First Class Warehouse Research Report: The public beta is coming, a comprehensive analysis of the 3A chain game masterpiece Illuvium

Illuvium is a blockchain game world based on Immutable X and developed using the Unreal 5 engine, which includes four different types of games. These four games share a unified world view, are developed for different player groups, and are connected through the economic mechanism of the game world, which greatly enriches the players' gaming experience. At present, the game development progress is good, the mechanism and gameplay are well designed, and the game quality has surpassed most of the blockchain games on the market. It is expected that the main games will be launched in public beta within the year, so we choose to pay attention to Illuvium.

Investment Summary

Illuvium is a blockchain game world that includes four different types of games. These four games share a unified world view, are developed for different player groups, and are connected through the economic mechanism of the game world, forming a complete blockchain game ecosystem.

From the perspective of team and funds, Illuvium's development team has sufficient development experience and good development capabilities, and the project financing situation is good. On March 27, it just completed a 12 million A round of financing, so the funds are also relatively abundant.

From the perspective of products, Illuvium has designed a huge game world consisting of the simulation business game Zero, the open world adventure game Overworld, the strategy competition game Arena in the form of auto chess, and the NFT collection game Beyond. In this game world, each game has a unique gameplay mechanism for different player groups, but through the mining and utilization of resources between different games, these four games are connected in series, so that players can get a richer gaming experience in this game world. At present, these four games have a good degree of completion. Among them, Zero and Beyond have been released in public beta, while Overworld and Arena are still in the internal beta stage and are expected to start public beta soon. In the longer term, Illuvium's game world design poses a great challenge to the development and operation capabilities of the Illuvium team, especially the yield adjustment of the later collection games and the balance adjustment of the competitive games will be the difficult problems that the team must overcome. At present, Illuvium has proved its development capabilities, but its operation capabilities still need to be further tested in practice.

From the perspective of project development, Illuvium is still in its early stages, Arena and Overworld are still in the internal testing stage, and the overall conception of the game world is still some distance away from completion. However, the game has accumulated a high popularity, and the community and social media are relatively active. It is expected that Illuvium will welcome more players to participate after Arena and Overworld enter the public testing stage.

From the perspective of token economics, ILV tokens are mainly used as governance tokens of the network, and their main function is to feed back the core participants of the game to promote the sustainable development of the game ecology. At present, from the perspective of mechanism setting, ILV tokens can basically achieve the above goals through the pledge mechanism, but this mechanism puts forward high requirements for the subsequent profitability of the game, which needs to be answered in future practice.

From the perspective of the track, since the end of 2023, the chain game track has achieved rapid development, with significant growth in transaction volume and user volume. From the data, it is expected that after the end of this round of market cycle, the core user group of the chain game track will be at least doubled, which means that for a long time in the future, the chain game track will still have broad market space. The development of this round of chain game track shows the two characteristics of diversification of game types and improvement of game quality, which is the main reason for the continued rapid growth of the number of chain game users in this round. However, at present, most of the blockchain games in this round have not escaped the framework of "Play To Earn" and have made few innovations. Illuvium is one of the few game projects that have made innovations in the underlying logic of blockchain games. It no longer relies on a single mechanism and gameplay game to acquire users, but tries to establish a set of effective economic models from the underlying architecture to connect multiple games in series. Such a game ecology is expected to be more vital than the traditional single blockchain game world.

In summary, the Illuvium project is worthy of attention.

Note: The final assessment of [Attention]/[Not Attention] by the first-class warehouse is the result of a comprehensive analysis of the current fundamentals of the project according to the first-class warehouse project evaluation framework, rather than a prediction of the future price increase or decrease of the project token. There are many factors that affect the price of tokens, and the fundamentals of the project are not the only factor. Therefore, it cannot be assumed that the price of the project will definitely fall just because the research report determines it as [Not Attention]. In addition, the development of blockchain projects is dynamic. If a project we judge as [not concerned] undergoes major positive changes in its fundamentals, we may adjust it to [concern]. Similarly, if a project we judge as [concern] undergoes major malignant changes, we will warn all members and may adjust it to [not concerned].

1. Basic Overview

1.1 Project Introduction

Illuvium is a blockchain game world based on Immutable X and developed using the Unreal 5 engine, which includes four different types of games. These four games share a unified worldview and are developed for different player groups. They are connected in series through the economic mechanism of the game world, forming a complete blockchain game ecosystem.

1.2 Basic Information[1]

2. Project Details

2.1 Team

Illuvium is developed by Illuvium, and the team is located in Australia. The official website shows that the team currently has 102 people, and LinkedIn shows that there are 96 people. It is estimated that the current team size is around 100 people. The information of the main team members is as follows:

Kieran Warwick — Co-founder, Kieran and his brother Kain Warwick (founder of Synthetix) worked in e-commerce together, entered the cryptocurrency industry in 2015, and worked as a marketing sales director at an Australian over-the-counter exchange. In July 2016, he left the cryptocurrency industry to work in the food industry. In 2020, with the rise of DeFi, Kieran returned to the cryptocurrency industry again and founded Illuvium in September 2020.

Aaron Warwick — Co-founder, Bachelor of Computer Science and Physics from the University of Wollongong. After graduation, he worked in the retail industry and also worked as a tennis coach. In September 2020, he participated in the creation of Illuvium and was deeply involved in game design and administrative work. Kieran and Aaron, as well as Kain, the founder of Synthetix, are brothers. Their families have a sports background and operate multi-million dollar retail franchises, including several major sports centers in Australia.

John Avery — Chief Technology Officer, Bachelor of Computer Science from Federation University, Australia. After graduation, he worked in software development in the gaming and financial services industries for a long time. He started to participate in game development on the App Store very early, and his company JNA Mobile was once one of the important publishers on the Unity Asset Store at the time, and the games it released had more than 1 million users. In December 2020, Avery joined Illuvium and has served as Chief Technology Officer ever since.

Danny Wilson — Chief Financial Officer, has been engaged in related work in the retail industry for a long time. He has served as the retail franchise director of Harvey Norman, and later as the managing director of Harvey Norman’s subsidiary. He also participated in the establishment of an Apple authorized service provider MAC1 and served as the managing director. Later, Danny served as a consultant in many start-ups and participated in the establishment of a Web3 investment fund Oracle Venture. In December 2020, Danny joined Illuvium and has served as Chief Financial Officer ever since.

Benjamin Nietzsche — Chief Game Designer, has been engaged in development work in the game-related industry for a long time. In 2013, he participated in the establishment of Aequus Gaming to develop third-party software for League of Legends players, including LolReplay and LSI. In 2014, Nietzsche joined Riot Games as a third-party consultant. In 2018, Nietzsche joined the independent game studio HeadByte Studios and served as chief game designer. In March 2021, Nietzsche joined Illuvium and has served as chief game designer ever since.

According to the official website, among the 102 members of the team, there are 49 artists responsible for the design and implementation of game art, models, concepts, special effects, etc., 15 engineers responsible for the development of the game itself, and 9 testers responsible for ensuring the quality of the game, and 7 engineers responsible for building the game server. In general, the core team of Illuvium has certain experience in the game industry and blockchain industry, and the game development team is relatively solid and has good game development capabilities.

2.2 Funding

2.2.1 External financing

As of March 27, 2024, Illuvium has completed four rounds of financing outside the game, with a total financing amount of US$65 million. Investors include IOSG Ventures, Framework Ventures, Animoca Brands, Spartan Capital, Polygon Ventures, Yield Guild Games, Delphi Digital, etc. The most recent round of financing was completed on March 27, 2024, so the team’s current financial capabilities should be relatively sufficient.

2.2.2 Illuvium Zero Land Sales

On June 6, 2022, Illuvium announced that it had completed the Illuvium Zero Land Sales Project. The sale of Zero land raised approximately $72.19 million, with a total of 19,969 plots of Illuvium Zero land sold out of 100,000 plots. The land is divided into 5 levels, and different levels of land have different game benefits. The first four levels of land are auctioned in the form of Dutch auctions, and can be bid with ETH and sILV2. The highest level of land is auctioned in the form of English auctions, and can only be bid with ETH.

During the auction, the prices of various levels of land fluctuated violently. The starting price of T1 level land is 2 ETH, and the transaction price is 0.3 ETH to 2 ETH. The starting price of T2 level land is 6 ETH, and the transaction price is 0.97 ETH to 6 ETH. The starting price of T3 level land is 20 ETH, and the transaction price is 3.67 ETH to 20 ETH. The starting price of T4 level land is 80 ETH, and the transaction price is 13.6 ETH to 76 ETH.

This round of auction raised a total of 4,018 ETH and 239,388 sILV2, of which 4,018 ETH will be traded for ILV tokens and redistributed to ILV stakers, and the remaining sILV2 will be destroyed to reduce the token supply. The destroyed sILV2 tokens account for approximately 2.39% of the total token supply.

2.2.3 Illuvium Beyond D1SK Sales

Illuvitar is a customizable portrait NFT on Illuvium Beyond. Players purchase D1SK to obtain Illuvitar and its accessories, so as to match their own Illuvitar NFT. There are five types of accessories, including headwear, glasses, skins, clothes and props. There are two types of D1SK, Standard D1SK and Mega D1SK. The Standard D1SK includes 1 Illuvitar, 3 accessories and 1 T0 Illuvitar, and is priced at 0.005 ETH. The Mega D1SK replaces the T0 Illuvitar in the Standard D1SK with a rarer Illuvitar, but the price is more expensive than the Standard D1SK, priced at 0.025 ETH.

Illuvium's first wave of D1SK Alpha sales will start on March 7, 2023. The D1SKs sold in this round will have the special rare attribute mark of Alpha.

The first round of D1SK Alpha sales sold 20,000 Alpha Mega D1SKs and 20,600 Standard Alpha D1SK, with a total revenue of approximately 47,844 sILV2 and 742 ETH, equivalent to approximately US$4.75 million. Subsequently, Illuvium launched several rounds of D1SK promotions. Including:

On June 12, 2023, Illuvium launched a joint D1SK promotion with GameStop. Each D1SK sold will include a unique GameStop brand Illuvitar, and each D1SK costs approximately US$50. Illuvium did not announce the detailed sales amount of this round of promotions.

On September 8, 2023, Illuvium launched the second round of D1SK sales, launched the new Illuvitar, and the price of Standard D1SK was reduced to 0.00301 ETH, and the price of Mega D1SK was reduced to 0.01801 ETH. Illuvium did not announce the detailed sales amount of this round of promotions.

On November 30, 2023, Illuvium launched a joint D1SK promotion with Team Liquid. Each Promo D1SK sold will include a unique Team Liquid brand Illuvitar, and each D1SK costs about $40. Illuvium did not disclose the detailed sales amount of this round of promotions.

As of March 27, 2024, Illuvium has completed 4 rounds of financing outside the game, with a total financing amount of US$65 million. Investors include IOSG Ventures, Framework Ventures, Animoca Brands, Spartan Capital, Polygon Ventures, Yield Guild Games, Delphi Digital, etc. The most recent round of US$12 million Series A financing was completed on March 27, 2024, so the team's current financial capacity should be sufficient. Two rounds of NFT sales in the game were completed, with a total sales of approximately US$76.94 million for land sales and D1SK sales. However, since the tokens obtained from these in-game sales are mainly used for destruction and return to ILV stakers, this part of the income will not be included in the team's funding. In general, Illuvium's overall funding situation is good and should be able to support subsequent game development and operations.

2.3 Products and Technologies

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 into two categories: supply-type and demand-type games. The former is mainly aimed at input and output. Players invest certain real resources and then produce game resources to lay the foundation for the operation of the entire game world. 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 is mainly aimed at competitive consumption. Players use the acquired game resources to fight against each other, and consume the gradually accumulated game resources in the process of 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 current official game mechanism settings, the simulation business game Zero and the open world adventure game Overworld mainly exist as supply-type games, and the auto chess-style strategy competitive game Arena and the NFT collection game Beyond mainly exist as demand-type games. In addition, Illuvium has also developed a market called IlluviDex, which is specifically for trading game props within the ecosystem, where players can use ETH to buy and sell game props and complete cross-game prop interactions.

In the background setting of the game, players will be survivors in the interstellar fleet, investigating a mysterious signal on a strange planet suspected to be the birthplace of civilization. This planet has a changing climate, complex terrain, and a beast called Illuvials. This beast called Illuvials has some special energy, and players can capture and control this beast with crystal fragments mined from the surface of the planet. Players will explore, collect, build, and compete in this world to uncover the mystery of this planet.

2.3.2 Illuvium Zero

Illuvium Zero is the foundation of the Illuvium game world. Players will play the role of survivors on an alien planet through a simulation business game, develop surrounding mineral deposits, and produce corresponding resources to support future exploration of this mysterious planet.

In Zero, players can choose to buy land NFTs or build a series of buildings on the official free land in the future to mine and develop resources in the plots. The inherent resources in the land include elemental mines and fuel mines. Players can build buildings to mine and develop these minerals. Among them, elemental mines can mine three elements: Hydrogen, Carbon, and Silicon. Fuel mines can mine three fuels: Crypton, Hyperion, and Solon. The elements will be used to build and upgrade corresponding buildings in Zero, and fuel will be used as an important resource in Overworld. Green beans will be used as consumables for players to enter high-level areas in Overworld, and colored beans and soybeans will be used to make and upgrade equipment skins and drone skins in Overworld. In addition, the fuel mined by players can be stored in the wallet in the form of ERC-20, and then sold to other Overworld players in need on the official market IlluviDex.

In addition to inherent resources, there are also illuvials as random resources in the land. Players can build a special building to scan Illuvials that randomly pass through the land. After obtaining the biological data of Illuvials, players can continue to study this data in another special building to generate a blueprint NFT, which can be used to make equipment skins and drone skins in Overworld, or can also be sold to other Overworld players in need in the official market IlluviDex.

Zero's paid land is divided into 5 levels, with a total of 100,000. At present, 19,969 pieces of land have been sold in the first batch of land sales. Different levels of land represent different levels of rarity. The rarer the land, the more resources it can produce, and the more resource production bonuses it has. At the same time, T3, T4 and T5 lands also have unique special bonuses (Landmark landmarks) and functions, and the corresponding prices are more expensive. Currently, T1 to T4 lands can be purchased in the IlluviDex market, while T5 lands can only be obtained through auctions. In addition, since the number and location of elemental and fuel mines are randomly distributed, some lands may face a situation where one mineral is in excess and another is insufficient, so players need to strategically choose more balanced lands to purchase. In addition, the player's position in the entire map will also have a certain impact on the development of the land. In the future, if the player owns multiple adjacent lands at the same time, these lands will be able to exchange resources and be merged to form economies of scale.

On the land, players can build corresponding buildings in a limited space to develop the resources in the land. Currently, the following types of buildings can be built:
1) Infrastructure. Nexus, which determines the maximum number of buildings; Engineering Workshop, the pre-construction of resource mining sites and power plants; Quantum Fabricant, the pre-construction of fuel mines and technology buildings; Power Station, which can increase the output of mining sites and resource converters.
2) Mining sites. Sediment Excavator, carbon mining site; Mine, silicon mining site; Hydrogen Pump, hydrogen mining site; Crypton Gate, crypton fuel acquisition pool; Hyperion Extractor, hyperion fuel acquisition pool; Solon Dredge, solon fuel acquisition pool.
3) Converter. Carbon Converter (Sequestrian Plant), automatically produces carbon and can convert the other two elements into carbon; Silicon Converter (Photodisintegration Plant), automatically produces silicon and can convert the other two elements into silicon; Hydrogen Converter (Condenser Plant), automatically produces hydrogen and can convert the other two elements into hydrogen; Mung Bean Converter (L-Crypton Collider) automatically produces mung beans and can convert the other two fuels into mung beans; Color Bean Converter (Hyperion Lathe) automatically produces color beans and can convert the other two fuels into color beans; Anti-Solon Inverter automatically produces soybeans and can convert the other two fuels into soybeans.
4) Warehouse. Carbon Warehouse (Carbon Matter Sil); Silicon Warehouse (Silicon Matter Silo); Hydrogen Warehouse (Hydrogen Matter silo); Mung Bean Warehouse (Crypton Containment Unit); Color Bean Warehouse (Hyperion Containment Unit); Solon Containment Unit.
5) High-tech Buildings. Singularity Scanner, used to scan Illuvials passing through the land; Zero Point Transducer, a pre-construction for manufacturing blueprints; Materials Lab, used to study the biological data sent back, produce illustrations or blueprints, but may fail; Data Bank, used to improve the output and yield of the laboratory;  
6) Others. Holographic Statue, displays the scanned Illuvials and increases the chance of scanning them again in the future; Marketplace, allows players to exchange the required resources in the game.

In addition to choosing the construction time of the building and the resource allocation, players also need to consider arranging appropriate locations and paths between buildings. Different locations and paths will have a great impact on the output of resource-producing buildings, and every modification of the location and path of the building in the game will incur a great cost. Therefore, only when the path is reasonably arranged and the location is fully planned, can players obtain the most efficient resource output. All of the above points will test the players' investment in strategy and increase the fun of players participating in the game.

In addition, the role played by Illuvium officials in the game is mainly the regulator of macro resources. Since the efficiency of fuel produced by players is limited, it may not be sufficient to supply the development of the Overworld game. Therefore, when a player casts 1 fuel bean in the form of ERC-20 and trades it, 19 fuel beans will be cast in the Illuvium treasury at the same time, which means that the player's output in Zero will be increased by 20 times at most and invested in the Overworld, but when and how much this output will be invested in the Overworld will be controlled by Illuvium officials. When the price of fuel beans fluctuates greatly, Illuvium officials will intervene in the supply of fuel beans to stabilize the price of fuel beans, so as to reduce the risk of someone maliciously controlling the price of resources in the game. In addition, this setting also means that when a player harvests the income of 1 fuel bean, the entire game will increase the income of 20 fuel beans, and the income from the remaining 19 fuel beans after selling in the future will be distributed by the treasury to the holders of ILV tokens. Simply put, in the entire Zero game, 5% of the revenue will go to the land holders, and 95% of the revenue will go to the Illuvium ecosystem participants in the future. And this ratio can be modified in the future through Illuvium DAO governance to better distribute the profits generated by the game. In addition, as the developer of the game, Illuvium may design more unique gameplay, buildings and resources in the future to enrich the player's gaming experience.

The game has now entered the public beta stage. Currently, only paid land buyers can participate in the game. The blueprints created in this stage can be retained for subsequent use, but other data will be reset after the official version is launched. The game is available on both PC (MAC, Windows) and mobile (Android).

2.3.3 Overworld

Overworld is an open world adventure game that is most closely tied to the game worldview. Its main focus is adventure, exploration and capture. Players will play the role of explorers on the planet, equipped with drones to collect ores, build equipment and capture Illuvials in various areas.

Overworld is designed with 8 areas, 1 of which is the initial area, and the other 7 are explorable areas. Different areas have different landscapes, corresponding to different types of resources and Illuvials with different attributes. The area is also set to 4 levels. Different levels require different amounts of green bean fuel, and the levels of resources and Illuvials produced are also different. In addition, there is a power limit for players in the area. Players' actions in the area will consume power, and they must leave the area after the power is consumed. Therefore, players need to arrange their actions reasonably in the area.

The materials that players can obtain in the area are mainly ores, plants and some materials. Then players can also capture Illuvials through Shards props, and then conquer Illuvials by fighting cards with Illuvials in the battle space. After obtaining materials, players can create some new props. These props are of two types. One type can be used to collect materials or improve the efficiency of material collection, including drone blueprints (Drone), equipment (Equipment), and Shards (equivalent to the Pokémon game). The other type is mainly used to make cards in Arena, including function cards (Augments), weapons and armor (Armaments), battle cards (Illuvials), etc. In addition, the production of props in Overworld requires the consumption of colored beans and soybeans produced in Zero, and the created props can also be sold to players in need in IlluviDex.

Overworld is an open world adventure game. It focuses on two aspects: one is the adventure experience between different areas and the visual shock brought by the game's art design. The other is to let players experience the fun of collecting and making. In Overworld, the proportion of these mechanisms is increased, so that players can have more sense of gain.

The game is currently in internal testing. To qualify for the internal testing, you need to send an email to the official to apply for an activation code. The game itself can currently be downloaded from the Epic Games store, and there are certain computer configuration requirements.

2.3.4 Arena

As a strategy and competitive game, Arena is fundamentally different from the simulation business game Zero and the open world adventure game Overworld in terms of positioning. Arena does not require cumbersome resource collection and production processes. Players only need to rely on their own Illuvials decks to conduct PVE or PVP auto chess strategy battles.

In terms of the core design of the game mechanism, the setting of Arena's auto chess is not much different from other auto chess. The game adopts a round-based battle system. Players need to use gold coins to purchase corresponding chess pieces in each round and place them on the field for battle. Each chess piece in the auto chess has its own special abilities and characteristics, as well as two attributes: profession and bond. Players need to rely on these two attributes to form corresponding bonds and enhance the ability of the chess piece. At the same time, players can also purchase the same chess piece repeatedly and perform synthesis operations to enhance the ability of the chess piece itself and change the shape of the chess piece.

From the perspective of profession, there are five basic professions for chess pieces in Arena, namely warrior, guardian, assassin, mage and auxiliary. Different professions mainly distinguish the functions of chess pieces. For example, warriors and guardians are mainly used to be placed in the front row to bear the damage of the opponent's chess pieces, assassins are mainly used to bypass the opponent's front row chess pieces to cause damage to the back row chess pieces, and mages and assistants are used as back row units to attack the opponent's units, or add BUFF to the units on the field. In addition, the same chess piece can also have multiple professions, and then the player's strategic choices and lineup will be more abundant.

From the perspective of attributes, there are five basic attributes for chess pieces in Arena, namely water, fire, earth, wood, and air. These five basic attributes show a mutually restraining relationship. Each chess piece can be attributeless or have one or more composite attributes. When a chess piece has one or more attributes, the main attribute of the chess piece will become the main basis for restraint judgment. When there is a property restraint between two opposing chess pieces, a predation effect will be triggered, and the property restrained party will get an exciting Buff, and the combat ability will be enhanced after the status bar is fully charged. Therefore, for players, choosing chess pieces with different property restraints for different enemies will also be an important part of testing the player's strategic ability.

In addition to basic chess pieces, players can also use the rune system and equipment system to add unique effects or ability bonuses to their chess pieces to enhance the ability of the chess lineup at a certain stage, thereby enhancing the confrontation of the strategy.

As of March 27, 2024, Arena has launched 205 chess pieces with different attributes, professions and levels, 87 runes of different levels and types, and 81 super runes with different functions. In the future, players will be able to buy these cards on the market, or make corresponding cards in Overworld to build their own decks, and win the ladder bonus of each season in the Arena arena.

The role played by Illuvium in Arena is mainly the operator and referee of the event. Illuvium is responsible for launching new cards to enrich the player's gaming experience. At the same time, it also needs to adjust the balance of old cards in each version to maintain the competitiveness of the entire game. This will place high demands on Illuvium's numerical adjustment and operation capabilities.

Arena is still in the internal testing stage, but it has been launched on Epic Games and has certain computer configuration requirements. In the future, if players want to participate in the ladder mode to obtain ladder bonuses, they need to hold at least a valid deck containing 28 cards.

2.3.5 Beyond

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

Beyond is relatively independent from the other three games. Players can obtain Illuvitar avatars and accessories by purchasing D1SK, and can customize their own portrait PFP by equipping different accessories. In addition, players can also buy and sell these NFTs in IlluviDex, and then configure avatars that meet their needs, and use these avatars to participate in the official rarity competition, which will be held once a week. The top 100 avatar holders will receive ILV as a reward.

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

2.3.6 Summary

At present, the design of Illuvium’s four games basically complies with the principles it laid down at the beginning of the construction of the game world, that is, different games have their own independent gameplay and mechanisms to target different player groups, but these games can be connected to each other through the game’s economic mechanism to form a prosperous game ecosystem. From the perspective of completion, Zero, Overworld, and Arena have already achieved a good degree of completion in their respective game mechanisms and quality. What needs to be done in the future is to connect the various games technically. At the same time, Illuvium’s special game token sILV2 will also play a more important role in this game world in the future, thereby ensuring that the entire ecosystem has sufficient sustainability. All of the above puts high demands on the development and operation capabilities of the Illuvium team, but as of now, the team's performance is basically satisfactory to players.

Summary

From the perspective of team and funds, Illuvium's development team has sufficient development experience and good development capabilities, and the project financing situation is good. On March 27, it just completed a 12 million round A financing, so the funds are also relatively abundant.

From the product perspective, Illuvium has designed a huge game world consisting of the simulation business game Zero, the open world adventure game Overworld, the auto chess-style strategy competition game Arena, and the NFT collection game Beyond. In this game world, each game has a unique gameplay mechanism for different player groups, but through the mining and utilization of resources between different games, these four games are connected in series, so that players can get a richer gaming experience in this game world. At present, all four games have reached a good level of completion, among which Zero and Beyond have been released in public beta, while Overworld and Arena are still in the internal beta stage and are expected to start public beta soon. In the longer term, Illuvium's game world design has put forward a great test on the development ability and operation of the Illuvium team, especially the yield adjustment of the later collection games and the balance adjustment of the competitive games will be the difficult problems that the team must overcome. At present, Illuvium has proved its development ability, but its operation ability still needs to be further tested in practice. 3. Development

3.1 History

3.2 Current situation

3.2.1 Operational data

According to the block browser of Immutable X, as of 17:00 on March 21, 2024, there were 11,392 transactions of land on Illuvium Zero, with a total transaction volume of 10,753 ETH. The average transaction price per piece of land was 0.944 ETH, the current floor price was 0.12 ETH, and there were 7,680 independent holding addresses.

As the other Illuvium games are still in internal testing, no detailed operating data is available yet.

3.2.2 Social media scale

As of March 21, 2024, Illuvium’s social media platform is large in scale, with a large number of fans, frequent interactions, a large community, and high activity. The content mainly revolves around game mechanics and token mechanisms.

3.3 Future

Summary:

From the perspective of project development, Illuvium is still in its early stages, Arena and Overworld are still in the beta stage, and the overall concept of the game world is still some distance away from completion. However, the game has already accumulated a high level of popularity, and the community and social media are relatively active. It is expected that Illuvium will welcome more players to participate after Arena and Overworld enter the public beta stage.

4. Economic Model

4.1 Supply

4.1.1 ILV Token Distribution

ILV, as the governance token of Illuvium, was launched on the mainnet in February 2021, with a total supply of 10,000,000. As of March 27, 2024, the supply of ILV tokens is 9,605,840[8], and the circulation is 6,334,671.

In terms of distribution, tokens allocated to financing account for 30% of the total tokens, tokens allocated to the team and treasury account for 30% of the total distribution, and the remaining 40% of the tokens will be distributed to ecosystem participants as liquidity staking rewards and in-game rewards. Due to the long time since the token was issued, most of the tokens have been unlocked.

In addition, ILV tokens have a synthetic sub-token sILV2, which is mainly used to purchase items and services in the game. For example, in Zero's land sales and Beyond's D1SK sales, in addition to supporting ETH payments, sILV2 is also supported for payment. The only way to obtain sILV2 is by staking ILV tokens, and the exchange of sILV2 tokens with ILV tokens is one-way and irreversible. Each minted sILV2 token will reduce the circulation of ILV tokens by one. In the long run, due to the irreversible exchange of sILV2 tokens with ILV tokens, as the game is officially put into operation, more ILV will be unilaterally minted into sILV2 tokens, and ILV tokens will become deflationary. As of March 22, 2024, a total of 154,310 sILV2 tokens have been minted[10].

4.1.2 Analysis of Coin Holding Addresses

As can be seen from Figure 4-2 above, according to the Ethereum browser, as of March 27, 2024, there are 50,187 ILV holding addresses, and the top 100 holdings account for 90.22%. Among the top 20 currency holding addresses, there are 4 contract addresses, holding about 63.41%, including the contract address, treasury address and pledge pool address of ILV tokens, 7 exchange addresses, holding about 9.66%, and the total of the above two accounts for 73.07%. In addition, there are 3 capital addresses belonging to IOSG Ventures and Delphi Digital, holding about 1.63%. Therefore, after deducting some of the above tokens, we can see that the overall holdings of ILV tokens are relatively scattered.

4.2 Demand

As the governance token of Illuvium, the main function of ILV tokens is not only to participate in the governance of the protocol, but also to stake to share the dividends of project development. Users can stake their ILV tokens in the pledge interface of Illuvium, and after a lock-up period ranging from 1 to 12 months, they can withdraw their principal and pledge rewards. Staking rewards can be withdrawn in the form of ILV tokens or sILV2. If withdrawn in the form of ILV, this part of the staking rewards will have a 12-month vesting period. If withdrawn in the form of sILV2, this part of the reward will be unlocked immediately and can be used for in-game purchases. This is also the only way for users to obtain sILV2 tokens.

There are currently two staking pools that users can choose, one is the ILV token pool, and the other is the ILV/ETH token pool. The former is a staking pool set up by Illuvium itself. Users only need to stake ILV tokens to obtain staking rewards, but the share of liquidity staking rewards is relatively low, accounting for only 20% of all staking rewards. As of March 27, 2024, the total locked position of the liquidity pool is approximately 338,761,280 USD, with an estimated APR of 2.93%. The estimated number of tokens staked is 2,219,930, including tokens in the liquidity staking pool, some tokens in the treasury, and tokens that have not yet been distributed and are still in the vesting contract. The latter is a liquidity pool in cooperation with SushiSwap. In addition to staking ILV tokens, users also need to stake ETH tokens. However, the liquidity staking reward share of this token is relatively high, accounting for 80% of all staking rewards. In addition to liquidity staking rewards, you can also get transaction fees in the liquidity pool as an additional reward. There are 291,165 ILV tokens staked in this liquidity pool. Together with the staked ETH, the total locked amount is about 80,519,968 USD, the estimated APR is 49.29%, and the estimated token staked amount is 263,827. After adding the staked tokens in the two liquidity pools, it is estimated that the current total number of ILV tokens staked is about 2,483,757, accounting for about 25.86% of the current token supply.

The staking income of ILV tokens comes from two sources. One is the liquidity staking reward, which accounts for 30% of the ILV token supply. This part of the staking reward is issued every 14 days as an epoch, for a total of 78 rounds, and has now entered the 71st epoch. As of March 27, 2024, the total estimated token issuance for this Epoch is approximately 11,694 ILV, of which the ILV liquidity pool will receive 2,339 ILV tokens and the ILV/ETH pool will receive 9,355 ILV tokens. The total number of ILV tokens issued is approximately 2.92 million, accounting for 97.33% of the liquidity staking rewards. It is expected that all liquidity staking rewards will be issued in early July.

In addition to liquidity staking rewards, ILV staking income also includes the profit of the game itself. According to the Illuvium governance proposal IIP-45-R[13], after deducting costs, 5% of all operating income in the game will be distributed to the holders of the land in Illuvium Zero, and the remaining 95% will be used by the Vault contract to purchase ILV tokens in the ILV/ETH liquidity pool, and then distributed to the stakers of the current Epoch as staking rewards.

Here, take the D1SK sale as an example. Assuming that a round of D1SK sales obtains a total of 1,000 ETH tokens and 4,000 sILV2 tokens, then according to Illuvium's distribution rules, 50 ETH tokens in this round of sales will be distributed to the holders of land in Illuvium Zero, and the remaining 950 ETH tokens will be collected by the Vault contract and used to purchase ILV tokens in the ILV/ETH liquidity pool, and then distributed to the ILV token pledgers in the current Epoch. In addition, the sILV2 tokens used to purchase D1SK will also be distributed to ILV token pledgers as RevDis (profit distribution) in the future, or destroyed to reduce the total supply of tokens.

In general, the principle of ILV's pledge design is to fully feed back the core participants of the game and promote the sustainable development of the game ecosystem.

Summary:

From the perspective of token economics, ILV tokens are mainly used as governance tokens for the network, and their main function is to feed back to the core participants of the game to promote the sustainable development of the game ecosystem. At present, from the perspective of mechanism setting, ILV tokens can basically achieve the above goals through the staking mechanism, but this mechanism puts forward high requirements for the subsequent profitability of the game, and the answer remains to be given in future practice.

5. Track

Illuvium belongs to the blockchain game track, but because the projects in the track themselves are quite different, quantitative analysis cannot be carried out. Therefore, this section only discusses the current status and future of the track, and no longer conducts competitive product analysis.

Since the end of 2023, when the market entered a new round of bull market, the blockchain game track has achieved significant growth and has become one of the main tracks leading the bull market in this round. From the data, we can see that the blockchain game track is experiencing its second rapid growth period since the end of 2021. The number of blockchain game players is growing rapidly. At most, the number of active users has exceeded 3 million, and transactions are active, with great enthusiasm for market participation. If estimated based on the player retention rate during the previous round of rapid growth, after the end of this round of growth, the core user group of blockchain games will remain above 2.5 million, which is nearly three times the number of core player groups at the bottom of the market in the previous round. This means that the volume of the entire blockchain game track will have a very large growth space in the future, and more top projects may emerge.

Looking at this round of rapid growth, we can find some slight changes.
1) The types of blockchain game projects have become more diversified. Compared to the previous round of blockchain game growth, which was dominated by role-playing, simulation business and sports, in this round of blockchain game growth, in addition to the above three traditional blockchain game types, chain game types such as massively multiplayer online role-playing, action, shooting, chess, strategic simulation, MOBA, etc. that emphasize confrontation and strategy have gradually emerged with their own representative projects.
2) The quality of blockchain games has been significantly improved. On the one hand, this improvement is in the quality of the game. More and more games are beginning to use the most popular game engines for corresponding development. Art design is becoming more and more aesthetically pleasing. The art style that was dominated by cheap pixel style in the early stage is gradually abandoned. The gameplay also emphasizes the rationality and diversity of the mechanism, and the playability is rapidly approaching the traditional game industry. On the other hand, it is also reflected in the operation of the game. Due to the rapid influx of talents in the old game industry, the operation concepts and methods of several mainstream chain games are getting closer and closer to the model of the traditional online game industry. This mature model can still fully promote the development of games and communicate with players in real time in the short term. Therefore, the combination of quality and operation has significantly improved the perception of this round of chain games and the previous round of chain games.

But the biggest problem facing this round of rapid growth is that it still has not gotten rid of the influence of the first round of rapid growth of chain games. Strictly speaking, there has not yet emerged a project that has innovated the paradigm of the chain game track in this round of rapid growth of chain games. Because in essence, the rapid growth period of this round of chain games is caused by the bull market background and the development of chain games. Chain games with relatively simple development can be launched first and occupy the first-mover advantage, while chain game projects that require large investment costs need two or three years of development time to be truly implemented. The time difference in between determines that large-scale chain game projects will inevitably be later than market recognition, and large-scale chain game projects have more participants, higher costs, and more difficult transformation. This means that as a latecomer in the development of the chain game track in the previous round, it is actually difficult for this round of large-scale chain games to make major innovations based on the experience and lessons accumulated during the rapid growth period of the first round of chain games. They can only continue to deepen and develop the practice of the "Play To Earn" concept in the game economic model.

At present, Illuvium is one of the few game projects that have made innovations in the underlying logic of blockchain games. It no longer relies on a single mechanism and gameplay game to acquire users, but tries to establish a set of effective economic models from the underlying architecture to connect multiple games in series. Such a game ecology is expected to be more vital than the traditional single blockchain game world.

Summary

From the perspective of the track, since the end of 2023, the blockchain game track has achieved rapid development, with significant growth in transaction volume and user volume. From the data, it is expected that after the end of this round of market cycle, the core user group of the blockchain game track will be at least doubled, which means that for a long time in the future, the blockchain game track will still have a broad market space. The development of this round of blockchain game track has shown the two characteristics of diversification of game types and improvement of game quality, which is the main reason for the continued rapid growth of the number of blockchain game users in this round. However, at present, most of the blockchain games in this round have not jumped out of the "Play To Earn" framework, and have made few innovations. Illuvium is one of the few game projects that have made innovations in the underlying logic of blockchain games. It no longer relies on a single mechanism and gameplay game to acquire users, but tries to establish a set of effective economic models from the underlying architecture to connect multiple games in series. Such a game ecology is expected to be more vital than the traditional single blockchain game world.

6. Risks

1) Code security risk:Illuvium's pledge contract has undergone multiple rounds of audits, but there is still a possibility of code security risks. In addition, the codes of Illuvium's various games are not open source at present, and the security is unknown. There is a possibility of corresponding plug-ins in the future.

2) Market risk:The current game market competition is relatively fierce, and various types of games are emerging in an endless stream.

3) Operational risk:Both competitive and production games have put forward higher operational requirements for game project parties.

4) Token risk:ILV is an important governance token for the project, and there is a possibility that the token price will fluctuate sharply and affect the development and operation of the project itself.

5) Development risk:Game project development is difficult and takes a long time, and there is a risk of failure to deliver on time.

References

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

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

First Class Warehouse Research Report "Illuvium"

Illuvium Chinese Game Strategy, 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-illuvi

[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://tw itter.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