Public Beta Imminent! Comprehensive Analysis of AAA Blockchain Game Illuvium

Original Title: First-Class Cabin Report: Public Beta Imminent! Comprehensive Analysis of AAA Blockchain Game Illuvium

Illuvium is a blockchain gaming universe developed on Immutable X with the Unreal Engine 5, comprising four distinct types of games. These games share a unified world view, cater to different player demographics, and are interconnected through the game world’s economic mechanisms, significantly enhancing the gameplay experience. The development progress of the game is currently satisfactory, with a well-designed mechanism and gameplay. The game quality has already surpassed most blockchain games on the market, and the main game is expected to start its public beta within the year. Therefore, we have chosen to focus on Illuvium.

Investment Summary

Illuvium is a blockchain gaming world that encompasses four different types of games. These games share a unified worldview, are developed for different player groups, and are interconnected through the economic mechanisms of the game world, forming a complete blockchain gaming ecosystem.

From the perspective of the team and funding, the Illuvium development team possesses ample development experience and capabilities. The project is well-funded, having completed a $12 million Series A funding round on March 27, thus ensuring a robust financial standing.

In terms of product, Illuvium has designed a vast game world consisting of a business simulation game called Zero, an open-world adventure game named Overworld, a auto-battler strategy game titled Arena, and an NFT collection game known as Beyond. Each game in this world has unique gameplay mechanics targeting different player demographics. The games are linked by the shared use and exploitation of resources, providing a richer gaming experience. Currently, Zero and Beyond are already in public beta, while Overworld and Arena are still in closed beta, with public testing expected to begin soon. In the longer term, the design of Illuvium’s game world poses significant challenges for the team’s development and operational capabilities, particularly in adjusting the yield rates for the collection games and balancing the competitive games. While Illuvium has demonstrated its development prowess, its operational capabilities await further real-world validation.

Regarding project development, Illuvium is still in its early stages, with Arena and Overworld in closed beta and the overall game world concept far from completion. However, the game has already accumulated significant popularity, with an active community and social media presence. It is anticipated that as Arena and Overworld enter public beta, Illuvium will attract even more players.

From the perspective of token economics, the ILV token primarily serves as a governance token for the network, aiming to sustainably drive the game’s ecosystem by rewarding core participants. The token’s staking mechanism is designed to achieve these objectives, but this mechanism places high demands on the future profitability of the game, which requires further practical evaluation to determine its effectiveness.

From the perspective of the track, since the end of 2023, blockchain gaming has achieved rapid development with significant growth in transaction volume and user base. The data predicts that after the current market cycle ends, the core user group of blockchain gaming will be at least double its original size. This indicates that there will be a vast market space for blockchain gaming for a considerable period in the future. During this development phase, blockchain gaming has diversified its game types and improved game quality, which are the main reasons for the continuous rapid growth of its user base. However, most games in this cycle have not deviated from the “Play To Earn” model and have made few innovations. Illuvium is one of the few projects that innovates at the fundamental logic level of blockchain games. It does not rely on a single mechanism and gameplay to attract users but attempts to establish a viable economic model from the ground up, linking multiple games together. Such a gaming ecosystem is expected to have more vitality than traditional single blockchain game worlds.

In summary, the Illuvium project is worth attention.

Note: The final rating of “Follow” or “Do Not Follow” by First Class Warehouse is based on a comprehensive analysis of the project’s current fundamentals according to the First Class Warehouse project assessment framework and is not a prediction of future price fluctuations of the project tokens. Many factors affect token prices, and the project’s fundamentals are not the only factor. Therefore, a research report’s designation of “Do Not Follow” should not be taken as an indication that the project’s price will definitely fall. Additionally, the development of blockchain projects is dynamic; projects we initially designated as “Do Not Follow” may be reassessed as “Follow” if there is a significant positive change in their fundamentals, and vice versa, projects initially marked as “Follow” that undergo significant negative changes may be adjusted to “Do Not Follow” and will be flagged to all members.

1. Basic Overview

1.1 Project Introduction

Illuvium is a blockchain game world developed using the Unreal Engine 5 and based on Immutable X. It comprises four different types of games that share a unified world view. These games are designed for different player groups and are interconnected through the game world’s economic mechanisms, creating a comprehensive blockchain gaming ecosystem.

1.2 Basic information[1]

2. Project details

2.1 Team

The development company behind Illuvium is also called Illuvium, based in Australia. According to the official website, the team currently consists of 102 people, while LinkedIn shows 96 members, estimating the team size to be around 100 people. Key team members include:

Kieran Warwick — Co-founder, who entered the cryptocurrency industry in 2015 with his brother Kain Warwick (founder of Synthetix) after working in e-commerce. He left the cryptocurrency industry in July 2016 for the food industry but returned in 2020 with the rise of DeFi, founding Illuvium in September 2020.

Aaron Warwick — Co-founder, holds a Bachelor’s degree in Computer Science and Physics from the University of Wollongong. He worked in retail and as a tennis coach before co-founding Illuvium in September 2020, where he is deeply involved in game design and administration. Aaron is a brother to Kieran and Kain Warwick and comes from a family with a sports background, owning franchise rights worth millions of dollars, including several major sports centers in Australia.

John Avery — Chief Technology Officer, graduated with a Bachelor’s degree in Computer Science from the University of the Australian Federation. He has a long history in software development within the gaming and financial services industries and was involved in developing games on the App Store early in his career. His company, JNA Mobile, was once a significant distributor on the Unity Asset Store with over a million users. Avery joined Illuvium as CTO in December 2020.

Danny Wilson — Chief Financial Officer, has extensive experience in the retail industry and was the franchise director at Harvey Norman. Later, he served as managing director of a subsidiary of Harvey Norman and co-founded MAC1, an Apple authorized service provider, serving as its managing director. Wilson has also been a consultant for several startups and co-founded a Web3 investment fund, Oracle Venture. He joined Illuvium as CFO in December 2020.

Benjamin Nietzsche — Chief Game Designer, has a long history in game development. He co-founded Aequus Gaming in 2013, developing third-party software for League of Legends players, including LolReplay and LSI. Nietzsche joined Riot Games as a third-party consultant in 2014. In 2018, he joined the independent game studio HeadByte Studios as Chief Game Designer. Nietzsche joined Illuvium in March 2021 as Chief Game Designer.

Currently, the team of 102 members includes 49 artists responsible for game art, modeling, concepts, effects, etc., 15 engineers for game development, 9 quality assurance testers, and 7 engineers for game server setup. Overall, the core team of Illuvium possesses significant experience in both the gaming and blockchain industries, and the game development team is robust with strong capabilities.

2.2 Funding

2.2.1 External Game Financing

Table 2-1 Illuvium Financing Situation

As of March 27, 2024, Illuvium has completed four rounds of external financing, totaling $65 million in funds raised. The investors include IOSG Ventures, Framework Ventures, Animoca Brands, Spartan Capital, Polygon Ventures, Yield Guild Games, Delphi Digital, among others. The most recent round of financing was completed on March 27, 2024, indicating that the team currently has a robust financial capability.

2.2.2 Illuvium Zero Land Sales

Figure 2-1 Explanation of Illuvium Zero Land Sales [2]

Figure 2-2 Results of Illuvium Zero Land Sales

On June 6, 2022, Illuvium announced that it had raised approximately $72.19 million through the sale of land from Illuvium Zero, selling 19,969 out of 100,000 available plots. The land is categorized into five tiers, each offering different game enhancements. The first four tiers were auctioned in a Dutch auction format and could be bid on using ETH and sILV2, while the highest tier was auctioned in an English auction format, only accepting ETH bids.

During the auction, the prices for different tiers fluctuated significantly. Tier 1 land started at 2 ETH, with final prices ranging from 0.3 to 2 ETH. Tier 2 land started at 6 ETH, with final prices ranging from 0.97 to 6 ETH. Tier 3 land started at 20 ETH, with final prices ranging from 3.67 to 20 ETH. Tier 4 land started at 80 ETH, with final prices ranging from 13.6 to 76 ETH.

This auction round gathered a total of 4,018 ETH and 239,388 sILV2. The 4,018 ETH was converted into ILV tokens and redistributed to ILV stakers, while the remaining sILV2 was destroyed to reduce the token supply, approximately 2.39% of the total token supply.

2.2.3 Illuvium Beyond D1SK Sales

Illuvitar is a customizable portrait-like NFT in Illuvium Beyond. Players obtain an Illuvitar and its accessories by purchasing a D1SK, allowing them to assemble their unique Illuvitar NFT. The accessories include headwear, glasses, skin, clothing, and props. There are two types of D1SKs: Standard D1SK and Mega D1SK. The Standard D1SK includes one Illuvitar, three accessories, and one Tier 0 Illuvitar, priced at 0.005 ETH. The Mega D1SK upgrades the Tier 0 Illuvitar in the Standard D1SK to a rarer Illuvitar, but at a higher price, costing 0.025 ETH.

The first wave of D1SK Alpha sales began on March 7, 2023, with this round of D1SKs featuring special rare attributes labeled as Alpha.

Figure 2-3 Illuvitar D1SK Alpha Sales Explanation [3]

Figure 2-4 Illuvium D1SK Alpha Sales Explanation [4]

The first round of D1SK Alpha sales resulted in a total of 20,000 Alpha Mega D1SKs and 20,600 Standard Alpha D1SKs being sold, generating approximately 47,844 sILV2 and 742 ETH, equivalent to around 4.75 million USD in revenue. Subsequently, Illuvium launched several rounds of D1SK promotional campaigns, including:

On June 12, 2023, Illuvium launched a joint D1SK promotion with GameStop. Each D1SK sold included a unique GameStop-branded Illuvitar, with each D1SK priced at about 50 USD. Illuvium did not disclose the detailed sales amount for this promotion.

On September 8, 2023, Illuvium started the second round of D1SK sales, introducing new Illuvitars, with the price of Standard D1SKs reduced to 0.00301 ETH, and Mega D1SKs priced at 0.01801 ETH. Illuvium did not disclose the detailed sales amount for this promotion.

On November 30, 2023, Illuvium launched a joint D1SK promotion with Team Liquid. Each Promo D1SK sold included a unique Team Liquid-branded Illuvitar, with each D1SK priced at about 40 USD. Illuvium did not disclose the detailed sales amount for this promotion.

As of March 27, 2024, Illuvium had completed four rounds of external funding, totaling 65 million USD. Investors included IOSG Ventures, Framework Ventures, Animoca Brands, Spartan Capital, Polygon Ventures, Yield Guild Games, and Delphi Digital. The most recent funding round was a 12 million USD Series A completed on March 27, 2024, indicating that the team currently has sufficient financial resources. Within the game, there have been two rounds of NFT sales, including land and D1SK sales, totaling about 76.94 million USD. However, the tokens obtained from these in-game sales are primarily used for destruction and to reward ILV stakers, so this revenue is not considered part of the team’s finances. Overall, Illuvium’s financial situation appears to be strong, likely supporting ongoing game development and operations.

2.3 Products and Technology

2.3.1 Game introduction

Illuvium is not a game, but a game world composed of multiple games. In this game world, each game has its own role in the world. From a broad classification, the games in Illuvium can be simply divided intoSupply typeandRequirementsTwo types of games,The former takes input-output as its main purpose. Players invest certain real resources and then produce game resources to lay the foundation for the operation of the entire game world., and at the same time, Illuvium officials can also adjust the output of game resources to maintain the overall economic balance of the entire game world.The latter takes competitive consumption as its main purpose. Players use the acquired game resources to compete, and consume the gradually accumulated game resources during the confrontation., Illuvium officials can stimulate players’ competitive needs by adjusting the balance of competitive games, thereby adjusting the consumption of game resources to maintain the overall economic balance of the entire game world.According to the official current game mechanism settings, the business simulation game Zero and the open world adventure game Overworld mainly exist as supply games, while the auto-chess strategy competition game Arena and the NFT collection game Beyond mainly exist as supply games. It exists for demand games.In addition, Illuvium has also developed IlluviDex, a market specifically for the trading of game props within the ecosystem, where players can use ETH to buy and sell game props and complete cross-game prop interaction.

In the background setting of the game, players will act as survivors in the interstellar fleet and investigate a mysterious signal on a strange planet that is suspected to be the birthplace of civilization. This planet has changeable climates, complex terrain, and beasts called Illuvials. The beasts, called Illuvials, possess some special powers, and players can capture and control them using crystal shards mined from the planet’s surface. Players will explore, collect, build and compete in this world to uncover the mystery of this planet.

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2.3.2 Illuvium Zero

Illuvium Zero is the foundational game of the Illuvium universe, where players take on the role of survivors on an alien planet, managing resources and mining local deposits to support future exploration of this mysterious planet.

Figure 2-5: Zero Game Screen

In Zero, players have the option to purchase Land NFTs or build a series of structures on free land provided by the official platform to mine and develop resources within the plots. The inherent resources on the land include elemental mines and fuel mines. Players can construct buildings to extract and develop these minerals. Elemental mines produce elements like Hydrogen, Carbon, and Silicon, while fuel mines yield fuels named Crypton (green beans), Hyperion (colorful beans), and Solon (yellow beans). Elements are used in Zero to build and upgrade relevant structures, while fuels are utilized as significant resources in Overworld. Crypton serves as a consumable for players to access higher-level areas in Overworld, whereas Hyperion and Solon are used to craft and upgrade equipment skins and drone skins in Overworld. Moreover, the extracted fuels can be stored as ERC-20 tokens in wallets and sold to other Overworld players in need through the official marketplace, IlluviDex.

Besides the inherent resources, the land also contains illuvials as random resources. Players can construct a special building to scan for Illuvials passing randomly through the land. After acquiring the biological data of Illuvials, players can continue to study this data in another special building to generate a blueprint NFT. This NFT can be used to produce equipment skins and drone skins in Overworld or sold on the official marketplace IlluviDex to other Overworld players in need.

Zero’s paid land is divided into 5 levels, totaling 100,000 plots, with the first batch of land sales already selling 19,969 plots. Different levels of land represent different rarity levels; the rarer the land, the more resources it can produce, and the greater the production bonus. Additionally, T3, T4, and T5 lands have unique special bonuses (Landmarks) and functions, with corresponding higher prices. Currently, T1 to T4 land can be purchased on the IlluviDex market, while T5 land is only available through auction. Furthermore, as the quantity and location of elemental mines and fuel mines are randomly distributed, some lands may face a surplus of one type of mine and a shortage of another, thus requiring players to strategically choose more balanced lands. Moreover, a player’s position on the entire map also impacts land development; in the future, if a player owns multiple adjacent lands, these lands can interconnect resources and be merged to form economies of scale.

Table 2–1 Land types[5]

Table 2-2 Land Details

On the land, players can build specific structures within a limited space to develop the land’s resources. The currently available structures can be categorized into several types:

1) Infrastructure. Main Base (Nexus), which determines the upper limit of building numbers; Engineering Workshop, a prerequisite building for resource extraction sites and power stations; Quantum Fabricant, a prerequisite building for fuel mines and technology buildings; Power Station, which enhances the output of extraction sites and resource converters.

2) Extraction sites. Sediment Excavator, for carbon mine extraction; Mine, for silicon mine extraction; Hydrogen Pump, for hydrogen mine extraction; Crypton Gate, for obtaining Crypton fuel; Hyperion Extractor, for obtaining Hyperion fuel; Solon Dredge, for obtaining Solon fuel.

3) Converters. Carbon Converter (Sequestrian Plant), automatically produces carbon and can convert two other elements into carbon; Silicon Converter (Photodisintegration Plant), automatically produces silicon and can convert two other elements into silicon; Hydrogen Converter (Condenser Plant), automatically produces hydrogen and can convert two other elements into hydrogen; Crypton Converter (L-Crypton Collider) automatically produces Crypton and can convert two other fuels into Crypton; Hyperion Converter (Hyperion Lathe) automatically produces Hyperion and can convert two other fuels into Hyperion; Solon Converter (Anti-Solon Inverter) automatically produces Solon and can convert two other fuels into Solon.

4) Storage. Carbon Storage (Carbon Matter Silo); Silicon Storage (Silicon Matter Silo); Hydrogen Storage (Hydrogen Matter Silo); Crypton Storage (Crypton Containment Unit); Hyperion Storage (Hyperion Containment Unit); Solon Storage (Solon Containment Unit).

5) High-tech buildings. Singularity Scanner, used to scan Illuvials passing through the land; Zero Point Transducer, a prerequisite building for blueprint production; Materials Lab, used for researching biological data and producing encyclopedias or blueprints, which may also fail; Data Bank, enhances the output and yield of the lab.

6) Other. Holographic Statue, displays scanned Illuvials and increases the chances of scanning them again in the future; Marketplace, allows players to exchange resources needed within the game.

Besides the selection of construction time and resource allocation for buildings, players must also consider arranging appropriate positions and paths between buildings. Different positions and paths significantly impact the production of resource-producing buildings, and every modification of building positions and paths incurs substantial costs. Thus, only with properly planned paths and positions can players achieve the most efficient resource output. These points test players’ strategic involvement and add interest to the gameplay.

Moreover, Illuvium’s official role in the game is primarily as a macro resource regulator. Since the fuel efficiency produced by players is limited and may not sufficiently supply the development of the Overworld game, when a player mints one fuel bean in the form of ERC-20 and trades it, Illuvium’s treasury will mint 19 additional fuel beans. This means that the output in Zero can be amplified up to 20 times for use in the Overworld. However, the timing and quantity of this output transferred to the Overworld are controlled by Illuvium officials. They intervene in the supply of fuel beans during significant price fluctuations to stabilize the price and reduce the risk of malicious control of in-game resource prices. Additionally, this setup implies that when a player earns one fuel bean, the game gains the benefit of 20 fuel beans, with the profits from the remaining 19 sold later distributed to ILV token holders. In the entire Zero game, 5% of the revenue goes to the landowners, while 95% will eventually benefit the participants of the Illuvium ecosystem. This ratio can be adjusted in the future through Illuvium DAO governance to better distribute the profits generated by the game. Additionally, as the game developers, Illuvium may design more unique gameplay, buildings, and resources to enrich the player experience.

The game has currently entered the public testing phase, with participation limited to paid land purchasers. Blueprints crafted during this phase can be retained for later use, but other data will be reset after the official launch. The game is available on PC (MAC, Windows) and mobile (Android) platforms.

2.3.3 Overworld

Overworld is an open-world adventure game closely tied to the game’s worldview. Its main focus is on adventure, exploration, and capturing. Players act as explorers on the planet, equipped with drones to collect minerals, craft equipment, and capture Illuvials.

Figure 2-6: Overworld Game Screen

Overworld is designed with 8 regions, one of which is the starting area, and the other seven are explorable areas. Different landscapes exist within these regions, featuring various types of resources and Illuvials with diverse attributes. The regions are categorized into four levels, each requiring a different amount of green bean fuel. The resources and Illuvials levels available also vary by region level. Additionally, there is an energy limit for players within each region; all actions consume energy, and once depleted, players must leave the region. Thus, players need to plan their actions strategically while in the area.

The materials players can obtain in these regions mainly include ores, plants, and other materials. Players can also use Shards to capture Illuvials and then engage them in card battles within the combat space to tame the Illuvials. After obtaining materials, players can craft new items. These items are of two types: one type is used for collecting materials or enhancing the efficiency of material collection, including Drones, Equipment, and Shards (similar to Pokéballs in Pokémon games). The other type is mainly for creating cards used in the Arena, including Augments, Armaments, and battle cards (Illuvials). Moreover, crafting items in Overworld requires the consumption of colored beans and soybeans produced in Zero, and the crafted items can be sold to other players in IlluviDex.

Overworld, as an open-world adventure game, highlights two main features: the adventure experience across different regions, showcasing the game’s art design for visual impact, and the enjoyment of collecting and crafting, which has been emphasized in Overworld to enhance players’ sense of achievement.

The game is currently in beta testing, and beta access requires sending an email to the official to apply for an activation code. The game can be downloaded from the Epic Games Store, and it has specific system requirements.

2.3.4 Arena

Arena, a strategic competitive game, differs fundamentally from the simulation management game Zero and the open-world adventure game Overworld. Arena does not involve the complex processes of resource collection and crafting. Instead, players rely solely on their assembled Illuvials decks to engage in PvE or PvP auto chess strategy battles.

Figure 2-7 Arena Game Screen

In terms of core game mechanics, Arena’s auto chess setting is not much different from other auto chess games. The game uses a turn-based combat system, where players need to use gold each turn to buy corresponding chess pieces and place them on the field for battle. Each chess piece in auto chess has its own special abilities and characteristics, as well as two attributes: class and bond. Players need to rely on these attributes to form the corresponding bonds, enhance the capabilities of the chess pieces, and can also synthesize by repeatedly buying the same chess piece to enhance the piece’s own capabilities and change its appearance.

From a class perspective, the chess pieces in Arena mainly include five basic classes: Warrior, Guardian, Assassin, Mage, and Support. Different classes mainly distinguish the functions of the chess pieces, for example, warriors and guardians are primarily used in the front row to take damage from opponent’s pieces, assassins are used to bypass the opponent’s front row and damage the back row, while mages and supports serve as back row units attacking opponent units or adding buffs to units on the field. In addition, the same chess piece can also have multiple classes, thereby enriching the player’s strategic choices and team composition.

In terms of attributes, the chess pieces in Arena mainly include five basic attributes: Water, Fire, Earth, Wood, and Air. These five basic attributes have a mutually restrictive relationship. Each chess piece can be attributeless or can have one or more composite attributes. When a chess piece has one or more attributes, its main attribute will serve as the primary basis for restraint judgment. When there is an attribute restraint between two opposing chess pieces, a predatory effect is triggered, the restraining side gains an excited Buff, and once the status bar is fully charged, it gains enhanced combat capability. Therefore, choosing different attribute-restraining chess pieces against different enemies is an important part of testing the player’s strategic ability.

Apart from basic chess pieces, players can also add unique effects or ability enhancements to their chess pieces through the rune system and equipment system to enhance the capability of their team composition at certain stages, thereby enhancing strategic competitiveness.

As of March 27, 2024, Arena has introduced 205 chess pieces with different attributes, classes, and levels, 87 different levels and types of runes, and 81 different types of super runes. Players will be able to buy these cards on the market in the future, or make corresponding cards themselves in Overworld to build their own decks and win the ladder prize money in each season of Arena.

The role of Illuvium officials in Arena mainly involves being the operator and the referee of the events. Illuvium officials are responsible for introducing new cards to enrich the player’s gaming experience and also adjusting the balance of old cards in each version to maintain the competitiveness of the game, which demands high capability in value adjustment and operation from the Illuvium officials.

Arena is still in the beta testing phase but has been listed on Epic Games, requiring certain computer specifications. In the future, if players want to participate in the ladder mode to win ladder prize money, they will need to have a valid deck containing at least 28 cards.

2.3.5 Beyond

Beyond is an NFT collection game launched by Illuvium officials in June 2023, or strictly speaking, a portrait-like PFP creation game.

Beyond has a relatively independent relationship with the other three games. Players can buy D1SK to obtain Illuvitar avatars and accessories, and customize their portrait-like PFPs by equipping different accessories. Additionally, players can buy and sell these NFTs in IlluviDex to configure avatars that meet their needs and use these avatars to participate in the official rarity competitions held weekly. The top 100 avatar holders in these competitions will receive ILV as a reward.

In the future, these avatars will also become personal symbols and social media for Illuvium players participating in this vast game world.

Figure 2-8 Arena Game Screen

2.3.6 Summary

From the current perspective, the design of Illuvium’s four games fundamentally adheres to the principles established at the inception of their game world. That is, each game possesses its own unique gameplay mechanics and caters to different player demographics, yet they are interconnected through the game’s economic mechanisms, forming a thriving gaming ecosystem. In terms of completeness, Zero, Overworld, and Arena have all achieved respectable levels of game mechanics and quality. The future tasks involve technically linking these games together, and Illuvium’s special game token, sILV2, is expected to play a more significant role in this gaming world, ensuring the sustainability of the entire ecosystem. All these factors place high demands on Illuvium’s development and operational capabilities, but so far, the team has generally satisfied players.

Summary

From the perspective of the team and funding, Illuvium’s development team possesses ample experience and commendable development capabilities. The project has had a favorable funding situation, having completed a $12 million Series A funding round on March 27, thus securing sufficient financial resources.

Regarding the product, Illuvium has designed a vast game world comprising a business simulation game Zero, an open-world adventure game Overworld, an auto-chess strategy competitive game Arena, and an NFT collection game Beyond. In this game world, each game offers unique gameplay mechanics aimed at different player demographics, yet the games are interconnected through the mutual exploitation and utilization of resources, enriching the overall gaming experience. Currently, all four games have achieved respectable completion levels, with Zero and Beyond already in public beta, while Overworld and Arena are still in closed beta and are expected to start public beta soon. Looking further ahead, the design of Illuvium’s game world poses significant challenges for the team’s development and operational capabilities, particularly in adjusting the yield of the collection games and balancing the competitive games, which are challenges the team must overcome. To date, Illuvium has proven its development capabilities, but its operational capabilities still need to be tested in practice.

3. Development

3.1 History

Table 3–1 Illuvium major events

3.2 Current situation

3.2.1 Operational data

Figure 3–1 Illuvium Zero Land Transaction Data

According to the Immutable X blockchain explorer, as of 5 PM on March 21, 2024, there have been a total of 11,392 transactions on Illuvium Zero lands, accumulating a total trading volume of 10,753 ETH. The average transaction price per land is 0.944 ETH, with the current floor price at 0.12 ETH. The number of unique holding addresses is 7,680.

Other Illuvium games are still in beta testing and therefore do not have detailed operational data available.

3.2.2 Social Media Presence

Table 3-2 Illuvium Social Media Data

As of March 21, 2024, Illuvium has a significant presence on social media platforms, with a large number of followers, frequent interactions, a large community, and high levels of activity. The content mainly revolves around game mechanics and token mechanisms.

3.3 Future

Figure 3–2 Illuvium 2024 roadmap[7]

Figure 3–3 Illuvium 2024 Q2 roadmap

According to Illuvium’s published roadmap, the main focus for the year 2024 will continue to be on game development. The fourth beta version of Arena and Overworld is expected to be released soon. In the second quarter of 2024, Illuvium plans to launch a public beta version of the game world and release the third wave of Beyond D1SKs. In the third quarter of 2024, Illuvium plans to announce a new game, and in the fourth quarter, the plan is to launch the V3 of ILV staking and the fourth wave of Beyond D1SKs. Additionally, Illuvium has announced an airdrop plan following the end of the mainnet testing phase, which is expected to attract more players to the game.

Summary:

From the perspective of project development, Illuvium is still in its early stages, with Arena and Overworld still in beta testing. The overall conception of the game world is still some distance from completion. However, the game has already accumulated significant popularity, and the community and social media are quite active. It is anticipated that once Arena and Overworld enter the public beta phase, Illuvium will welcome an influx of more players.

4. Economic Model

4.1 Supply

4.1.1 ILV Token Distribution

ILV serves as the governance token for Illuvium, launched on the mainnet in February 2021 with a total supply of 10,000,000 tokens. As of March 27, 2024, the supply of ILV tokens stands at 9,605,840, with a circulation of 6,334,671 tokens.

Table 4–1 Estimated approximate distribution of ILV tokens

Figure 4–1 Distribution Diagram of ILV Tokens

The distribution shows that 30% of the total token amount was allocated for financing, and another 30% was given to the team and the treasury. The remaining 40% of the tokens are distributed as liquidity staking rewards and in-game rewards to participants in the ecosystem. Since the token has been in circulation for a while, most of these tokens have already been unlocked.

Additionally, there exists a derivative token called sILV2, primarily used for purchasing items and services within the game, such as land sales in Zero and D1SK sales in Beyond. Payment can be made using ETH or sILV2. sILV2 can only be obtained by staking ILV tokens, and the conversion from ILV to sILV2 is one-way and irreversible—each sILV2 token minted reduces the circulating supply of ILV by one token. Over the long term, as more ILV tokens are converted into sILV2 for the game’s operations, ILV will experience deflation. As of March 22, 2024, a total of 154,310 sILV2 tokens have been minted.

4.1.2 Token Holding Address Analysis

Figure 4–2 Analysis of ILV Token Holding Addresses

As shown in the chart above, as per Ethereum’s explorer, there are 50,187 ILV holding addresses as of March 27, 2024, with the top 100 holders accounting for 90.22% of holdings. This includes four contract addresses in the top 20, holding about 63.41% of tokens, which includes the token’s own contract address, treasury, and staking pools. There are also seven exchange addresses, holding about 9.66%. Together, these account for a total of 73.07%. Additionally, there are three capital addresses belonging to IOSG Ventures and Delphi Digital, holding about 1.63%. Hence, excluding some of the aforementioned tokens, the overall holding of ILV tokens is relatively dispersed.

4.2 Demand

ILV tokens function mainly as governance tokens for Illuvium, with their primary role being to participate in protocol governance and to share in the dividends of project development. Users can stake their ILV tokens on Illuvium’s staking interface, and after a lock-up period of 1 to 12 months, they can retrieve their principal along with staking rewards. These rewards can be collected either in ILV or sILV2; the former has a vesting period of 12 months, while the latter is immediately unlocked and usable for purchases within the game. This is also the only way for users to acquire sILV2 tokens.

Currently, users can choose from two staking pools: an ILV token pool and an ILV/ETH token pool. The former is set by Illuvium itself, where users only need to stake ILV tokens to receive rewards, though this pool shares a smaller portion of the liquidity staking rewards, only about 20%. As of March 27, 2024, this liquidity pool had a total lock-up of approximately $338,761,280 with an estimated APR of 2.93%, covering about 2,219,930 tokens, including tokens in the liquidity pool, some from the treasury, and others still unallocated but existing in the contract. The latter pool is in collaboration with SushiSwap, requiring users to stake both ILV and ETH tokens, but it offers a higher share of liquidity staking rewards, about 80%, and additional rewards from transaction fees in the pool. This pool holds about 291,165 ILV tokens, with a total lock-up of around $80,519,968 and an estimated APR of 49.29%, covering approximately 263,827 tokens. Combined, the estimated current total staking of ILV tokens in both pools is about 2,483,757, which is approximately 25.86% of the current supply.

Figure 4–3 ILV Liquidity Staking Pool

Figure 4–4 ILV token liquidity staking rewards[12]

Figures 4–3 and 4–4 illustrate the ILV Liquidity Staking Pools and the ILV Token Liquidity Staking Rewards respectively.

The staking yield of ILV tokens originates from two sources: one is the liquidity staking rewards, constituting 30% of the token supply. These rewards are distributed every 14 days in an Epoch, with a total of 78 rounds, and the process is currently in its 71st round. As of March 27, 2024, approximately 11,694 ILV tokens are estimated to be distributed in this round, with 2,339 going to the ILV liquidity pool and 9,355 to the ILV/ETH pool. So far, about 2.92 million ILV tokens have been distributed, accounting for 97.33% of the liquidity staking rewards, with all rewards expected to be completely distributed by early July.

In addition to liquidity staking rewards, ILV’s staking yield also includes profits from the game itself. According to Illuvium governance proposal IIP-45-R, after deducting costs, 5% of all business income from the game will be distributed to landholders in Illuvium Zero, with the remaining 95% used by the Vault contract to purchase ILV tokens from the ILV/ETH liquidity pool, which are then distributed as staking rewards for that Epoch.

For example, assuming a round of D1SK sales generated 1000 ETH and 4000 sILV2 tokens, according to Illuvium’s distribution rules, 50 ETH would be allocated to landholders in Illuvium Zero, with the remaining 950 ETH collected by the Vault contract to purchase ILV tokens from the ILV/ETH liquidity pool, and subsequently distributed to ILV token stakers for that Epoch. Additionally, the sILV2 tokens used for purchasing D1SK will either be distributed as RevDis (profit distribution) to ILV token stakers or destroyed to reduce the total supply of tokens.

In summary, from a tokenomics perspective, the ILV token primarily serves as the network’s governance token, primarily benefiting core game participants to foster sustainable development of the game ecosystem. The staking mechanism fundamentally achieves this objective, although this mechanism demands high profitability from the game, which future practice will need to validate.

5. Market Sector

Illuvium belongs to the blockchain gaming sector. Due to the significant variations among projects within this sector, quantitative analysis is not feasible. Therefore, this section will only discuss the current state of the sector and its future prospects, rather than conducting a competitive analysis.

Figure 5-1 Weekly activity and transaction volume of chain games[14]

Figure 5-2 Number of active users of chain games

Since the end of 2023, when the market entered a new bull run, the blockchain gaming sector has seen notable growth, becoming one of the leading sectors in this bull market. Data shows that blockchain gaming is experiencing its second rapid growth phase since the end of 2021. The number of blockchain gaming players has grown rapidly, with active users exceeding 3 million at its peak, and with active trading, the market enthusiasm is high. If we estimate using the player retention rate from the previous rapid growth phase, after this growth period ends, the core user group of blockchain games is expected to maintain at over 2.5 million people, nearly triple the number of core players at the bottom of the previous market cycle. This suggests that the entire blockchain gaming sector has significant room for growth, potentially giving rise to more top-tier projects.

Throughout this rapid growth period, several changes are observable:

1. The variety of blockchain gaming projects has increased. Compared to the previous growth phase dominated by role-playing, simulation management, and sports games, this growth period has seen an emergence of more diversified game types, including large-scale multiplayer online role-playing games, action games, shooting games, battle chess, strategic simulation, and MOBA games, each finding their representatives.
2. The quality of blockchain games has improved significantly. This improvement is reflected in the quality of the games, with more and more games adopting the most popular game engines for development, prioritizing aesthetic design and moving away from the early cheap pixel art style. Game mechanics are also more emphasized for their rationality and diversity, quickly approaching the playability of traditional gaming industries. Additionally, the influx of talent from the traditional gaming industry has led mainstream blockchain games’ operational concepts and methods to increasingly resemble those of traditional online games. This mature model can still effectively promote game development and communication with players in the short term. Thus, the combination of quality and operation has significantly enhanced the perception of this round of blockchain games compared to the previous one.

However, the biggest issue facing this rapid growth phase is that it has not escaped the influence of the first rapid growth phase of blockchain gaming. Strictly speaking, the innovations that fundamentally change the blockchain gaming sector have not yet emerged in this growth period. This is because, fundamentally, the rapid growth phase in blockchain gaming occurs due to the bullish market background and the time required for game development. Simpler blockchain games can be launched earlier to seize a market advantage, while larger, more costly projects require two to three years of development time to truly materialize. This time lag means that large blockchain gaming projects, as latecomers in the sector’s development, are unlikely to innovate significantly based on the experiences and lessons learned from the first growth phase but will instead continue to deepen and develop the “Play To Earn” concept within the game economic model.

Currently, Illuvium is one of the few projects making innovative changes to the underlying logic of blockchain games. It does not rely on a single mechanism and gameplay to attract users but attempts to establish an effective economic model from the underlying structure to link multiple games together. Such a gaming ecosystem is expected to have more vitality than traditional single blockchain game worlds.

Summary

From the perspective of the gaming sector, blockchain gaming has achieved rapid development since the end of 2023, with significant increases in both transaction volume and user base. Data predicts that, after this market cycle concludes, the core user group for blockchain games will more than double, indicating a vast market potential for the foreseeable future. This round of development in the blockchain gaming track has been characterized by diversification in game types and improvements in game quality, which are the main reasons for the rapid and sustained growth in user numbers. However, most games in this cycle have not moved beyond the “Play To Earn” framework, showing limited innovation. Illuvium is one of the few projects that innovates at the fundamental level of blockchain game logic. It does not rely on a single mechanism or gameplay to attract users but attempts to establish an effective economic model at the structural level to link multiple games together, creating a gaming ecosystem that is likely to be more vibrant than traditional single blockchain game worlds.

risk

1. Code Security Risk: Illuvium’s staking contracts have undergone multiple audits, but there is still potential for code security risks. Additionally, the code for various Illuvium games has not been open-sourced, leaving security unknown and possibly vulnerable to hacks in the future.
2. Market Risk: The current game market is highly competitive, with various types of games continuously emerging.
3. Operational Risk: Competitive and production games both impose high operational demands on the game developers.
4. Token Risk: ILV, as a crucial governance token for the project, is subject to the risk of significant price fluctuations which could affect the project’s development and operations.
5. Development Risk: The development of game projects is challenging and time-consuming, with risks of not delivering on schedule.

References

Illuvium documentation, https://docs.illuvium.io/illuvium-whitepaper

Community Encyclopedia, https://www.illuvialmaster.com/

The first-class warehouse research report “Illuvium”

Illuvium Chinese game guide, https://ilvcn.gitbook.io/ilvplay

[1]http://www.coingecko.com/en/coins/illuvium data as of March 27, 2024

[2]https://illuvium.io/news/51-illuvium-land-sale-explained

[3]https://illuvium.io/news/illuvium-beyond-set-1-wave-one-buyers-guide

[4]https://illuvium.io/news/illuvium-beyond-v1-1-now-live

[5]https://illuvium.io/news/51-illuvium-land-sale-explained

[6]https://rc1-blockscout.ILV-testnet.org/mainnet/

[7]https://twitter.com/illuviumio/status/1772906673415262570/photo/1

[8]https://www.coingecko.com/en/coins/illuvium

[9]https://www.coingecko.com/en/coins/illuvium/tokenomics

[10]https://etherscan.io/token/0x7e77dcb127f99ece88230a64db8d595f31f1b068

[11]https://etherscan.io/token/tokenholderchart/0x767fe9edc9e0df98e07454847909b5e959d7ca0e

[12]https://staking.illuvium.io/

[13]https://snapshot.org/#/ilv-gov.eth/proposal/0xc4511bc3dadffcd3bcb617ea6b5fbeb8e0cf46c05f4805348f6fa87c601b8a0c

[14]https://dappradar.com/rankings/games/charts?range=1y

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