Illuvium released an IIP for Illuvium Forge (IIP-23). At a high level, Illuvium Forge would allow seed investors and the team to offer their tokens for sale at a discount. The goal is to enable liquidity for those holders without impacting the token price and allow the community to purchase ILV at a discount.

I think the IIP accomplishes these goals.

• Seed investors and the team can sell vesting ILV
• The community can purchase at a discount that varies based on the length of the lock (1-3 years)
• The tokens never enter the market (are, in fact, off the market longer), so the price won't be impacted.

I'd like to address some of the pushback I've seen from the community.

It allows VCs and team members to shift risk on small-time investors.

I think that's the wrong way to look at what's happening. Whoever buys the tokens is doing so because they want them and think Illuvium is a good investment. If they didn't, they wouldn't buy them. Whenever someone sells an investment to someone else, the buyer is taking on the risk of that investment. That's the point of the transaction. It also allows small-time investors to access yield farming rewards at a better discount than sILV.

It will allow VCs and the team to dump their investments.

I think it's a legitimate concern given it will enable selling the vesting portion of their investment in addition to what's already vested. I believe this is countered by three points.

1. A sale requires a buyer on the other side. They can't dump however much of their vesting ILV as they want.
2. If the seed or team wants to dump, they'll be able to start doing as their tokens unlock; it'll just be on the market instead of via OTC trading.
3. OTC trading is already possible. It just happens outside Illuvium. Keeping these transactions in-house is preferable.

Delaying token unlocks 1-3 years will hurt down the road. It's better to rip off the band-aid now.

Tokens unlocking indeed has the potential to negatively impact ILV price. However, the longer ILV supply stays off the market, the more runway the team has to build products and revenue streams to detract people from selling. All these tokens will unlock at some point, and 1-3 years in the future seems better than now.

I was counting on tokens unlocking to buy cheap ILV.

The DAOs job is to do things that benefit Illuvium, and a high ILV price helps the DAO since it raises the value of the treasury. Suppressing the price so investors can accumulate cheap ILV does not benefit Illuvium.

Additionally, ILV is currently $166.57. The community would have been ecstatic a few months ago if an opportunity to buy at these prices were presented.

It's only available to seed investors and the team.

I agree with this sentiment overall. Ideally, anyone should be allowed to offer vesting ILV for sale on the Forge. Unfortunately, doing so would require a complete overhaul of the staking contracts that would be tantamount to staking v3.

Providing seed investors and the team a way to access liquidity without impacting token price while pushing the unlocks to when Illuvium will have a product on the market solves a problem. The team could also do this without an overhaul of existing contracts. In my opinion, extending this ability to everyone wouldn't be worth the investment. At this point, I think it makes more sense to put those resources towards the game.

It shifts buying from the market to the Forge.

This is true, but I don't think it matters.

• Revenue distribution will put buying pressure on ILV.
• Revenue is distributed to stakers, so you don't need the token price to go up to profit.
• There will be a limited amount of ILV for sale via the Forge.

Additional purchase options will be confusing to investors.

I think the options available are straightforward and wouldn't confuse investors.

1. Buy via the Forge at a discount in exchange for locking the tokens 1-3 years.
2. Buy unlocked tokens on the market.

I think the Forge is a net benefit for Illuvium.

Based on the above, I think the Forge is a net benefit to Illuvium, and I would vote in favor of the IIP. I would like updates to the language in the IIP, but the changes would clarify what the IIP is doing rather than changes to the Forge.

I think the language in the IIP was a little unclear regarding who could participate; it would be nice if the language were clarified.

I would also like clarification on the purchase process and which tokens are sold from the pool. The way I read the IIP, the purchase is taken from the pool, and everyone gets ETH and loses ILV based on the percentage of the pool they own. I'm not sure that's correct, though. This is a minor point though given the limited number of people that can sell (i.e., seed and team).

It should also include specifications discussed in discord, like a cap on founders selling.

I'm also curious how the discount compares to ILV staking rewards. I assume they were chosen intentionally, but curious about the ROI vs. buying half the value at market price, pairing with ETH, and staking in the SLP pool. The discounts are configurable, so this could be adjusted after the fact.

Side thought - Timing of IIPs

I think the team should put IIPs up for a vote before development work begins. I believe when requirements are finalized would be a good time to get Council approval. This would ensure the product has the support of the community before resources are invested in building it.

As it stands, the Forge IIP has three no votes and will not pass. That means the team invested resources in building a product (Illuvium Forge) that will never be released to the market.

This blog post is part of the ✨Shiny Shards✨ content creators network.

Disclosure: I invested in ILV and have been waiting for this game since last July. I did my best to provide my unbiased thoughts, but I’m human and some may have snuck in.

Tags: #games #illuvium #shinyshards #IIPs