Bankless - Immutable Live Reveal: Scaling NFTs to a Billion Players with L2/L3

Episode Date: May 25, 2022

Co-Founder & President, Robbie Ferguson and Co-Founder & CTO, Alex Connolly join us to reveal something very important: the next chapter of Immutable. Tune in to find out what it is and what it means for the NFT space! ------ 📣 ALCHEMIX | Get a self-repaying loan today! https://bankless.cc/Alchemix  ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/  🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/  ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALED ETHEREUM https://bankless.cc/Arbitrum  ❎ ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across  🏦 ALTO IRA | TAX-FREE CRYPTO https://bankless.cc/AltoIRA  👻 AAVE V3 | LEND & BORROW CRYPTO https://bankless.cc/aave  ⚡️ LIDO | LIQUID ETH STAKING https://bankless.cc/lido  🔐 LEDGER | NANO S PLUS WALLET https://bankless.cc/Ledger  ------ Timestamps: 0:00 Intro 6:15 What’s Holding GameFi Back? 12:00 Immutable’s BIG Release 15:32 Why Multichain? 20:27 The Interoperability Layer 23:11 Network Effects, Security, & Fractal Scaling 45:15 Liquidity, Multichain & Bridging Dynamics 53:41 Wen Games? 58:00 Rarible x Immutable ------ Resources: Robbie Ferguson https://twitter.com/0xferg  Alex Connolly https://twitter.com/0xconnolly  Immutable https://www.immutable.com/  https://twitter.com/immutable  Spectrum of Chain Chart https://imgur.com/oaGPuuE  Unified Ecosystem Diagram https://imgur.com/j32AzjH  ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures 

Bankless Nation, welcome to another state of the nation episode. We're doing a deep dive today on scaling NFTs with our friends at Immutable. And this is a particularly important topic in the whole scaling NFT strategy. David, getting even some preview of who we're talking to and what we're talking about today. Yeah, we've had Robbie Ferguson from Immutable on the show a number of times before. But he has brought his CTO, Alex Connolly, to bring it along with him. because we are going and doing a deep dive into some of the technical aspects that is going to create a revolution in both layer two technology, as well as NFT technology, as well as gaming technology. But you and I, Ryan, are going to do our best to make this simple and make this digestible for the rest of the world, because what they have going on here, I think, is going to solve a lot of people's concerns about the future of Ethereum scaling.

As we all know, the gas fees on Ethereum suck, I guess. and then we are all trying to move on to the same layer two, and so that we can have all these composibilities. But the issue is, we can't just have one single layer two, we're going to have many, many layer twos. And so how do we restore composability while also having cheap fees? And so this is the conversation that we're going to be having today with the immutable co-founders,

and just to really kick things off with context. Last September, Vitalik Buterin wrote a research post on the ETH Research Forum, titled Cross-Roll-Up NFT Rapper and Migration Ideas, which is a proposal for how to make NFTs cross-roll-up friendly, allowing NFTs to move across the entire Layer 2 ecosystem. And today, what Immutable is announcing is their solution towards solving the cross-roll-up composability issues.

So what does this mean? This means we are going to have many, many games with many, many chains, with many, many assets, and all of those things are going to be completely abstracted away. And so users are not going to need to be defy DGens to be able to play their defy game. Game developers are not going to be able, not going to have to be smart contract developers to build a game. And we're going to talk about all the different layers of complexity that exist to make this magic happen, while on the surface level it doesn't feel complex at all, Ryan.

Yeah, this is super cool. This is a way to have your cake you need it too, right? We get all of the scalability of layer twos without losing composability. And what that just means is we have the ability to, like, atomically move, liquidity from one place to another, be able to trade with one asset on one chain, the other. It's all interwoven. It's all composable. We get these to preserve these money Legos. David, speaking of having your cake and eating it too. Dude, we got to do a shout out to Alchemics. They wanted us to tell the bankless community

that their product is here. It's fantastic. I believe they have released some new token economics to power this thing. But the base is, there's only two points in time. to get ETH. You know, one is before the merge right now. The other is after, right? And so if you're, if you're like me and David, you're holding your ETH and yet the same time, you might need some liquidity on that ETH. You might need to, you know, to use some cash in the real world. Alchemics allows you to take a loan out on your ETH without selling it and without being subject to liquidation. A little bit of a magic there, where they're pulling yields forward in order to make that possible. And you can get into the mechanics of how that works. But David, they've also

release some new token economics. You have some details on that and where can people learn more? Yeah, there is a link in the show notes if you want to dive into this. That's banklist.comx with a capital A. In addition to just having stable coin pools, they also have ETH pools. So you can pull out an ETH denominator loan and have that ETH denominated loan pay itself back over time. Overall, Alchemics has a lot of cool new things coming. So look forward to all of those things coming up in the future. You are muted, right? I'm still muted. All right, David, we're going to get right in the podcast with Alex and Robbie from Amutable.

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That's AL-T-O-I-R-A dot com slash bankless and start investing in crypto today. Welcome, Bankless Nation into this fantastic show where we're going to discover how exactly immutable is scaling out NFTs and GameFi to a billion people. In the bottom left corner, we have Robbie Ferguson, who you've seen him on bankless before. We've had them on a number of times. Robbie, welcome back. Thanks, David. Good to be here. And in the bottom right corner, first time on bank lists,

we got Alex Connolly, the CTO of Mutable, also co-founder. Alex, welcome to the show, man. Thank you very much. Super excited to be here. So we have a lot of stuff to get through, a lot of material to get through. But I want to start with this very, very high-level question. We're coming off of the absolute mania of 2021,

going into 2022. GameFi has definitely embedded itself into the minds of more or less everyone these days. But I'm still yet to be playing a game. I haven't found a Web 3 game that's quite for me. Robbie, what would you say is really holding the world of GameFi back right now? I think there's two answers. The first is we don't have a platform which is easy for mainstream gamers to use

at the scale at which these games will operate, which is 100 million players on more per day in the largest cases. And the second reason is that great games take time to build. And often the lagging time on these is at least a couple of years. And so although we've seen a huge influx of the DFI of profile picture projects which look attractive and can be built in a month, it's really, really hard to build long-term games. There are very few which will be releasing up to this point.

But we're going to start to see over the next 12 months more and more of these games come out and the average standard of game rise dramatically. Alex, what would you add to that? I think there's a big trade-off here between. the games where they are sort of gamified economies, right? So that's where you're basically having a defy-like construct, but with a game you wire where it sort of feels a little bit like a game, and a game where it's fundamentally built to be a fun game that you can play,

and then you're sort of soft onboarded into crypto. At the moment, most of the games that have been built are the first one, right? So those economic games, and those are great, but for most players, they just aren't very fun. And so the reason that you're not playing in so far is that we haven't actually been able to build the type of games that you would play, even if you didn't yet know about NFTs and crypto, we think it's really necessary to have that soft onboarding

so that people can use this technology for the first time without having to spend $2,000 on virtual sneakers. I think when we all hear the word GameFi or Web3 game or asset-powered game, we more or less think of the games that we all played in our childhood, World of Warcraft, Diablo, Starcraft, but when we find items in these Web3 games, just like we did in our old games, they're actually items.

They are actually assets. But other than that, the blockchain element, at least this is how I interpret gaming in my mind, Web3 gaming, where the blockchain elements just aren't present in the game. I don't have to be signing metamass transactions. I don't have to be worried about gas fees and everything just happens instantaneously. And so they look and feel like the games of my childhood,

but they are also with real-world assets. Robbie, same question, but back to you. Like, why haven't we found this yet? What are the ingredients that we need to really get to this point of gaming? So I think we need a few things. The first is, as we'll talk about in today's episode, the scale and user experience that enables, you know, billions of players to eventually play these games,

which is the total market of sort of games in the world. But the second is I think we need really robust gaming playbooks so that games in the Web 2 era can come into Web 3 and actually be able to build things successfully without being economic experts. Because when we look at every previous paradigm of success for gaming, whether it was mobile gaming as pioneered by Supercell, whether it was social gaming as pioneered by Zinger,

or whether it was even free-to-play gaming, which had massive backlash on gamers and games industry folks alike when it first came out, the commonality between each of these industries is they only truly took off when a winner developed content in the space and then turned that content to playbooks for everyone to use. use. You know, they re-skinned Farm Bill and Mafia Wars into 10 different skins of games and created the playbooks that any publisher could create, you know, social graph, incentivized marketing

for Facebook. For Supercell, it was developing the playbooks that people could just build, you know, mobile games and gutcha games at scale. We need that moment for Web3. We need it to be, hey, here's how you take an MMORP and develop it into a play and earn economy, which, powers creators and players inside that game. We need, hey, here's how you develop a MOVA, an RPG, at scale, with exceptional user experience. And those are the playbooks that are mutable as investing in. And so this is a line that I have later in the show, but I'm going to pull it up here,

where the future of GameFi or Web3 gaming or asset-powered games is not that game developers become smart contract developers too. It's that the smart contract developers build the scaffolding to allow the game developers to continue to be game developers, yet also just pull in assets. And I think that, I think it's a great transition to at a high level what you guys are announcing here today. So as we are going through the whole rest of this show, unpacking all the details. Robbie, can you just explain what Immutable is releasing here today? So Amutable is releasing the first cross-roll-up liquidity solution, which will allow games to have their own dedicated L2 or L3 instance, which means that now

World of Warcraft can come on board and their 100 million players can have a dedicated, you know, 10,000 TPS or multiple instances of it while we fundamentally solved the reason that multiple roll-ups would suck today, which is siloed liquidity and siloed orders. Assets can't be easily traded between them and the orders can't connect anywhere. So with a mutables open order book, we solved a fundamental liquidity problem with NFTs today, which is that assets traded on one marketplace or venue cannot be matched against assets traded anywhere else, which is really going to be a fundamental thing that would prevent gaming liquidity from taking off. With this announcement today, our cross-roll-up liquidity platform, we're basically supercharging those highways. So now not only can you

trade from any marketplace, rarable, game stop, open sea, but each of those can have the TPS required to support the next billion players on the theory. Hey, Robbie. So a quick question for you. I think some people are still, you know, you're almost talking about a problem ahead, maybe a problem that many of the game publishers and developers and certainly you guys see right now, which is like, hey, we don't have kind of the compose ability, we don't have the ability to move from kind of one roll-up chain to another.

A lot of people are still stuck on the first problem when they think about crypto games, which is like the ETH gas fees are too damn high and like transaction speed are too low. Could you give some other context for actually what main problem, immutable as solving and then also fit that into kind of the next horizon of problem set, which is like, you know, making sure that we have liquidity and composability,

we can trade assets from one layer two to another. But like the question of why do, why layer two is in the first place and will this actually fix, you know, gas fees on Ethereum? What would you say to that? Right now, if you trade an asset on Ethereum layer one, it'll cost you anywhere between, you know, $20 to hundreds of dollars in gas fees, depending on how, suggested the network is. And the problem with this is if you're creating an economy where you want to create tens of millions of NFTs per day and have players trade these NFTs as part of a real

economy, it doesn't make sense. Why would you pay $50 in gas fee on an item that costs, you know, a dollar or $2 to trade? And so what we're fundamentally doing is bringing a scaling solution where the consumer and business-facing gas cost is zero. In order to, if you want to mint 100 million NFTs on the mutable today, it costs you literally $0 in gas fees. And the reason we're so passionate about that part of our tech architecture, you know, which no other sort of side-chain or scaling solution has is because what's most important is an economy can be generated where you don't know the value of which these NFTs will trade. You know, it's just tokenizing stuff like you can own these assets in real life. And the reason that's so important is now players can on board

without having any eth in their wallets and start to earn and trade instantly. But also games can just create real economies where they don't have to worry about, you know, paying millions of dollars in minting costs to create a true economy in the first place. And they can just monetize through a player incentive aligned manner as they take these secondary fees. And so this is, of course, bringing and collapsing the cost of being a game inside the Web3 space down to zero. But Alex, I want to throw this next question to you. Why can't we all just do that on like the Starknet or one single ZK roll-up? Why do we have to have many chains?

Great question. What this comes down to for us, and I think this speaks to a mutable positioning in the space as well. Just as you asked before, why are we looking so far into the future to next year and beyond? That's partly because we speak to these game studios every day. We speak to all the major game developers in the world. We speak to all the major indie studios to the mid-barker. studios to AAA studios and we get to hear what they're thinking about building and what they would need to make that happen. And the truth is that what they're looking for often is a little bit

different and they want to make slightly different trade-offs. Some of them absolutely must have their own dedicated roll-up because they need hyperscale. Some of them need different guarantees around privacy or around data availability or they want to have different sequences structures to enable better resiliency. Or for instance, some roll-ups, people are comfortable paying a low-gas fee for each transaction. Some roll-ups, people will say, okay, well, we have to find some way to subsidize these costs to make them zero. Our big belief is that in that end state, if we want to have every major game, which has non-fundable tokens and truly owned assets built on Ethereum, we need to ensure that we can actually offer them the roll-ups that make sense for those games. And that means

we have to support multiple roll-ups rather than everything just being on one roll-up. And I think if you just like take it at face value, it makes sense. sense that game developers aren't going to want to share space with other game developers. They're going to want to spin up their own chains just because that's just kind of what they're used to. They want more control over the way that their layer two, their ZK. Roll-up looks and feels. And so we've got a graphic that you guys threw us before the show talking about some various spectrums of L2 designs that are available to be chosen by any sort of game designer that was interested in making a crypto game.

So Alex, can you walk us through some of these different choices that a game designer would make and why they would optimize for some instead of others? Absolutely. So I think I'll start by talking to the top half of this chart. On the right is a technology that Robbie was talking about earlier. So we've partnered with the stockway team. We've worked extremely hard to basically build the best infrastructure in the world for building NFT games. And on the right, you see that Stark X offering.

That's what's live today, which is an application-specific roll-up. which is extremely optimized for the needs of NFT projects. Most NFT projects can deploy today. They can experience really strong scale. They can experience an incredible training experience with no gas fees and instant confirmation of transactions. But the trade-off there is that you lose composability and smart contracts. So because this application specific, you can't write custom functionality.

While this is okay for many NFT games, for those particularly more game-fire-oriented games who need more complex tokenomics, they need that smart contract support, right, or solidity support. On the top left there, you see what everyone in the community is also extremely excited about the moment. I'm sure you guys have had had Uriott previously talking about Starknet and what that's going to do.

This is an early stage product, but it's one which is going to be increasingly important for Ethereum over the course of the next year. That's a product where you have some tradeoffs are reintroduced. So you have a gas fee mechanism, even though the gas fees are substantially lower. But you do get in return that awesome power of smart contracts, composability, interoperability. On the bottom half of the chart, if you're a game developer looking at the bottom half, it's essentially the same benefits as the top half, but you're also getting the benefit of much more control over your environment. So you can tune it to your game's particular needs.

It's not just about the total theoretical TPS. I think this is an important point for many people to realize. The total theoretical TPS is one number, but also remember that if two major games decide to launch a midnight promotional event, where they want to mint a million NFTs to a million players, and they decide to hit the button at the same time, it's important that Ethereum infrastructure is resilient to that use case. And it's extremely important that that doesn't result in a bad user experience or on which turns people off game. And so there are all sorts of reasons why you might want a particularly customized roll-up solution. But the obvious trade-off is that you won't have access to the apps that have been built.

elsewhere in the ecosystem. So I think the big challenge for us to solve as we look at this graph and we see this as, hey, how can we solve the problems of game developers? How can we offer them the environments that they need to be successful? Is how do we avoid fragmenting asset liquidity and order liquidity on each of these roll-up platforms? So as we lean into this world of many, many chains, I think it becomes pretty obvious, especially with these kind of crypto-deep crypto-native games, there was the whole like

loot phenomenon where these ones. single assets will be a part of many, many games. And in that world, that's going to be somewhere on the left side of the spectrum, the Starknet side of the spectrum, where you do need that interoperability. But in order to have that, you have to pay gas fees. And so even though the fees on Starknet are very, very low and affordable, it still is a design choice to have to click a transaction on your game to make that thing happen. And so that is one end of the spectrum. On other ends of the spectrum, there are completely gasless, from a user perspective, gas list games, where everything is taken care of and each one will have those own verticals.

But we, we'll talk a little bit how this actually works. But the thing that you guys are announcing today is that it doesn't matter what chain is on. It doesn't matter where your money is on. It doesn't matter where the assets that you want and what their chain is on because of this interoperability layer coming out of immutable, everything all interoperates pretty seamlessly. Robbie, is that all right? My tracking here? So the really unique thing about this is every roll up by default in today's model would have

its own siloed asset book and order book. There's no improvement in liquidity, even if some game has a massive success on one roll-up. And the problem is everything in the world comes down to liquidity. The most successful financial markets are the ones where you get the price by going and trading bet. Now, this problem doesn't exist as much in fundable token markets, because if I even have half a percent of the fundable token supply and I'm, you know, running an AMM on, you know, Ethereum and USC, people will just up inefficiencies. But it can't work that way with NFTs. Every single NFT market is unique. And it's really, really tricky to build this global liquidity standard that allows players and users to trade any unique in-game item anywhere.

And so the fundamental thing we're doing is we're building this liquidity bridge and platform across every single wallup. So even if that ends up being a thousand, servicing, you know, tens of thousands of different games with millions of daily active players each and then interactive content like TikTok. Ultimately, what we've done is created the global pool where any asset can be traded on any roll-up, on any marketplace, instantaneously and in one single atomic transaction. That's seamless to the end-user. And that is what builds this sort of gravity and massive network effects around liquidity.

Roby, is that any roll-up or is that any roll-up in kind of the Starknet ecosystem or like ZK roll-up specifically? Any immutable supported roll-up, of course. Yeah, like that's what by doing. Okay. So any immutable, supported roll-ups, that would be right now kind of, you know, ZK-Sink tech, more sort of starkware, is that correct? That will be stockware.

Okay, got it. Got it. Can I ask you guys the bigger question here, high level question here, and maybe allow you to kind of explain this a little bit? So this is another graphic that you guys helped to help us understand what's going on here. It's just we've got these different layers here. And of course, we've talked so much on bank lists about layer two, which is this layer that sits on top of Ethereum.

That's where kind of the roll-ups reside. And we've been talking about, you know, kind of that being, layer two being the new frontier. That's where the new property is, the new block space is. We also have this diagram, a layer three is kind of like built on top of a layer two. I'm wondering if you could explain that. But before we explain everything in that's depicted here, can you give us the high level of like, why are we doing layers at all? Like, why are we doing layer two?

Why not just for what you said, you know, gaming publisher needs hundreds of thousands of TPS, tens of thousands, hundreds of thousands of TPS, why don't they just launch their own chain, to create their own separate chain? Why are we doing, why are we going to all the work of doing layer twos in the first place? Rob, you want to start with that? And I'd love to loop Alex in, too. Sure. Look, I think that one's very easy, which is network effects and security. Every single other L1 or side chain, which has been created so far, has an inferior security model to Ethereum. In some cases, this means users lose billions of dollars. I don't think I need to call up, you know, the recent examples, but I will, whether it's the $600 million dollar

polynetwork hack, this is $600 million Roman Bridge hack, the, you know, $40 billion demise of Luna, which was more due to sort of game theory in economics and the underlying security of the consensus mechanism, but the reality is that security fundamentally matters when we build the architecture of these blockchains. Now, end consumers do not care on which blockchain something has built, which is why Immutable is so passionate about making sure the best possible prices and the best possible user experience for playing what is going to be the most popular consumer apps built on the blockchain in the next decade by far, gaming, are on Ethereum because we don't ultimately want to build infrastructure, which is insecure.

We don't want it to be owned by meta and have 52.5% fees. I mean, this stuff is really, really important because whatever platform wins now and becomes the default will set the standard for what security fees and decentralization looks for how people own digital stuff. Yeah. So I, you know, the, the, the Luna think, I think reminded the ecosystem, you know, when we had that meltdown. It's like there were so many developers actually like scratch their head and going like,

now what? We have invested months developing on top of this layer one ecosystem in the Luna. And now it's completely disappeared underneath us. Like the economy is completely collapsed. And so has the security, by the way. All of the security budgets completely. went to zero. So it had to be like, you know, trying to open a storefront in the middle of the Weimer Republic, right? It's just like everything's collapsing around you and it's, you know,

fires, everything's burning. And so, so that does. Once in a while, I guess we get these reminders, Robbie, that hey, security does matter when it's a hack or whether it's a collapse of an entire layer one. Alex, what would you add to that? And can you explain this, this diagram that's in front of us for a minute? Sure. Just to round that off, we hear this from the perspective of game developers. So we're out there in the market. We're talking to the people who are building these games. And what they're telling us, even if users are okay, they're happy to sort of, they don't really understand what's going on.

It's hard to explain the different tradeoffs. What's the difference between a side chain and NL2? But game developers, particularly the game developers, we're looking to build long-term games. That's a multi-year investment. That's millions of dollars of upfront capital that's being invested in those games. They want to build on the best tech.

And also they want to build on the winning ecosystem. They don't want to be left somewhere out on an island. And right now that makes Ethereum extremely attractive to many of the world's top game developers. We just have to get the user experience there. In terms of how we get the user experience there, that's where we think this diagram comes in. So we've heard a lot on the show previously about layer two. The concept of layer two is actually extremely simple. How can we take transactions, process them on layer two, and then roll them up to layer one,

using a Zika roll-up or an optimistic roll-up where we're verifying that all those transactions actually happened. on the layer one. So if you're not verifying on Ethereum layer one, you're not an L2. The way that you should understand layer three is that essentially we can take the exact same concept and then do it one more time. So remember that process that I just described,

how we take a lot of transactions, we generate a proof for those transactions, and then we verify that proof using a smart contract on a base layer. Well, we can do the same thing where we gather a number of transactions on layer three, generate a proof for those transactions and then verify that proof in a layer two transaction, which remember is going to be later verified itself in a layer one transaction when that transaction

itself is rolled up. What this is called fractal scaling. And what this means is that we are able to use through this shared state of Ethereum, we are able to build the types of things we discussed earlier. So different roll-ups with different trade-offs, which can be even cheaper, which can make even deeper trade-offs, and you can build those such that they share a settlement layer in Ethereum. So you can see in that L3 slot, you have a number of different designs for what a layer 3 might look like. There's the application-specific roll-ups.

There is the private stock nets. There is another version of Starknet on top of public Starknet. All these things which can be built customizably to the needs of world-class games, but which can settle all the way back to layer two and will be even cheaper than layer two transactions. So this is a, I think, a huge innovation. And if you want to read more of the technical detail about it, I really strongly recommend the Starkware fractal scaling article.

Okay. So, and within this layer three, Alex, this is what you're saying, what you've just rolled out does is you're connecting all of these chains within the layer three. You're connecting liquidity. You're enabling the ability for assets to move back and forth. You're providing that composability, sort of the, the glue that will connect this entire layer three.

So it's not like a whole bunch of different chains in layer three. It's just almost like from a, from a developer perspective, or maybe from a user perspective, it's one deep liquidity pool, one pool of inventory of assets. It's almost like looking at one chain. Am I understanding you correctly?

Yeah. So it's not just about layer three. It's layer two and layer three. So it's wherever you have these Zicare wellups, right? And you are user, you own, let's say, I'll take the example from earlier. you've got an asset in World of Warcraft, right, which is operating as an L3 application-specific roll-up to do like hyper-optimized targeting of people at planet scale.

And you've got ETH on public Starknet because you were doing scalable defy there. And you want to purchase the asset that someone else has listed over there. Having to go through all the process, like the, you know, moving things around between roll-ups, bridging orders between it will massively hurt Ethereum's ability to service the best game. in the world. Okay. What we're providing is basically the ability to take that order, right, from the world of warcraft roll up and to fill it with the ETH that you have on public stock. Okay. So we've encouraged people in listening to bank lists to go start to explore the layer to you that they want to, you know, live in to like go tour the neighborhoods, go look at schools,

you know, go look at the rows and the infrastructure, the traffic patterns and figure out where you want to live. Let's say I want to go live on public starknet. That's going to be my layer two or one of my layer two is because that's the cool thing. I don't have to just pick one. Now we have all of these other kind of layer three metaverses, one of which is my favorite game. It's a world of Warcraft meets NFTs and it's the best thing ever. I have another game that's MMORP type game. I've got another game that's like a first person shooter or whatever. And I also have this whole NFT ecosystem on layer three. You're saying that because I'm living in the Starknet ecosystem in layer two, that's the neighborhood I've chosen. It's like I'm right next door to all of these

other mini metaverses, right? And like I can swap my assets back and forth. It's not even a thing. And that's what immutable is providing the ability for it to be all seamless interoperable, same wallet user experience. I don't even know that I'm moving, I'm teleporting from one, you know, neighborhood to a different city because it's all at my, at my fingertips. Is that correct? Exactly. Exactly. And I think it's a mutable's vertical integration is what allows us to offer that full seamless experience. We really want to be there as the platform to solve these problems for games.

And that requires you to build all the intermediate components to actually make this happen. I think there is so much value that we can offer to users here, simply by giving them much greater liquidity than they have right now, where they're moving between these relops. Okay, so I'm going to do my best to tie all this together

because the IMX community is incredibly energetic. And they're always, every time we bring you guys on, They're always in the chat, and people are asking for just a little bit more elaboration. So I'm going to do my job to summarize absolutely everything that I can here. So we got Ethereum at the bottom, and that's, of course, the blockchain that we know and love. And what we are talking about earlier with all of the varying spectrums of varying roll-ups that you can produce. You can produce generalized ones. You can produce application-specific ones.

And the cool thing that Immutable is helping companies, gaming companies do, is to spin up their own particularly suited flavor of blockchain. And that's going to be in the L3 layer. And so World of Warcraft, Diablo, all of your favorite games, there might be Web3 versions of these things, and they're all going to have perhaps their own specific blockchain. There's also going to be games that are built on the public and open blockchains like Starknet. But there's going to be many, many, many chains.

There's probably going to be up to one chain per game. And all of that does is breaks composability. Like you can't just live on one chain, especially when you exist in gaming. And so while we're seeing these lines go to all these different chains, think of like an application-specific Starknet or a StarkX Validium or StarkX roll-up. These are all different ways to construct a game in ways that a gaming developer might choose to best suit their game.

Now, instead of having just how many are there, five different types of blockchains in that L3 layer, multiply that by numbers of games. And so you guys call this fractal scaling. And I want the listeners here to think of a root system that is growing out of the public's dark net. For every single game, there's a new route. And so this is what allows this whole gaming ecosystem to grow.

And that increases in complexity, it increases in surface area, and it increases the ability to onboard users into a particular flavor of game, because that allows that game to be maximally useful based on the ZK blockchain tech that is built upon. And so there are no limitations based in the blockchain world for what a game developer can build in the layer three layer. And that layer three layer ultimately gets settled on the layer two,

which ultimately gets settled on the layer one. But the whole entire thing, the reason why you'll notice the box that surrounds everything, is the immutable X ecosystem, which is this mesh network to allow your asset on one game to hop to another game. And if your ether is on one chain, but you want to buy an asset on a different chain,

it doesn't matter what chain it's on because of the Vitalik paper that I talked about in the introduction. And so I'm just super bullish on this thing. I'm going to throw a bone to all of the listeners out here who are here because they probably like the IMX token. All of that value, all of that economy is being funneled into the immutable ecosystem.

And the way that the IMX token is useful, is that it's a staking token. So as there's these fractals of chains getting birthed, because every single blockchain game births its own ecosystem, its own economy. Ultimately, all that value of all those transactions on that chain gets put into the IMX token. Thank you, Ryan. It gets put into the IMX token.

And so, like, imagine an insane amount of, like, surface area for all these blockchain games, and it's all being collapsed down. into the immutable core ecosystem, which ultimately gets settled on the Ethereum layer one. So for all of you, all the YouTube people who are talking about how way too complicated that is, I hope that that was the explanation to really drive this home.

Robbie, Alex, did I mess up anywhere? Is there anything that you wanna add? I'm gonna take that two minute snippet and put it on our home page. No, I completely agree. And I think the really important thing to remember is that the whole reason that Ethereum is the greatest, most liquid place to kind of deploy an NFE project today is because all of the

wallets are shared, all the network effects are shared, all the composability between smart contracts is shared. That is what generates this business machine and what ties it all together is the security of the consensus mechanism and the robustness of that network that exists today. What we're now saying is we can take this scale, create zero gas costs for any game developer, any application building on it while preserving all of that same benefits of, you know, shared liquidity, shared order and asset state, shared network effects. Alex, if you're anything you want to add as well? Yeah, the way I'd branded off is by saying, if all that sounds complex, right,

there is a lot of complexity there. The goal is to make sure that both to game developers and to users, right, that just looks like a really, really seamless ecosystem environment, right? So you as a game developer, you just say, hey, get me the user's wallet and initiate a trade. It doesn't matter to the game developer, how you're funding that transaction, where the funds are coming across well up. This is the crucial point. And this is why we see ourselves,

we are really in the business, like, of obviously building these scaling solutions, building this liquidity infrastructure, but we are just in the business of getting the best games in the world to build on Ethereum. And we think that that is what's necessary to unlock everything we talked about in the introduction. You have to make the user experience awesome,

and you have to make the developer experience awesome. You need the empowerment that all these different tools give you and all this complexity on the back end. But you need, you actually genuinely need some of that infrastructure to build some of the mechanics that your games need or to support the user account that you want. But unless we're able to successfully abstract a ton of that complexity away from particular users and honestly developers as well, right? No one is going to be able to build that type of planet scale Ethereum game that everyone wants to see. It's the bottom line of what you guys are saying is that like, okay, Ethereum is now scaling and we're open for business to DPI. Like, are we saying, are we going as far as saying, we've now solved the scalability problem?

So if you are worried about building your game in crypto, like, don't be because it's now solved. Would you go, I know Alex is the engineer, so he's going to solve the problem. I don't know for sure. But like, is this kind of what we're saying in this first section here? I think this is the path to solving those problems for Ethereum. I think the ZK roll-ups, ABM capacity. CKrollops and justicare ops in general are here ahead of schedule. One of the few things in the Ethereum roadmap that has been consistently delivering at a really,

really strong pace. And we think there's some amazing tech that's been built there. And that tech is going to be the foundational piece that allows Ethereum to go fractal and to get to that number of users. There is now a much clearer path, I would say, for Ethereum to scale, then even some of the model I think, you're sort of high TPS alter ones, there's a much clearer path to how Ethereum is going to scale to build to have the biggest games in the world built on it than there is for any other blockchain. One question I just wanted to ask while we get into multi-chain is Alex, and this kind of relates to multi-chain,

but you made that point about just Ethereum right now and its scalability path being even better than some of the monolithic chains. And of course, over the past few months, we've even seen some of these quote-to-quote high-throughput, high-transact, high TBS, Monolithic chains, we've actually seen them go down. Like, there have been outages. Imagine if that's your platform. It's not just like World Warcraft, Zic, World Warcraft, StarCraft, all your favorite games on the same platform.

And then power goes down. Like, none of them work. Can you talk a little bit about the scalability limitations on monolithic chains versus this? Dig into that a little bit more and contrast that with maybe where David was going with kind of the multi-chain strategy. Yeah. So look, I think, yeah, at the end of the. the day, blockchains are technology, and technology can have, can have challenges, particularly early stage technology. I think it's easy to forget now, like Ethereum has been around

and has been almost entirely stable for most of the past year, seven plus years. There's been a ton of work that's been invested in building out the core infrastructure of Ethereum to make it the most reliable and most performing infrastructure in the space. You'll see this now with a lot of the old ones that are coming out, are simply forking, forking Ethereum and sort of turning down the security parameters for a while. The danger of this for many game developers is A, right, you're reliant on a development team that is like less competent, less credible, and less aligned to the ethos of building great blockchains.

And so we're seeing a lot of developers come to us concerned about these types of uptime incidents that you've seen on other chains. Obviously, there's nothing you can do that will totally and categorically eliminate all types of downtime, but seeing chains go down for eight plus hours where they're not processing any new transactions, imagine if that's the midnight launch that you've poured $50 million of your games marketing budget into. That can be a really tough thing. It's more likely to be at launch time, right? Exactly, exactly. And that's right at the moment that you critically need that scale, right? That could be the point that things fall over. The reason that I might just say,

this is with games with like, you know, 50,000 players. We're nowhere near the type of games that even make a dent in the real world. So this stuff has to be able to scale to those experiences. And to give traction to the numbers that Alex is saying, immutable's uptime is right now, 99.9x% where X can vary month to month. But when you look at something like Solana, you look at something like Polygon,

you know, these are both in sort of the 95 to 97% ranges based on downtime over the past couple of months, which is not to sort of show those in particular, but like monolithic architecture really kind, aren't support the scale alone that we need to get to the next 100 million players on Web3. As there's a few more conversations that I want to get through, I want to differentiate this strategy between just going multi-chain. And I think that is definitely worth something parsing apart.

And also I want, Robbie, I know that you gave me a line yesterday about how, well, ultimately the way that this ecosystem works with this like mesh network of interoperability. That's also ultimately how Ethereum grew into having such high. success. So I want to have that conversation. I also want to talk about when games, because these are lock trains are cool, but games are also cool. And so I want to hear about your guys' BD relationships and who you guys are working with, and that also will lead into a conversation about Rarable. And so we will get to all of these conversations right after we get to some of these fantastic sponsors that make the show possible. AVE is the leading decentralized liquidity protocol.

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go to ledger.com, grab a ledger, and take control over your crypto. And we are back. And so, Robbie, I want to take this conversation into just a conversation around overall liquidity and how multiple chains kind of feed off of each other. Because if we have this mesh network of chains that all have this layer of interoperability where assets can go from chain to chain to chain, this is meaningfully different from a multi-chain strife. And where if Ave, for example, deploys on the Mi-Etherium-Main-L-1, but then also Polygon, but then also Avalanche,

they actually have to split up their dev resources. But that's not what we're talking about here. We're talking about every time a new game comes and deploys a new ZK roll-up and brings a new player base, they're adding their own unique economic energy to a shared pie. They're adding more players.

They're adding more money. They're adding more liquidity to this whole ZK roll-up ecosystem that you guys are pioneering. Can you talk about just like the inversion of just like splitting and dividing versus collecting and converging? You have assets, you have orders, you have composability and you also have wallets or currency ready to be spent. And what we're doing is making sure that any improvement, any one of those inputs can bring shared value to every single other application or game built on immutable. So I'll give a specific example. Let's say

alluvium becomes absolutely massive, which I absolutely think it's going to, and it gets, you know, like 50 million Dow, and it needs its own dedicated L3 instance. And someone on boards onto Alluvium, they've never played another game before, but they like buy some Ead or they buy some NFT with credit card. Now, anytime they sell that, they sell that on the, you know, Illuvium in-game marketplace, and it's bought on the GameStop marketplace or the wearable marketplace. anyone can purchase that with ETH from, you know, a completely different role-up, from a completely different game that they've onboarded to. And then over the top, we have immutable's open waterbook. So the problem this solves is right now, if they were sold in the Alluvium and Game Marketplace, not on Immutable, they could only be bought from that same location,

which is a fundamental problem because the places that people will trade NFTs are as numerous as the places that people trade real stuff. Like we're talking about the data standard by which people will, own digital goods. And the most important thing is that if I sell it somewhere, it can be bought anywhere and everywhere. And so the fundamental difference we're building is rather than just offering a myriad of sort of multi-chain scaling solutions where someone can use the application on this instance, but ultimately it's still every blockchain racing to build liquidity and to build success, every single game and every single application adds users, wallets,

liquidity and interoperable sort of composable smart contracts that can be used by everyone. And this is the infrastructure that's going to be needed to sort of take Ethereum to the next billion players. And just to build off the top of that, I think it's a really important point to note here about the, about bridges in general. Because obviously a lot of projects have gone multi-chain. You can sort of bridge your funds into, you know, from Ethereum, just a lot. Bridges are by far the most fragile point of the entire blockchain ecosystem.

They are more fragile than the consensus mechanisms of, you know, alter ones. They often have a very small group of multi-sig signers. These blockchains can't actually talk to each other. So what happens is people are locking up funds here. And there's a group of people that are saying, yep, issue them some funds over on, over on, you know, back on 8th. And that can obviously result in people printing money. Bugs can result in people printing money. We saw that with things like the wormhole, the wormhole smart contract bug, right?

not even hacks, just brittleness in smart contracts can cause big issues. When we're talking about people moving assets between roll-ups, because those assets share a settlement layer, so because they all rely on Ethereum at the end of the day where they're on L-2 or three, because it all points back, you can move assets between roll-ups with none of those major security trade-offs that people who are just building in a multi-chain world half. And so it's fixing one of the most fragile points of the current blockchain ecosystem,

which is bridges. I hate bridges. I hate insecure, unsecured bridges. I think they are kind of the worst thing that we are introducing in this generation of blockchain architecture. I almost feel like, David, we should rename this podcast, Bridgeless. That's what you're talking about. Because like the worst bridges are actually banks.

When they are just multi-sigs, those are just like a bank of another flavor. And I think the, a theme of, well, now 22, but like we had some catastrophic bridge hack in 2021 and 2022, over a billion dollars. And then we also had the collapse of the Terra ecosystem, which was like almost $50 billion. And so we had an insecure L1, and we had insecure bridges represent the majority of the losses of the entire crypto ecosystem for its entire lifespan.

And it all happened inside the last like nine months of time. And so this should be in stark contrast to what is going on here, where we have strong cryptographic bridges inside of the same share, ecosystem with shared assets. And just to drive this home about the usability of this, when we do want to scale blockchains up to a billion users and a different and a billion players who are going to invest billions of hours of time into these whole things, we need to make sure these things are secure.

And the beauty ultimately of this ecosystem is that you do get that security. But also, it's probably going to be like the same wallets that users use because, of that it's all in the same ecosystem. So, like, if you have, like, your one wallet on one game, that's probably going to work in a different game. And regardless of where the destination of your ether is on one chain, you can still use it. And so users are going to be using these bridges in the background,

not knowing it, but we can actually feel secure about these things and obfew skating away so much complexity from the users because of the fundamental secure primitives that we have in the background. And Robbie, Alex, you guys want to add on to that? Yeah, I think the one thing I'll add is that the blockchain space is particularly as it's become more commercialized over the last few years, constantly in this kind of tug of war between people who are racing to build the commercially most important things, which is

how can we onboard users incredibly easily and create a good experience for customer-facing applications and how can we bridge liquidity, which is ultimately the most important thing sort of groups up new networks versus how can we all do this in a really, really secure way? How can we make sure that this infrastructure is going to be around it for the long term? And I think the worst thing that could happen is the most commercially successful applications in the short term are built on completely insecure technology. And unfortunately, we've actually seen that, you know, essentially twice in the last nine months. And both of these instances push back Web3 adoption.

They push back developers from trusting what we're building. They push back consumers because you've been burned. You know, you bought thousands of people. dollars of lunar or whatever. And I think the most important thing that we want to do is a mutual tool is build the easiest possible to use commercial solution for building web free games, to allow users to scale to these sorts of heights and have the best prices for assets. But to always do it while preserving a self-custodial protocol, 100% user security. And we'll never kind of violate those standards along the way, because we know if we want to go the next five,

10 years and build something, people have to have fundamental reputational trust in sort of Ethereum and what we're building. Okay, guys. So we have the technology. You guys are helping to release it. We have the block space. We have the scalability now. The question we want to return to is, okay, when games? What are we going to get the games? And it just came back from the permissionless conference last week. I was talking to some people in the GameFi space. And, you know, they're builders, so they're not bearish. But GameFi is very bearish right now from a market sentiment, right? It's like, kind of Axi infinity has gone down quite a lot.

It's impacted a lot of the gaming economy in the Philippines and other places. And the market in general is kind of bearish on it. But Robbie, you're in the trenches with the builders and you're talking to the game studios. Is there some hope here? Should we be bearish? Or is there a reason that we should remain excited

about GameFi? And if so, what are those reasons? Yeah. So my strong belief is that the successive game should be entirely decorrelated from the general crypto markets. And I think that's what it's going to help provide this. We've seen crypto markets have reduced speed at every cycle, right? Like they're becoming reduced in volatility, even with a 60% down, 68% down from ATH. It's like less than 2019 and 2018. And so what I'm really passionate about is games will truly be driving success on Web 3 and mainstream success. And we almost

stop talking about it is like game by being in a beta mode because it's well hey there's this game over here that is 100 million players and there's this game over here with 50 million players and under the hood people are using NFTs people are truly digitally owning their items and experiencing 10 times the value they could get through a web two game and that's when the narrative is obsolete because the product is there the adoption is there and the leading indicators that we're seeing today that mean we're going to arrive at that are many sheer amount of talent and venture capital all pouring into Web3 games in the space. You know, every single VC, if you're in gaming right now, 50% of your pictures are for Web3.

The majority of funding is going into Web3 games rather than ordinary games right now. And out of the top 10 most mainstream game developing company in the world worth tens of billions of dollars, more than eight of them have full-time Web3 teams focused solely on exploring this strategy. I mean, like that's, and I'm not saying they're going to launch this year and next year because this is a massive change. they're the incumbents reaping the benefit of the current model. What we have to do is take the alluviums of the world, you know, the planet quest,

the embersorts, the Guild of Guardians and gods and chains of the world and say, hey, we can create an experience that is 10 times better than that competition. And that forces them to get their act together and say, oh shit, we actually have to go build this now. Like that's the classic kind of innovators dilemma. So I'm feeling extremely confident. I think the reason it will take longer is games take time to build. As I said, like Alluvium is building for nearly two years now. They have more than 200 full-time employees and like a war chest of hundreds and millions of dollars.

The only reason they get into a stage where they can release this kind of like AAA game in the next six months is because of the fact they started so early. Now, we're seeing those games having been built over the last year. And the next year, I think we're no longer going to see sort of crappy quality play to own games be successful. Every single game you play that rises up to the top of the market is going to be a credible double. and launch a BluA game. That's incredible. Alex, you have anything to add to that as we close?

Yeah, I think the future is extremely exciting for web through games and all you have to do is zoom out a little bit. There will obviously be market sentiment that's caused when you actually don't have many people playing these games, just as Robbie said. The key thing that all builders can do

and our message to everyone, we're talking to many game developers, but if you're all listening to this podcast and you're not a game developer, the future is extremely bright. As long as you build things that people genuinely want to use. And actually, there can be a lot of noise in times of great height where people are just using things because it's there.

In times where there isn't quite as much frothiness, you can actually focus on building a product that people genuinely would play and would love, even if they're not earning anything to begin with. And I think that's actually a big blessing for builders. Amazing. Alex Robbie, how far we've come. Thank you so much for joining us in this conversation for everything that you guys are building over immutable. We appreciate you. Of course.

Thank you very much, thank you for me sign off, however, since we're here, this is going to be completely adjacent, but also immutable relevant. Robbie, what's going on with Rarable? Yeah. So we announced today that Rarable will be integrating immutable X into its marketplace, so it's the second largest TNETI marketplace in the world by volume today. Well, I feel like on a different day, a different week that would have been a show in of itself, but sadly, we are out of time.

So guys, thank you so much for coming on to. to the show and diving deep into this, a very sci-fi-sounding future that seems so close. Guys, thank you. Thanks, guys. Thank you very much. Disclamers, everybody. Of course, none of this was a financial advice. All of crypto is risky.

Eth is risky. So are layer two. So is defy. You could definitely lose what you put in. But we are headed west. This is the frontier. This is the gaming frontier now. It's not for everyone, but we're glad you're with us on the bankless journey.

Thanks a lot.