In this article we will jump into the tokenomics of Illuvium’s ILV Token, as well as the fundamental revenue streams built into the protocol.
The Illuvinati Council #
Originally, Illuvium was conceived as a community-governed, collectible NFT game.
The Illuvinati Council is the mechanism by which the community of $ILV holders will govern and maintain the protocol, and what types of changes can be proposed. It is modeled the governance process and received input from several Synthetix core contributors – these are governance on Ethereum EIPs and early versions of change control in open-source software.
Owners of $ILV may nominate individuals for council seats as well as delegate their vote to a nominee. Before the due date for the election, candidates for council members must be proposed, followed by a formal voting period lasting 72 hours to select the 5 best candidates for the role of governing the platform. The eDAO will then compile all candidates from the Illuvium Discord Channel Illuvinati Council, and prepare them for the Snapshot vote.
“eDAO” and “Illuvinati Council” are the initial governance models and are subject to change. $ILV holders will be disadvantaged through this mechanism and plutocracy will be reduced. The system intends to be one of the most equitable methods of how to weigh a vote.
Governance Overview #
A new governance system consists of two major components:
The Illuvinati Council will consist of nominees voted in by $ILV token holders, allowing the influence of representatives from the community who can debate and distill technical changes while not directly giving large holders an unbalanced vote.
There will be a space to publish the IIP’s Illuvium Proposal space (changes in the protocol through ICCPs and IIPs). For proposals to be enacted, a supermajority is required.
Documents describing a proposal to change one of the System Configuration Variables of Illuvium are known as Illuvium Configuration Change Proposals (ICCPs). It is intended to provide a detailed history of each configuration change and the rationale for it at the time it was implemented. It is the author’s responsibility to build consensus within the community and document dissenting opinions. On how to correctly write an ICCP, a separate blog will be posted later.
ICCPs can change the following variables:
- Configurable Council Values (see below)
- Marketplace fees
- Capture mechanics
- Balance changes
Illuvium Improvement Proposals (IIPs) are designed to ensure that changes to Illuvium are transparent and well-governed. IIPs provide information to the Illuvium community about proposed changes to the system. It is the author’s responsibility to build consensus within the community and document dissenting opinions. On how to correctly write an IIP, a separate blog will be posted later.
IIPs can result in the following improvements:
- New contracts
- New systems
- Character sets
Council Epoch #
During an Epoch, Illuvinati Council members will debate and vote on ICCPs and IIPs within a public discord forum within a Council Epoch (Epoch length can be configured using an ICCP). The Council will continue to function if a council member withdraws during an Epoch, but the supermajority formulas will change (each normal proposal must have a supermajority).
$ILV council changes will be necessary in some cases. There must be a unanimous approval for any meta-governance proposal. A Meta Governance case is when the community decides on something prior to telling the core team and developers to grant the change.
Council Stipend #
At first, IlluviumDAO will manually pay Council Members $ILV at the end of Council Epochs. If a sufficient number of Council Member votes are pulled before the end of a Council Epoch to remove them from the Council, they will receive $ILV rewards proportional to their time in the Council during that Epoch, up until the point at which their NFTs are retrieved. After their NFT has been issued, the replacement Member will receive $ILV rewards proportional to the time they have spent on the Council.
Executioner DAO Discretion #
In spite of the council reaching a consensus on a proposal, the ExecutionerDAO remains as a backstop and can act in an emergency.
Technical Specification #
To signify a wallet is part of Illuvinati Council, the Executor DAO (eDAO) will need to create a modified version (or custom contract) of an NFT. In order to house the Illuvinati Council Election process, a new space on Snapshot will be created. The addition of an “Illuvium Proposal” space utilizing a new strategy to count the NFT issued by the eDAO is live at council.illuvium.io. Government is in progress at gov.illuvium.io.
Configurable Council Values (Via ICCP) #
Initially, the deadline for council nominations is set at 72 hours before the start of the election period. A cycle of elections is the length of time that passes between elections. The council members will receive their NFTs at the end of the Election Period
Token holders must redelegate their votes to new and existing council members after each Council Epoch (to prevent stagnation and transitory power) which is set at 3 months, with the genesis election taking place on 18th February 2021 (0:00 UTC)
Initially, there was a 24-hour time lock period before the proposal was implemented.
Balancing via Governance #
Since Illuvium’s codebase is data driven, balance patches can be executed much more dynamically than traditional games. The next patch will be a Neural Net Assisted update that will be voted on by the council and take into account the thousands of expected matches in the game.
To Break down the total maximum supply, explain the role $ILV holders can play in decentralized governance, and explaining how $ILV supports the Illuvium game, this will tell the story on how $ILV’s Tokenomics will function.
The graph above displays how token distribution will be handled.
The ILV token supplies are as follows:
Balancer Smart Pool Distribution #
The Balancer Liquidity Bootstrapping Pool allows DeFi protocols to acquire capital from a smaller amount of liquidity than would typically be required when seeding a pool such as Uniswap or Sushiswap.
This problem can be solved by using variable asset weightings in Balancer:
- A regular pool matches the values of two assets 50:50. BLBPs differ in that the weights change over time to create downward pressure.
- When the pool goes live, the price will start to decline, hence the high initial price of the token.
- There are two competing forces for the price of the token in a BLBP. By changing the weights of the tokens, the price of the token will naturally fall, since the token begins with the majority of the pool’s value, and ends at a much lower value.
- The token can be traded. The number of tokens in the pool decreases as more people buy the token, but their value must still match the weights, so the price of the token increases to compensate. You will see a gradual decline in token price followed by periodic spikes that cause the token to rise again. The price of a token should eventually reach some value that is considered accurate by the overall market. Due to Balancer’s Smart Pools, we are able to distribute up to 1,000,000 tokens that aren’t subject to lockup, listed at an initial price of 50 USD.
NFT Details and Promotional Reward #
NFTs from Rhamphyre are purely promotional. Therefore, in-game use is not permitted. On the other hand, they do have a strict supply limit. No more will be minted after the claim period ends.
Once the game is released, the M0z4rt Skins, Emotes, and Badges will be redeemable in-game. Prior to launch, they can be traded on any market, but they need to be owned in your linked wallet to be redeemed in game.
There is no cost to badges, they are simply based on a points threshold. For the bronze badge, there is no points threshold, so any purchase size counts towards this badge.
Ethereum ETH can be used in all purchases. Use it to convert at the end of the bootstrap balancer. After the limit is reached on the promo NFTs, they will be available to sale right after. The rule applies only to those holding all of their ILV purchases after the sale concludes until the NFTs redeem window has closed.
Illuvium’s governance is a complex structure. The game aims to create a huge ecosystem that will allow its users to become owners of the project under the protocol. The user and owner will be able to propose and vote on new activities. This will create a gaming ecosystem that no other title as been able to accomplish yet.