We’ve heard many a crypto head say it, and we stand by it, too. Web3 gaming, crypto gaming, NFT gaming – whatever you want to call it – is going to be a major narrative in the next bullish cycle.

And Alex Connolly, the co-founder and CTO of $3.5 billion Sydney company Immutable, seems like the perfect guy to talk to about it.

He and his fellow founders Robbie and James Ferguson have built their company and its flagship product ImmutableX (IMX) into one of the biggest and widely tentacled pieces of high-tech, web3 gaming blockchain infrastructure in the industry, with more partnerships than you can shake a hardware wallet at.

Notably, ImmutableX is the blockchain-platform home to some of the most-hyped, developing gaming titles in the Web3 space, including Illuvium, Guild of Guardians and Gods Unchained.

And Immutable’s ultimate mission? “To bring asset ownership and commerce alive in digital worlds through the power of immutable NFTs”, I’m informed.

We covered a fair bit of ground in this chat, so let’s not waste any more time in intro territory…


‘Gaming showcases the benefits of web3’

Hi Alex. Congrats to you and Immutable on all your partnerships and growth in recent months. We’ll get to that, but let’s speak more broadly first.

Do you think web3 gaming will be the thing that onboards the masses into crypto? Is it the gateway drug into the space? 

Absolutely. Even a single AAA title can have more players than there are total crypto users right now. Gaming stands to be a great field to showcase the benefits of web3, including verifiable property ownership and shared economic ownership, without those having to be the main draw.

Users can come in for a fun and innovative experience, and along the way, they can be exposed to what web3 can offer.

How will that be best achieved, do you think?

First and foremost, it’s crucial that we encourage involvement from traditional game developers and leverage their expertise to design engaging products that people actually want to use. We can achieve this in a number of ways, such as providing non-complex and customisable tooling, as well as ensuring a smooth onboarding process.

On the user side, we can foster adoption by designing the tech elements to work seamlessly with the game design. Users won’t even necessarily know that they’re engaging with blockchain. This will take top-notch game design so that using digital assets never feels cumbersome or intrusive to the players.

Can traditional gaming and web3 gaming coexist as separate markets? Or do you think it is inevitable that they must bleed into one?

They should have no problem coexisting, as not every game is going to need a blockchain or NFTs. Think of it like mobile gaming. Nobody feels that mobile gaming has diminished traditional gaming; it has only given players more options and brought in more casual gamers.

Web3 gaming can be similar. As mentioned, a lot of players won’t even notice the difference between web3 games and web2 games. It will be more about what’s going on under the hood.


Is ‘play to earn’ dead?

The “play to earn” crypto gaming narrative became pretty frothy at one stage in 2021, but the bear market and perhaps unsustainable tokenomics on some projects might have put paid to that. I guess my question is: is play to earn dead? 

Most projects are pivoting from the play-to-earn model, and towards a play-and-earn one.

The main difference here is that earning can’t be the main attraction. Rewards and economics need to be carefully balanced so that in-game ecosystems don’t attract players who only want to extract value.

Players can absolutely generate value for their time, but there need to be engaging mechanics and benefits to keeping assets on-platform, to draw in a robust and engaging community.


Is the negative perception of NFT gaming shifting?

Why do you think there has been, and still is, a stigma attached to web3 gaming and NFTs?

There are a few reasons. One is the “Wild West” narrative that has been surrounding crypto for years. A lot of gamers see scams, hacks and the like and feel that cryptocurrency is a Ponzi scheme or playground for criminals. Of course, this narrative is changing, but it’s slow going.

‘A single AAA title can have more players than there are total crypto users right now’

Furthermore, players have a right to be dubious. Gamers have been putting up with exploitative business practices surrounding micro-transactions, loot crates, and pay-to-win gaming for years. They worry that NFTs could just be another branch of this, and if the tech isn’t integrated carefully, they could be right.

There’s also the rather practical barrier of cryptocurrency transactions being clunky and relatively slow. Nobody wants to wait 20 minutes for their transaction to finalise on the blockchain, and many gamers don’t even want to know what that means.

We need to provide infrastructure that works around these limitations, and that’s exactly what Immutable is doing.

So it’s a negative perception that’s beginning to shift do you think? And is that based on the sorts of people you chat to?

Yes, this perception is absolutely shifting. For one, blockchain gaming already makes up over 48% of the entirety of blockchain activity, and blockchain gaming wallets are growing at 8% month over month. Clearly, new players are coming into this space.

And from Immutable’s side, the platform has grown from 5 to 100+ games in 2022.

Investors are growing in interest too, and it’s looking like the tumultuous events of 2022 haven’t stopped that. In October and November alone, web3 games have raised over $534 million. Perhaps some VCs are on the sidelines, but most of them are definitely paying attention.


Are gaming developers rushing into Web3?

We’re seeing more and more developers with seriously impressive mainstream gaming backgrounds working on Web3 games. Are you seeing that as an influx, or a gradual shift?

I would say it’s an influx, as there has been no shortage of stories of developers leaving notable web2 companies to work for web3 startups.

Immutable has seen its own share of web2 talent coming from firms such as EA Games, Riot Games and others. They see what is happening in web3 gaming and know that they have a chance to be at the front of a massive shift in the space, and I have a feeling it’s only going to continue in 2023 and beyond.

Can you pinpoint any areas in which web3 gaming still particularly needs to improve in order to help attract more of this kind of talent?

Absolutely. The truth is that right now, too many Web3 games are simply modified mobile-gaming models. There’s no real AAA titles available just yet. This isn’t surprising. Blockchain technology has only been used for gaming for a few years now, but massive titles take 3-5 years or more to build, even when you have a talented team and capital.

But these titles are coming; it’s just a matter of ensuring that established game developers have all they need to hone their craft in web3.


On going partnership crazy

As far as Immutable and its layer 2 ImmutableX blockchain are concerned – you’ve been going partnering crazy, it seems. Do you have gaming titles banging down the door to work with you guys?

Well it’s true we have formed a lot of partnerships lately. A major one being our recent collaboration with GameStop, which partnered with ImmutableX to launch its own Web3 marketplace.

This marketplace will bring access to blockchain games and assets, as well as gas-free minting and trading, to millions of new users.

Then there’s the various projects launching on, or migrating to, ImmutableX. In fact, more games have been onboarded to Immutable in the last three months than in the previous three years combined.

For example, major games like Deviants’ Factions, Undead Blocks, Tatsumeeko, and StarHeroes have all migrated over to ImmutableX.

Partly because you’re an Aussie-founded project but also because it makes good headlines, we’ve covered quite a few Immutable-related bits and pieces of news over the past several months. DC Comics was another big one, right? 

Yeah, that’s right – the DC Comics NFT collection is also leveraging ImmutableX for their first entry into web3.

And we also have partnerships with multiple web3 organisations and projects, like our multi-year agreement to be the title sponsor of NFT.NYC and NFT.London.

Major NFT trading platform Nifty Gateway has also integrated with ImmutableX to make it a true multichain platform. These are just some of the most premier names and services – there are new launches happening all the time.

Migrations over from other blockchains, too – such as Tiny Colony, which we wrote about earlier this week. And then there’s this one, Resurgence, just announced this week…

How is IMX unique in the space?

What is it then that draws gaming projects to ImmutableX? What makes it unique in the web3 gaming and Layer 2 sectors?

ImmutableX is solving a core problem facing web3 gamers and developers via a suite of solutions, including its gaming-specific blockchain which enables gas-free, high-scale, carbon-neutral NFT minting and trading.

And this is possible thanks to a zk-rollup engine that is a huge upgrade over previous NFT protocols.

ImmutableX also offers native NFT wallets, easy-to-use APIs, and a kit of developer tools and services for building better games and marketplaces, as well as SDKs and support and guidance for developers.

Moreover, our enforceable royalties model, which Immutable plans to expand as a standard on Ethereum, ensures creators are always compensated for their efforts on ImmutableX.

There’s also a suite of backend and platform focused products for NFT games and marketplaces, including our shared orderbook and our NFT indexer. We process hundreds of thousands of API requests each minute, surmounting the normal scaling challenges of a product of our size and scope.


Helping the industry scale

Getting back to that GameStop partnership for a sec – do you see that as a defining, or catalytic moment in Immutable’s short history? 

We’re definitely proud of it. The reason we think it’s so significant is because we see it as a huge onramp for millions of new gamers to enter into the web3 space.

GameStop is a trusted name in gaming, and so the collaboration helps to change the current perception of web3 gaming, like we were talking about earlier.

By choosing to use ImmutableX, GameStop also confirms the conviction that our solutions can help scale the industry globally.

What else is Immutable particularly proud of that we haven’t touched on? 

From a technical point of view, our integration of the EIP-2981 royalty standard, which is an open-ended implementation of royalties for NFTs.

EIP-2981 specifies a single royalty recipient and percentage amount and applies it to each token ID in a collection. This means royalties are enforced at the blockchain level, and lets the token contract define a currency-agnostic royalty amount given a sale price.

‘Nobody feels that mobile gaming has diminished traditional gaming; it has only given players more options’

We followed this with a recent announcement to extend our enforceable royalties model across the web3 ecosystem, starting with Ethereum. The move represents the first step in establishing industry-wide standards around enforceable royalty payouts.

And lastly, we’re also pretty thrilled by the sales numbers we’ve seen around our God’s Unchained NFT collection. These assets broke records this year, selling over $18 million worth of NFTs in October alone.


What’s next for Immutable?

What’s coming up next for Immutable that has your team engaged?

That’d be the upcoming launch of Guild of Guardians – our mobile RPG currently in development.

GoG already has over 850,000 pre registered players, and has launched multiple well-received demos and a staking rewards program in 2022.

We’re eagerly looking forward to a full launch in 2023, as well as our partnership with eight of the world’s most prominent teams in esports, bringing GoG to millions of eSports players and fans globally.

There are some other surprises and revelations coming, and overall the next year should be very exciting.


Any major hurdles ahead?

Are there any risks or roadblocks that you see standing in the way of Immutable’s and/or the web3 gaming vision? Bear market conditions, for instance? Or heavy regulations? 

Fortunately, web3 gaming is proving to be fairly resilient to bear-market conditions. Projects that are heavily based around speculative trading get washed out at times like this, and ones with deeper engagement and meaningful gameplay get elevated. So we don’t see the market as being significant as a roadblock.

Regulations are unfortunately less clear as to how they are going to shake out, especially in the US. While they could prove to be an issue, we are committed to doing whatever is necessary to align with the law, when it is written.

Overall, we expect web3 gaming and NFT assets to continue to proliferate, and while setbacks are possible, there’s nothing currently in our way that is going to stop us.

This interview was edited lightly for clarity. None of the contents of this article represent financial advice.

At the time of writing, the author holds several cryptocurrencies, including Bitcoin and Ethereum, plus a small amount of ILV and IMX – all purchased on crypto exchanges such as Coinbase, Binance and Coinspot.