Immutable Ventures will provide developers working on its Ethereum scaling solution with investment and grants in IMX tokens and cash.

Immutable, the company behind the Immutable X layer-2 scaling solution for Ethereum, has announced the establishment of a $500 million fund to encourage developer adoption of the platform. In collaboration with a variety of VC funds and ecosystem allies, the Immutable Ventures fund will invest in and grant grants to projects that build on Immutable X using a mix of IMX tokens and cash.

Immutable announced today the $500 million venture, which includes assets from Animoca Brands, BITKRAFT Ventures, GameStop, Arrington Capital, King River Capital, AirTree, and Double Peak.

"With the understanding that we have only begun to scratch the surface of the massive potential for this category," said co-founder and President Robbie Ferguson in a release.

Immutable X is a scaling solution that allows for faster, cheaper, and more energy-efficient transactions than Ethereum's mainnet can support. The platform conducts transactions on a separate chain before combining them and committing them to the Ethereum blockchain using StarkWare's StarkEx rollup technology.

Immutable X is thus well suited to applications requiring a high volume of transactions, including potentially low-value purchases, such as crypto-powered games and NFT projects.

An NFT is a blockchain token that serves as proof of ownership for digital goods such as artwork, collectibles, and video game items. NFTs could be used in video games for player avatars, virtual land plots, rare weapons, and apparel.

GameStop is one of the most well-known companies using Immutable X for its upcoming NFT gaming marketplace. Immutable and GameStop announced a $100 million token grant fund for crypto game developers in February.

A representative from Immutable confirmed to Decrypt that the previous $100 million fund with GameStop is distinct from the newly announced Immutable Ventures fund.

Immutable X is also used by partners such as TikTok, an NFT collectibles platform, Gary Vaynerchuk, an entrepreneur and NFT creator, and ESL, an esports giant. OpenSea, the leading NFT marketplace, also announced plans to integrate Immutable X in March 2021, but has yet to do so.

The scaling solution is also used in NFT-powered games such as Gods Unchained, Guild of Guardians, Illuvium, and Ember Sword. Immutable and its partners intend to provide development and tokenomics advice, as well as community and marketing assistance, in addition to funding.

"We're taking the lessons learned from building two of the blockchain's most popular games—Gods Unchained and Guild of Guardians—and hiring the smartest people from Web2 studios like Riot Games to make entering the NFT gaming world simple and rewarding for gaming studios," Ferguson explained.

Illuvium, a role-playing game (RPG), recently sold $72 million in virtual land plot NFTs on Immutable X. Players pledged $203 million in cryptocurrency last summer to purchase land plots in the upcoming RPG Ember Sword, which is also based on Immutable X.

The fund is expected to deploy investments and grants over a four-year period, with an average expected investment of $100,000 to $500,000 in tokens and cash, according to the Immutable Ventures website. The fund has already invested in StarkWare, game development platform Stardust, and NFT game PlanetQuest.

Immutable Ventures intends to use "around 500 million" IMX tokens during the campaign. IMX is currently worth around $0.76 and has dropped significantly in value due to the overall crypto market crash. It's down 19% in the last 30 days and is now 92% off its all-time high of $9.52 set in November.

Immutable raised a $200 million Series C round in March, valuing the Australian company at $2.5 billion, adding it to a long list of crypto "unicorns" worth at least $1 billion. Among the investors were Animoca Brands and Chinese gaming behemoth Tencent.