An article to understand the details of Immutable protocol fees

Immutable X, the second-layer expansion plan of Ethereum, announced on May 30 that the platform will charge protocol fees from June, and 1% in June will be 2% in the future. The official said that it will only be collected from the behavior that creates value, not minting coins and transfers.

This week, we’re activating Immutable X’s “protocol fees” in preparation for the upcoming June release of $IMX staking. The protocol fee is not a gas fee and does not need to be paid directly in $IMX – it is a simple transaction exchange fee, payable in the transaction currency. A portion of this fee goes to Immutable and a portion goes to the $IMX staking reward pool.

Funds obtained from the reward pool will be used to increase rewards during the initial staking phase before staking. To learn more about $IMX’s planned staking mechanism, please consult the Tokenomics Portal .

In preparation for the upcoming $IMX staking launch, and to celebrate some great content launches (including Illuvium and EmberSword), protocol fees will be fixed at a low 1% in June before returning to the normal 2%.

In addition to this launch, we would like to take this opportunity to share our overall charging strategy with the community. As a one-stop service platform for web3 games and markets, Immutable X has a unique full-stack perspective on the problems faced by next-generation NFT projects. Before diving into our pricing details, I want to start from the ground up – how should NFT projects decide what they do with platforms and fees?

As an NFT project, how should you view fees?

We have said to many NFT projects and games that are not yet live, fee is often a key priority. Generally, they are wary of high Ethereum fees and want to offer lower cost options for their projects – either because the minting assets are expensive to operate, or because they want their users to be able to do it with lower fees trade. It’s actually good for us too, as a key part of our marketing, Layer 2 is a way to access the more scalable and cheaper Ethereum.

Our advice to these projects, however, has always been that their primary goal should not simply be to reduce costs, but to maximise the chances of creating a large sustainable economy. If a platform or tool charges 50% but may create a 10x larger pie for your community, choosing the former will be a good decision for your project compared to the next best option. This applies not only to the blockchain layer, but also to upper-layer tools such as launchpads.

The Ethereum project pays the most fees and has the most transaction volume, while the Tezos project has almost no expenditure and no transaction volume. If you’re building some set of 1000 NFTs that’s making a lot of hype, then paying Ethereum fees is clearly worth it. The key to choosing a platform is to identify the right trade-off between functionality, cost, and liquidity for the long-term future of the project. Low fees are good, we often praise low fees on Immutable – but that just advertises itself as the “cheapest” blockchain, without any information about liquidity or its ecosystem, they may not be the right place to build a project .

Our second principle is that incentive alignment is critical to the success of web3. Ideally, users, developers, and the market are all incentivized to create a healthy economy with strong prices, high volume, and liquidity. Fee structures that make your success platform independent, or allow the platform to reap the benefits of your project when you don’t do it well, are unlikely to create long-term success.

OK, so this is our framework – how does Immutable achieve this? Before we dive into Immutable’s fee structure, we need to go back to where blockchain fees started.

gas fee 

Ethereum (the most popular smart contract blockchain) gas fees have been a nightmare to launch many NFT projects, with Ethereum users spending billions of dollars on these fees in the last year alone.

Gas fees are critical because blockchain is a severely resource-constrained environment. Every transaction has to be executed by every node (on Ethereum, 5000+), so a transaction requires orders of magnitude more computing power than simply executing the program off-chain. Gas fees ensure that users pay a percentage of their consumption when transacting, and protect against denial-of-service attacks, such as the one that took Solana out of service for 17 hours last September.

The gas mechanism works by specifying a cost for each operation (e.g. adding, subtracting, storing data) and then adding up each operation performed in a transaction to reach the total gas consumption:

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Each block has a gas “limit” – the total gas consumption of all transactions in that block. Since the time between blocks is roughly fixed, this means that the total capacity of the protocol is capped. We decide who can use this fixed capacity through a simple mechanism: who wants to pay the most for each unit of gas they consume? While there are some blockchains that employ slightly more complex calculations (most notably Ethereum’s EIP-1559), many simply take the value of gas used per transaction x “gas price” to determine fees , .

Gas fees are paid in the “native tokens” of the blockchain – ETH for Ethereum, MATIC for Polygon , SOL for Solana. As blockchain usage increases, so does the demand for the native token. As native tokens are gradually accepted as currency, these fees become the primary monetization mechanism for the blockchain, although currently only ethereum’s revenue matches its market cap.

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In the future, low-fee blockchains will be forced to deal with the fact that a significant change in the value-accretion mechanism of their native token may be required to justify the token’s market cap – which could result in increased fees, or other withdrawals Rent-type tokenomics.

Immutable X: NFT that does not generate  gas fees 

Immutable X has no gas fees, we’ve made it a core part of our brand, and users often associate this with the fact that we’re a rollup – but in reality, most rollups have gas fees or a gas-like mechanism, as shown in the table below As shown, the fee will vary according to the complexity of the operation

And add:

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A simple reason: while rollups make state and computation cheaper, cheaper doesn’t mean infinitely cheaper! In the case of high-throughput sidechains like Polygon: Players playing the money-making game Sunflower realize that the low cost of the network makes it feasible to send hundreds of thousands of transactions, which effectively results in the network producing no value to others. In response, Polygon increased its minimum gas fee by a factor of 30 — a necessary concession to handle this throughput increase. Even if the incremental cost per transaction decreases over time, and even if rollups still have to pay for proofs and data availability, both blockchains and rollups need an anti-spam mechanism.

If gas costs are critical to preventing web spam, how does Immutable avoid gas fees? Are we making ourselves and our games vulnerable to spam? To answer this question, let’s go back to the origins of Immutable X.

Blockchain projects often start with a technology and then work backwards to define the best experience the solution can offer. When designing Immutable X, we asked “what does it take for a high-quality game project to succeed” and then approached this goal from first principles. Our core belief is that the underlying transaction costs of native tokens add unnecessary friction to users and developers. If you’re developing a game that requires mass acceptance, this friction may be insurmountable.

To use Flow , you need FLOW. To use Polygon, you need MATIC. Every time a coin is minted or an asset is traded, a fee needs to be paid in the base currency in the network. Granted, this fee may be small – but the biggest drag is getting users and developers to go from $0 →> $0 in their native currency on your chain. There are workarounds (like metatransactions), but they get more complicated and still require someone to pay! Additionally, blockchains like Solana even require you to constantly pay “state rent” in native tokens, preventing your assets from being removed from the chain over time.

On Immutable X, we want to completely remove the requirement for users or developers to own any native tokens. To achieve this, we need a strategy:

1. Charge a fee for value-moving transactions (such as primary and secondary sales) and charge for the value itself rather than additional native tokens

2. Do not charge fees for transactions with no value flow (e.g. minting, transfers)

3. Use anti-spam technology to prevent abuse of these free transactions

4. Subsidize free transactions with transaction fees that generate value

The first two points are directly related to our incentive alignment principle – if you don’t have a successful sales track record, or create a thriving user-to-user economy, then Immutable won’t make money. But do we still need to defend against spam – how to stop someone from minting a billion assets and clogging someone else’s network? This is our key advantage – because we start with our goals and can choose the technology that best suits our goals.

Immutable’s role as a single zk-rollup “sequencer” gives us many tools not available to L1 blockchains. Because all transactions are linearized by us, we can implement all standard web2 protections against spam – we issue API keys to partners, implement custom rate limits, leverage commercial protection products, etc., enabling direct Reduce the risk of spam.

If Immutable can enforce limits, does that mean the network is centralized? To understand the important difference, users can always choose not to trust, migrate their assets to Ethereum L1, and complete the transaction there. In contrast, during the recent period of high NFT transaction volume, some Solana validators proposed to Magic Eden to block transactions, which would leave users with nowhere to go (thankfully the validators did not proceed with the proposal). For games, accepting a single sequencer for the best user experience at best, and being able to rely on Ethereum consensus at worst, provides the best of both worlds.

Well, that’s the high-level philosophy – but did you mention transaction fees?

User-to-User Transaction Fees

We believe that the future of gaming NFTs includes assets at all price points, similar to the asset economy of existing games like CS:GO and World of Warcraft. Many assets will be priced at the luxury items commonly found in existing NFT transactions, but we believe that in the long run, the vast majority of NFTs will be low- to mid-value utility commodities. Our pricing strategy is built around supporting the growth of this segment. Immutable charges a 2% “protocol fee” on all secondary transactions, with no flat fee per transaction. This allows us to support uneconomical transactions on platforms with high fixed cost gas fees.

For example, many Gods Unchained cards cost around $1.00. On Ethereum, a standard NFT transaction on OpenSea costs about $40 and the gas price is 100 gwei, which dwarfs the value of the asset. On Immutable X, trading this asset will only incur a fee of $0.02. The protocol may not make huge profits from the tiniest of these deals — but supporting a thriving game requires an economy where assets of all kinds exist. Immutable’s goal is to make the entire economy as liquid as possible. Also, knowing the exact fees ahead of time (with as little gas as possible) allows you to develop a more reliable trading strategy and make a market more efficiently.

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Platforms that make money based on the number of trades have one goal, and only one: to increase the number of trades. In contrast, Immutable has a clear incentive to trade the asset as often as possible at the highest possible price. If Immutable wants to make more money, we should develop products that create high-value turnover, such as new transaction types, or an improved transaction experience. This creates excellent long-term alignment with our projects and builders.

Will a percentage without a cap create a large fee for a high-value asset? This is of course standard across the NFT ecosystem and all major NFT marketplaces such as OpenSea, LooksRare and Fractal use uncapped percentage fees – but we expect Immutable X to significantly outperform other platforms in terms of fees, so this is an important consideration . At the same time, our core principle of incentive alignment comes into play here – we want to be incentivized to make these assets more valuable and allow the protocol to capture some of the value it creates at the high end!

We are actively exploring several options in this regard, including prorated fees, fee caps, and no changes, and will keep the community updated. We have also introduced a minimum transaction amount – initially $0.001 (or equivalent in an alternative exchange currency). We haven’t seen many NFT transactions below this fee yet and intend to adjust this number in the future based on demand and our proof cost.

This protocol fee for user-to-user transactions is what we enabled this week — but there are other types of fees in the Immutable X ecosystem.

royalty

Immutable X allows minters to set royalties on assets that persist within the scope of the protocol. Unlike many platforms, Immutable supports custom royalties and tax collectors on a per-asset basis. This means that different assets in the same set may have different fees – these fees will be respected in each protocol market and automatically distributed to up to 10 taxpayers. This is a major upgrade compared to most L1 ecosystems, and even after standards such as EIP-2981 were created, royalty rights are often not respected across the market. Again, our royalty system is based on feedback we’ve heard from game developers – to support a thriving UGC ecosystem, or to meet complex licensing obligations, game developers need this flexibility to handle their assets. At Immutable, we love royalties because we love incentives – we want games to actively create mechanisms that encourage asset turnover.

Currently, we only support a lower level of royalties after the initial coinage to prevent projects from increasing royalties later on harming their users.

market fee

The last part of Immutable’s charging strategy is unique to Immutable. Through our Protocol Orderbook , any market can attach a fee to any order they create. The original market can still collect fees when these orders are filled on any market on the protocol. This incentivizes markets to share liquidity with each other – your orders are more likely to be filled on 100s of other markets, rather than only on the market you created. There is no limit to these fees – the market should set what they think is a reasonable fee for their product!

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Immutable runs its own marketplace as a client of the protocol, so we are also a participant in that marketplace. We see ourselves as a case study of a successful IMX market – not cutting expenses, just focusing on adding value to a specific target customer. The global order record ensures that the marketplace can provide a more relevant user experience without having to worry about liquidity.

Now we have a list of many different fee types – wouldn’t all of them lead to higher prices for customers? Yes, not necessarily. We believe that all these participants can only charge for what they can prove – if they add value, users will pay. If not, users will switch to other marketplaces or projects until these fees are reduced.

primary sales

Of course, many NFT projects also derive value (and most of their early revenue) from primary sales. We think it’s important to align incentives with games in the space, but again we want to address the specific challenges that games face. Games mint assets in a variety of sophisticated ways, including through land sales, loot-style mechanics, or direct sales. On other blockchains, you pay a gas fee proportional to the complexity of this selling mechanism, regardless of the sale price or the number of assets. But Immutable’s strategy is different.

Instead of charging a minting fee like other blockchains, we take a smaller 2% of primary sales and allow unlimited free minting (using the spam protection discussed earlier). In this way, any game design they choose can be implemented in the game, and (assuming they succeed), we will all make money. This typically results in lower costs for low-value, high-volume mints and higher fees for high-value, low-volume mints. Immutable also provides a number of tools to make primary sales more successful, including a minting API, metadata storage, and simultaneous batch minting. On other blockchains, this is handled by other tools (such as NFT ports), which all charge their own fees. It’s hard to compare all of these tools directly, and they solve different problems and come at different prices. That’s exactly the point we’re making – you need a holistic call to the platform that contributes to the success of the project – if Immutable increases sales by 2% over the next best platform, then using Immutable and paying 2% would be a viable option. Profitable decision.

StarkNet

We have just announced that we will be rolling out support for Immutable X on StarkNet, allowing projects requiring EVM compatibility/smart contract support to join our ecosystem. On StarkNet, things will be different: there is a gas fee for every transaction, because Immutable will no longer be a single sequencer in the system. Immutable fees are charged when you use our trading contracts or platforms (similar to Metaplex on Solana or 0x on L1).

As shared with the community last week, we also created a royalty standard for NFTs. Unfortunately, as StarkNet supports custom smart contracts, advanced users can avoid these fees. Nonetheless, by defining early standards for royalties and working directly with the marketplace, our goal is to ensure that the StarkNet ecosystem respects creator royalties from the start.

We are confident that all of the best gaming and market choices are traded through Immutable X. The deep vertical integration of Immutable products will ensure that the best trading experience for games and markets is always available through our protocol, even if it requires us to help games launch on different rollups.

Summarize

Our goal with Immutable X has been that way since day one: to allow teams to build world-class web3 games without compromising their vision due to technical limitations. Cheap gas is definitely an improvement – but the complete elimination of gas is a huge advantage of Immutable X’s unique UX and developer experience.

Immutable’s unique positioning and focus allow us to more effectively solve the core problems of high-quality, large-scale NFT projects like games. The goal of across-the-board pricing and fees is to align our incentives with these projects and their users, and then use the revenue from fees to reinvest to make them even more successful.

Very excited to introduce protocol fees and staking this month, and we will continue to experiment with fee structures in the future to maximize the protocol’s long-term transaction volume and staking reward pool size.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/%e5%85%83%e5%ae%87%e5%ae%99%e7%a4%be%e4%ba%a4%ef%bc%8c%e5%9c%a8%e7%ad%89%e4%b8%80%e6%ac%beiphone/
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