[Tokenomics] Illuvium / ILV

This model simulates the high-level dynamics of the ILV token.

At the top, players’ game-based transactions, such as buying fuel tokens (not shown directly), expend ETH (Ethereum), which is sent to the Illuvium Vault.

Periodically, the Illuvium Vault – which is a developer controlled protocol – uses its ETH revenues from users to buy back ILV tokens from the Sushi ILV/ETH Liquidity Pool. These tokens are how ILV stakers are repaid.

For simplicity, the model assumes that as a whole, stakers are rewarded with ILV at the value of the sum total of the ETH that players spent, for the given time interval (i.e. a step in the model). For example, if players spent 1000 ETH on the game in total in a given interval, and the price per ILV at the end of that interval was 0.2 ETH, stakers would be rewarded with a total of (1000/0.2=) 5000 ILV in total.

We also assume that, at each interval (step), stakers sell 10 percent of the total ILV they hold (assuming at least this much is un-staked ILV). This applies downward pressure on the price of ILV in the liquidity pool.