Nov 16, 2022
9. Tokenomics, Launchpad, and Reward Details
This post aims to explain the tokenomics of the $ILV token, rigorously breaking down the total maximum supply of 10,000,000 as well as explaining the fundamental revenue streams built into the protocol. Additionally, we announce the Balancer Liquidity Bootstrap Pool.
Note: Yield farming is set to take 3 years with a significant majority of the coins distributed in the first two. Balancer Liquidity Bootstrapping Pool (BLBP)
Utilizing Balancer for our Launchpad we are able to fairly distribute 1,000,000 tokens subject to no lockup that will enable a healthy and stable price discovery process. Below are the proposed variables for the upcoming sale.
Initial Pool Weight Ratio 96:4
Final Pool Weight Ratio 50:50
Timespan 72 hours
Promo NFT Rewards
Participants in the BLBP will receive various promo NFTs for purchasing early, in large quantities, or both. We will also provide rewards for participants that aren’t able to outlay large amounts of capital via randomized NFT drops where ALL participants are entered automatically. Functionally this means that any participant, no matter how big or small, has the chance to win rare NFTs.
Illuvium Vault Revenue Streams
Illuvium Vault revenue streams can broadly be divided into two categories; In-game Purchases and IlluviDEX exchange fees.
Shard Curing (used for catching Illuvials)
Exchange Fees and Wagering Fees are generated from every sale on our IlluviDEX at an initial rate of 5% of the total transaction value. In addition to this, the Immutable X platform (IMX) takes a small capped fee of all transactions on their network in exchange for waiving GAS fees. The predominant in-game currency is ETH.
Yield Farming Rewards
Token Supply: 3,000,000.
Below are the proposed variables for yield farming.
Yield update cycle: Fortnightly
Adjustment ratio: 97%
Pool weights are initially set as follows:
The Yield Pool contract is enabled to create “flash pools” which are temporary farming pools that can be added by the eDAO for distributing $ILV at a certain weight. This way there is the flexibility to add new partners and further distribute Illuvium tokens.
The percentage allocation of the yield farming for a given Pool X is calculated by the following formula:
All in-game purchases and fees in ETH are sent to the Vault contract. Periodically and automatically, the Vault contract uses the ETH to purchase an equivalent value of $ILV from the $ILV/ETH Uniswap V3 pool and $ILV is distributed to staked token holders in proportion to their stake*. (*There are risks associated with DeFi, particularly staking and smart contract risk, and contract configurations are being developed continuously and subject to change and sentiment expressed by the Illuvium community).
Participants in both the $ILV / ETH and $ILV staking pools are given equal weighting for the purposes of Vault distributions.
To incentivize long-term stakers we have developed a novel distribution system that differentiates between locked and unlocked tokens.
Stakers have the option of locking their staked tokens on a sliding scale for anything up to 12 months. Those that choose to keep their staked tokens unlocked get the flexibility to withdraw them at any time. Those that lock gain a boost in their pool weight as a reward for their confidence in the token. This bonus is linear, and with a maximum locking of 12 months, staked tokens are weighted as twice that of unlocked staked tokens. This weighting affects both Yield Farming Rewards and Vault Distributions.
As an example:
Staker A chooses not to lock. Their weight is 1.0
Staker B chooses to lock for 1 month. Their weight is 1.083 (1 + 1/12, since they are locking for 1/12 of the maximum period)
Staker C chooses to lock for 9 months. Their weight is 1.75
Staker D chooses to lock for 12 months. Their weight is 2.0
Accumulated Distribution and Yield
High GAS costs represent a barrier for entry, especially for smaller stakers. Since the game has the potential to attract stakers of all sizes we do not force staked token holders to claim their rewards periodically.
Instead, rewards have the option to be rolled over each distribution cycle, so that stakers can claim when it is appropriate for them, to avoid a high percentage of GAS fees. However, to encourage participation and activity in the game itself, the ability to roll over is tied to in-game activity. Effectively, to avoid having to make weekly claims, the linked account must be active for a minimum time period.
Token Supply: 1,000,000.
A portion of the yield will be distributed in-game for tournament battles, quests, and daily challenges. We have done this to incentivize game-play and to allow players lacking in capital to instead use sweat-equity to gain access to yield rewards.
$sILV Yield Rewards
$ILV rewards obtained through yield farming are escrowed and held by the vault for 12 months. During this time they can’t be withdrawn from the protocol. Instead, stakers can forgo those rewards and claim an equal amount of $sILV (equivalent in value to $ILV) which is minted and transferred to IMX. $sILV is used as an in-game currency, which allows the holder to effectively spend their rewards earlier than the standard 12 month period. All in-game purchases are indexed to USD so a price conversion from $sILV to USD (based on $ILV) is used.
All tokens except those bought in the BLBP and In-Game Yield are subject to a 12 month lockup period and then are linearly unlocked over an additional 12 months.
Tokens bought in the BLBP are unlocked, but a participant may choose to lock them to receive a higher distribution of $ILV in exchange for providing sustained liquidity for the in-game economy. All tokens claimed through yield farming are also locked and staked for 12 months as described in the $sILV Yield Rewards section*.
Our initial private and seed participants are all confident in the longevity of the protocol, as can be seen by the lockup period which means that the vast majority of the tokens will be out of circulating supply. We have studied the tokenomics of many successful protocols in the DeFi space and believe the mechanics in Illuvium will ensure a fair distribution of the $ILV token.
(*There are risks associated with DeFi, particularly staking and smart contract risk, and contract configurations are being developed continuously and subject to change and sentiment expressed by the Illuvium community).
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Stay tuned for further communications…
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