Tokenomics are a big part of Web 3. Often times we see alt coins offering exorbitant returns for staking a certain token. We saw this with the crash of Terra Luna, which had boasted about 20% returns with certain staking mechanisms. Just the other day we saw this again with the Celsius crash. Celsius had offered 18% returns. The problem with both of these products is they didn’t produce anything tangible to generate revenue. Without a revenue producing product you rely simply on trusting an algorithm. How could these returns be sustainable? Spoiler alert, they couldn’t and weren’t.
Enter in Illuvium. The project offers a return for staked ILV that looks very similar to others, but with one major difference. They have a real revenue generation plan. Illuvium is building out a AAA gaming studio to rival the big players in the space. I’m talking about traditional studios like Riot, Epic and Activision.
There are hundreds of billions of dollars to be made in the gaming space and Illuvium is poised to get a piece of the pie. Moreover, they are further along than one might think. With a working beta version of an autobattler, a successful $72 million Land Sale and their in game pfp called Illuvitars coming soon Illuvium is the real deal. With the ILV token, they have a model where 100% of revenue goes directly back to the community. Imagine if Niantic gave 100% of revenue back to its community? That’s what we are talking about here. The possible returns for investors are incredible. I’ll let the first Land Sale results speak for themselves:
Impact to the Illuvium Team
The other aspect of this type of model is how it motivates the Illuvium team. Many members of the team hold ILV and are directly incentivized by the token to work hard and put out a good product. This is invaluable and makes it easy to be motivated to put your best foot forward. This incentive even spills over to the community with many ILV holders putting out original content and spreading the word on Illuvium. With ILV, we are all part owners of the project and everyone has an equal shot at equity.
Here is a breakdown of the token supply from Illuvium’s white paper:
The pre seed round saw ILV sell for $1 each and sold out fairly quickly. To follow that up, the seed round had that price bumped up to $3 with a similar result. We are currently in the Yield Farming stage where staked ILV is rewarded based on a time scale. The tokenomics structure has a maximum supply of 10 million ILV ever. There is also a short term deflationary aspect as every time someone chooses to collect rewards in sILV2 instead of ILV the equivalent amount of ILV gets burned. In the recent Land Sale we saw this result in roughly 250,000 ILV being burned for sILV2. At this point the ILV supply can max out right around 9.7 million. This will drop further with the launch of Illuvitars and other sales moving forward. The lowest this can potentially fall to is 7 million ILV.
Possibilities for the ILV Token
The other factor to consider is that ILV will receive revenue distribution from any other Illuvium game. This is a AAA powerhouse in the making and they are not stopping with this initial suite of games. They’ve already hinted at cart racing games (think Mario Kart). Imagine the possibilities. Merch sales, in game revenue, secondary NFT marketplace fees, etc. with so many ways to generate revenue, there is real upside to owning the ILV token. There are real use cases for revenue generation. When Illuvium generates revenue they use those funds to buy ILV and distribute it to ILV holders. This creates more buying pressure on the token and creates a model that is successful as the project is successful. This team is building a real product to rival games like Fortnite and the best part is all the revenue goes back to the community.
Being early and having conviction in this downturn is extremely difficult, but there may be an opportunity here. The team has thought out this tokenomics model extremely well and built a product that can deliver. As always, time will tell, but I’m not sure there is another token out there backed by something as tangible as this game studio. I encourage everyone to read the white paper which can be found here. The level of insight and transparency that the white paper provides leaves little to doubt. We are nearing the end of the speculation phase of NFTs and it is time to make rational, educated decisions with our crypto.
As always, thank you for reading my article! Follow me on Twitter (@Rhamphy) to keep up with the latest Illuvium news, leaks and more.