?



Connolly: By far our biggest competitor is the Web2 gaming industry. We want everyone who builds Web3 games to be using Immutable products. But realistically, our competition is the exploitative ownership model of Web2 games where you rent items instead of owning them and you can&#8217;t sell the things that you spend your money on in games.&nbsp;



What we need to do to be successful there is to demonstrate that blockchain games have the capability to actually add value to players’ lives, not as a theoretical investment vehicle. But as, “Hey, when you buy something in a game, we believe that you should own it.”



Blockworks: Are you using artificial intelligence tools to improve your offerings?



Connolly: We have our own studios, which helped to produce some of the best content in the space for our platform with games like God&#8217;s Unchained, Guild of Guardians and Shardbound. In those games, we definitely use AI for things like art and game interactions.



On the platform side of things, I think we use AI in a more traditional way in terms of a SaaS technology company where we can optimize our products across the board. As Web3 gaming takes off and when we have millions of users using products like Immutable Passport, we’re hopeful that we&#8217;ll be able to use AI to deal with problems like transaction security. 



Keeping users safe in this environment requires us to build a lot of the same infrastructure as banks have when they&#8217;re detecting things like transaction fraud, and also recommendations for when users are making purchases for these assets. We think there are lots of ways that we can offer additional value at the wallet layer and the checkout layer by improving those experiences.&nbsp;



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We compete with Web2’s ‘exploitative ownership model’: Immutable co-founder

Michael Bodley

<div id="highlights-block_a7a4bb5f1e5f523a41031b947c7b872c" class="highlights">
 <ul>
 <li>The company raised about $3 million at a valuation of about $30 million from a number of venture firms</li>
 <li>The startup has also partnered with a number of well-known gaming guilds, which it plans to tap in a bid to grow its market share</li>
 </ul>
 
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Blockchain-based gaming platform <a href="https://docs.openblox.io/" target="_blank" rel="noreferrer noopener">OpenBlox</a> has raised its seed round as the company looks to ride a wave of interest in play-to-earn gaming in preparation of its first game launch later this year.



OpenBlox raised about $3 million at a valuation of about $30 million and plans to earmark the funds for product and business development, game design and additional staffers. The round was led by venture capital firm Shima Capital, a recently launched San Francisco firm helmed by veteran venture capitalist Yida Gao. Shima, after this story was published, reduced their contribution by an unspecified amount. 



Venture firms including 3Commas Capital, 100&#215;100 Venture Capital, Digital Strategies and MC Ventures were also set to participate in the seed round.



MC Ventures withdrew their commitment after publication, as did Digital Strategies. Representatives for the firms did not respond to a request for comment. 



OpenBlox, which employs ethereum virtual machine (EVM) technology in an effort to create a bridge between blockchains, also has an NFT marketplace in the works — and in the meantime has been partnering with a number of prominent gaming guilds.



The team plans to roll out three games — players can deploy blockchain applications, including NFT (non-fungible tokens), across the trio of metaverses. The gaming platform intends to create a Web3-powered community, as opposed to minting digital collectibles on a one-off basis — an approach that may deliver immediate profits, but one that rarely drives sustained user engagement.



It&#8217;s planning its first experience, dubbed RunBlox, to be released publicly in May on the Avalanche blockchain — along with an in-game token, $RUX. To play the game, users are required to hold a RunBlox shoes NFT, which will be partially distributed via an airdrop. 



Its digital universe is based on a collection of 7,998 genesis blox NFTs that can breed via in-game mechanics, similar to blockbuster play-to-earn giant Axie Infinity.



The fundraise comes as a growing number of top-tier traditional game-makers — including Ubisoft — are looking to employ blockchain elements.



Those blue-chip, so-called AAA developers have the leg up on game design and gameplay, industry participants say, but <a href="https://cms.blockworks.co/ubisoft-nft-efforts-are-off-to-a-rocky-start/" target="_blank" rel="noreferrer noopener">have faced a tough sell</a> from gamers wary of NFTs because of environmental concerns.



After starting with just Ethereum, the team has pivoted onto the Arbitrum blockchain, a side-chain, as it works to expand its decentralized finance (DeFi) dealings.



The startup plans to introduce an in-game token, which perhaps could convey governance features down the line. The longer-term plan is to create a decentralized autonomous organization (DAO) that would be controlled by game players.



Gao, who has previously backed other play-to-earn Web3 startups, said the team has “deep experience” in both traditional video games and as crypto natives. OpenBlox is also working with a number of top-tier developers and graphic designers, which helps, he said.



The challenge is to bridge avid traditional video gamers — accustomed to stunning graphics and engaging gameplay — with legions of crypto natives who may be less choosy on the gameplay front, but more particular when it comes to the blockchain technology in play and the potential to make money as a consumer in exchange for their time and loyalty.



“You want to basically have these new types of ways to play games, where the ownership is in the hands of the players, not the developers, and you&#8217;re able to bring in other users and bring in other counterparts to the space,” Gao said. “So, instead of having all the graphic designers and the people making the games in the studios control everything, you can bring in others.”



Elle Sia, a Web3-focused investment director at OpenBlox backer Digital Strategies, said the game&#8217;s graphics are significantly sharper than your average crypto-native game.&nbsp;



And the team, according to Sia, has been taking pains to ensure the gameplay is fun and engaging.



“It needs to be fun,” Sia said. “Otherwise, no one&#8217;s going to play it. Otherwise, it becomes a bit of a Ponzi, so far as you need new players to come in.”



The startup will also look to lean heavily on its partnerships with gaming guilds — including Real Deal Guilds (RDG), Ancient8, Good Games Guild and BreederDAO — to drum up interest in the metaverse venture and gain players worldwide.&nbsp;



Dr X, the pseudonymous OpenBlox founder, said in a statement that the startup’s incoming investors “bring a large network of stakeholders” to the venture.



Updated Dec. 14, 3:15 pm ET: Shima Capital reduced the size of its commitment after this story was published, and Digital Strategies, as well as MC Ventures, rescinded their capital pledges.



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NFT gaming