Illuvium — A New Level of Blockchain Gaming
In this article, we provide insights into Illuvium and the ways it’s changing how the world views gaming. Most specifically, blockchain gaming. From what the project is to its governance structure and economic lifecycle, readers receive a thorough explanation of what makes Illuvium a crypto gaming group to look out for and why it has recently amassed a total amount staked of $1.8 billion.
The Global Gaming Market
In 2020, the global gaming market was valued at USD $174 billion. Blockchain gaming is capable of transforming this industry, but how so? Blockchain gaming introduces a gaming structure known as play to earn (P2E). P2E games enable users to transfer in-game items, tokenize, trade and convert them to assets with tangible value. In-game currencies are cryptocurrencies and can thereby be exchanged for other cryptos or fiat such as USD. Likewise, other in-game items, such as characters and inventory, are also tradeable in the form of NFTs.
Decentraland and Axie Infinity are currently the largest blockchain games, with market capitalizations of $7B and $6.9B respectively. The metaverse is continually developing. Moreover, when users are able to carry tangible assets created in a game into other digital experiences, a new economy that can be monetized in the real world is created. Grayscale predicts the metaverse to be worth around $1 trillion.
What is Illuvium?
Illuvium is an open-world, role playing game (RPG). Unlike many other blockchain games (including Axie and Decentraland), Illuvium intends to become the first AAA, high-definition and high-quality game in the space. The game is built on the Immutable X Network — a layer-2 blockchain running on the Ethereum network — touted to have zero gas fees and instantaneous transactions.
Players can explore a vast world, collect and battle creatures known as Illuvials. Illuvials are presented as NFTs possessing different traits, abilities and classes. They can be upgraded and enhanced to generate further in-game utility and out-of-game, real-life value.
Illuvium is set for a full release sometime in 2022. Nonetheless, Illuvium’s anticipated ability to revolutionize gaming is reflected in its staked digital assets from its individual investors, now sitting at around $1.8 billion worth of ILV.
What is Staking and How is it Related to Illuvium?
Staking cryptocurrency is the process of buying, holding and committing your cryptocurrency to support a blockchain network’s security and operations. Individuals who commit cryptocurrency via this mechanism gain return on the amount committed. For more information on staking and other cryptocurrency terms, visit our Crypto 101 page.
Illuvium’s staking product distributes game revenues back to those who stake. This return is in the form of $ILV. $ILV is an ERC-20 token, meaning it is based on the Ethereum network. Over a three-year period, a total of 3 million $ILV tokens will be distributed. $ILV’s staking rewards are subject to a 12-month lockup period. However, sILV rewards, Illuvium’s in-game currency, can be claimed and used immediately once the game launches.
A Move Towards Real Value
In most games today, in-game items cannot be exchanged for real-world value. Mostly, users pay large sums of fiat currency to obtain in-game items that only possess in-game value and cannot be exchanged to other platforms or currencies. An example of this is Fifa’s Player Packs in-game feature. Players can pay fiat currency for Fifa Packs and hope to obtain players with significant value within the game. Players’ in-game statistics are related to their real-world performance. Moreover, better players are worth more “in-game” due to their superior statistics and are much less likely to be packed compared to players with worse statistics.
Unlike Illuvium and other cryptocurrency games, Fifa’s in-game features aren’t tied to tangible assets and cannot be exchanged for such. Illuvium’s play-to-earn structure is transforming how gamers view and approach gaming. Tangible economic incentives tied to gaming structures, like Illuvium’s, are paving the way for a new type of gaming experience focused on user models towards financial opportunities.
A Decentralised Governance Structure — True User Preference
Meeting demand with new and innovative ideas is difficult when creators are not fully aware of what their participants desire. Accompanied with the goal of maximizing sales and profit, such challenges can often diverge games away from consumer preference. Illuvium promotes a decentralised governance structure and self-regulating community that is intended to remove this preference mismatch.
Those who stake and receive regular distributions and those who hold $ILV will be able to vote on everything game-related, from the tokenomics of Illuvium to in-game features. Therefore, as Illuvium grows, the prospects of the decentralised governance protocol also grow. This system supports the long-term sustainability of the Illuvium game, allowing Illuvium’s structure to be determined by those who use the protocol.
Not only is Illuvium and other crypto games reshaping how gaming approaches user preferences, they are also providing economic opportunity for a multitude of gaming enthusiasts — especially for individuals in countries with low-income levels. In Axie Infinity, another crypto game, players can make up to $1200 USD each month — an impressive figure considering that the annual average per capita income worldwide is $10,298 USD.
How Illuvium Gaming Guilds are Endorsing Economic and Educational Access
Mass adoption of crypto games is significant for the development of its decentralised structure, sustainability and tokenomics. However, the rising prices of crypto assets have been an entry barrier for a lot of gamers interested in joining the crypto gaming ecosystem. In most play to earn games, players require starting equipment to play the game which translates to having the required capital to purchase such gaming items to start playing.
Play to earn gaming guilds, such as Polemos who recently raised $2 million via a strategic funding round for Illuvium, are aware of these expense related challenges and are assisting demographics in need of financial support. For example, Polemos looks to assist players in developing nations, educating and lending players the initial resources required to start.
A Proposed Lifecycle for Illuvium
Illuvium, as well as other crypto games, are introducing mechanisms that are transforming the way we think and approach gaming. Historically, gaming has been viewed as a hobby. Financial incentives were associated with a small proportion of gamers. Now, gaming is directly associated with real value creating the basis for a new workforce. Decentralised structures remove preference mismatch and they give users the power to make changes to the experience. Illuvium and other crypto games that financially incentivise users are creating economic opportunity, ensuring user preference and revolutionizing the industry.
It is important to consider that monetized gaming tokens are in the early stages of their lifecycle and like any new and innovative idea, risks exist. Illuvium possesses community backing, strong leadership and offers something unique. However, these products still face exposure to forces they can’t control. Macro headwinds, inflationary concerns and the uncertainties associated with early stage projects present risk despite how disruptive the technology may be.
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Originally published at https://zerocap.com on January 24, 2022.