ImmutableX, a leading layer-2 scaling solution for NFTs on Ethereum, introduced its native utility token, IMX, in 2021. This ERC-20 token is designed to power the ecosystem, providing holders with various benefits and use cases. Understanding how to use IMX is essential for anyone looking to engage with the ImmutableX platform, whether for trading, investing, or participating in governance.
This article breaks down the core functionalities of IMX, including its role in fees, staking, and decentralized governance. We'll also explore how to acquire IMX and answer common questions about the token.
Core Uses of the IMX Token
IMX serves three primary functions within the ImmutableX protocol: facilitating fees, enabling staking rewards, and allowing holders to participate in decentralized governance. Each of these utilities is designed to enhance the user experience and promote ecosystem growth.
Transaction Fees on the Network
One of the standout features of ImmutableX is its gas-free NFT minting and trading. However, a 2% protocol fee is applied to every transaction settled through the global order book. Notably, 20% of this fee is converted to IMX and allocated to the staking rewards pool.
What sets ImmutableX apart is its user-friendly approach. Unlike other blockchains that require users to hold their native token for transactions, ImmutableX automatically converts the purchase currency (e.g., ETH) into IMX on the open market. This eliminates the need for users to pre-purchase IMX, saving time, energy, and money compared to manual swaps on decentralized exchanges. As a result, users can start buying and selling NFTs immediately after depositing ETH into the protocol.
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Earning Rewards Through Staking
Staking is a fundamental mechanism that allows IMX holders to earn rewards while contributing to the network's security and success. Rewards are generated from the 20% share of the protocol fee mentioned earlier and are distributed every 14 days to qualifying stakers.
The amount of rewards a user receives is proportional to their staked amount relative to the total pool. For example, if you stake 10% of the total IMX in a cycle, you will receive 10% of the rewards pool.
To qualify for staking rewards, users must meet specific criteria:
- Hold IMX on a Layer 1 (like Ethereum) or Layer 2 blockchain.
- Have voted on a governance proposal within the last 30 days.
- Either hold an NFT on ImmutableX or have completed a trade on the platform in the last 30 days.
After each cycle, users can choose to re-stake their rewards to compound their earnings, maximizing their long-term returns.
Participating in Decentralized Governance
IMX token holders are granted voting rights on proposals that shape the future of the protocol. This includes decisions on allocating token reserves, approving developer grants, activating daily rewards, and changes to token supply.
Governance takes place on the Ethereum mainnet, with wallet balances considered across both Ethereum and ImmutableX. Voting power is proportional to the number of tokens held, meaning larger holders have a greater influence. This community-driven approach aims to continuously add utility to IMX and further decentralize the ecosystem.
How to Acquire IMX Tokens
There are two primary ways to obtain IMX: purchasing it on exchanges or earning it through platform activities.
IMX is listed on major cryptocurrency exchanges like Coinbase, Gemini, and Binance, making it easily accessible for purchase with fiat or other cryptocurrencies.
Alternatively, users can earn IMX through the ImmutableX Trading Rewards program. By simply trading NFTs on any marketplace integrated with the ImmutableX global order book (such as TokenTrove or GameStop Marketplace), users become eligible for rewards. These trading rewards are distributed on a 14-day cycle, similar to staking rewards. The earned IMX can then be staked to generate additional passive income.
Frequently Asked Questions
What is the IMX coin used for?
IMX is the native utility token of the ImmutableX ecosystem. Its three core uses are: to cover a portion of the protocol's transaction fees, for staking to earn rewards, and for participating in decentralized governance by voting on proposals.
Do I need to hold IMX to trade NFTs on ImmutableX?
No, that's a key advantage. The protocol automatically converts the currency you use (like ETH) into IMX on the open market to cover its fee. This means you can start trading immediately after depositing ETH without needing to acquire IMX first.
How often are staking rewards distributed?
Staking rewards are distributed every 14 days in what is known as a staking cycle. To qualify for rewards, you must meet the eligibility criteria at the end of each cycle.
What are the requirements to earn staking rewards?
To be eligible, you must: 1) Hold IMX on L1 or L2, 2) Have voted on a governance proposal in the last 30 days, and 3) Either hold an NFT on ImmutableX or have completed a trade there in the last 30 days.
Can I participate in governance without a large amount of IMX?
Yes, all holders can participate. While voting power is weighted by the number of tokens held, every token grants a voice. This allows the entire community, not just large holders, to contribute to key decisions.
Is IMX an investment?
This article is for informational purposes only and is not investment advice. IMX is a utility token designed for use within its ecosystem. The value of crypto assets can be volatile, and you should always be aware of the risks involved before participating.