Last updated: 21 October 2022

Ecosystem development and incentive optimisation

<aside> ☝ IMX was built to reward users and accelerate the growth of Immutable X to become the #1 ecosystem for NFTs. That’s why more than 50% of the $IMX supply is reserved for ecosystem development.

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The ecosystem development fund rewards all the activity and all the ecosystem participants needed to make Immutable X successful such as developers, traders and liquidity providers. The ecosystem development fund supply will only be used if there are sufficiently good growth opportunities, making the whitepaper circulating supply forecast an upper bound on circulating supply.

Opportunities are assessed against a number of factors, many of which we can’t share because of the sensitive and competitive nature of deals. Examples of the factors include:

• Will an initiative be likely to create short-term utility for the ecosystem? i.e will the increase in supply result in a corresponding increase in demand?
• Will an initiative be likely to grow long-term utility for the ecosystem? i.e. does it make the ecosystem more useful for everyone?
• What is the opportunity cost? i.e. what else could be done with the tokens now or in the future?
• What is our degree of conviction in this incentive?

Our strategy for supply allocation is to use data to optimise incentives over time. Currently, we are in an experimentation phase: testing different types of incentives and measuring their impact. As our confidence increases, we expect to narrow in on the most impactful types on incentives. This will likely take one to two years due to the time it takes to build high-quality games.

Circulating supply forecasts

Token lock-up rules

Tokens can be in one of three states:

1. Locked: Unavailable to trade, stake or withdraw
2. Awaiting Cliff: Unavailable to trade or withdraw, but eligible to stake and vote
3. Unlocked: Available to trade, stake and withdraw. Ecosystem Development unlocked tokens may be:
   1. Circulating: if they have been transferred to users
   2. Not circulating: yet to be deployed into initiatives to grow the ecosystem

Tokens are awaiting cliff if they would have been unlocked if it were not for the cliff. For example, if a party has been allocated 10,000 tokens with a 2 year unlock length (defined below), a 1-year cliff, and a 30 day unlock frequency, whilst there will be no tokens unlocked after 1 month, they would have unlocked 1/24 if there was no cliff. Thus 1/24 are “awaiting cliff.” After 2 months, no tokens are unlocked, but 2/24 are now “awaiting cliff”.