Introduction

Tokenomics is a critical element in the success of Web3 gaming projects, ensuring a sustainable and player-centric economy. Illuvium, with its dual-token system and innovative staking mechanisms, aims to create a balanced and transparent token economy. This report will cover:

• The initial token distribution and unlock schedule, detailing allocation percentages and vesting periods. [1a] [2a]
• The supply management mechanisms, including staking rewards, sILV2 conversion, and deflationary pressures. [1b] [1c]
• How Illuvium's tokenomics align with long-term sustainability and development milestones. [1d]

Initial Token Distribution and Unlock Schedule

Illuvium's token distribution is strategically allocated to support both the project's development and its ecosystem participants. [1e] Key aspects of the distribution include:

• 30% of tokens are allocated to financing, 30% to the team and treasury, and 40% to ecosystem participants through liquidity staking and in-game rewards. [1e]
• Staking rewards are distributed every 14 days in epochs, with 78 total rounds, and have reached the 71st epoch by March 2024. [1g]
• By March 2024, the total supply of ILV tokens was 9,605,840, with 6,334,671 in circulation, indicating significant token unlocking over time. [1h]

Supply Management Mechanisms

Illuvium employs multiple mechanisms to manage token supply effectively, ensuring both utility and scarcity. [1b] Key mechanisms include:

• Staking rewards can be claimed in ILV or sILV2, with ILV rewards having a 12-month lock-up period, while sILV2 can be used immediately in-game and is burned after use. [1j]
• The conversion of ILV to sILV2 creates deflationary pressure on ILV tokens, as sILV2 is burned after use in-game. [1b]
• Staking rewards are distributed via epochs, with an estimated 11,694 ILV tokens issued in the 71st epoch as of March 2024. [1l]

Sustainability and Development Alignment

Illuvium's tokenomics are designed to support long-term sustainability by aligning token unlocks with development milestones and fostering ecosystem growth. [1d] Key elements of this alignment include:

• The DAO governance system allows token holders to vote on proposals, ensuring community involvement in tokenomics adjustments. [2b]
• 95% of the game's operating income is used to purchase ILV tokens in the ILV/ETH liquidity pool, which are then distributed as staking rewards, creating upward price pressure. [1n]
• The project's innovative economic model connects multiple games in a series, increasing ecosystem vitality and long-term scalability. [1o]

Conclusion

Illuvium's tokenomics demonstrate a well-planned and transparent approach to managing token unlocks and supply. [1h] The project effectively balances initial distribution with long-term sustainability, supporting both ecosystem growth and development milestones. [1d] Key strengths include:

• Clear allocation percentages for financing, team, treasury, and ecosystem rewards, ensuring equitable distribution. [1e]
• Effective supply management through staking rewards, sILV2 conversion, and deflationary mechanisms. [1b]
• Strong alignment with development goals, as seen in the integration of staking rewards with game revenue and DAO governance. [1n]

References

[1] BlockBeats. First Class Warehouse Research Report: Public beta is coming, in-depth analysis of the 3A blockchain game masterpiece Illuvium. BlockBeats. 8 Apr 2024. Available from: https://www.theblockbeats.info/en/news/52859

[2] Crypto Saving Expert. In-depth Review of Five New Play-to-Earn Games Part 11: Illuvium Tokenomics. Medium. 2 Jan 2023. Available from: https://medium.com/@CryptoSavingExpert/in-depth-review-of-five-new-play-to-earn-games-part-11-illuvium-tokenomics-6242933f31be