Skip directly to Accessibility Notice

Can Illuvium Become Crypto Gaming’s AAA Breakthrough?

January 18, 2023

Read Time 10 MIN

Can Illuvium live up to its hype and become the biggest crypto game universe with its 2023 full release? We review its positive tailwinds and possible risks.

Please note that VanEck may have a position(s) in the digital asset(s) described below.

Crypto gaming is set for a breakout year in 2023, and one of the industry leaders is Illuvium. Illuvium is an upcoming series of games and the world's first Interoperable Blockchain Game universe offering a triple-A gaming experience. It includes an open-world exploration creature collector called Overworld, a city-builder called Zero, and auto-battler called Arena. All three games are built on the Ethereum blockchain.

Scheduled for a full release in 2023, Illuvium aims to become the biggest crypto game universe on the market to date. In the face of a bear market in 2022, Illuvium has managed to maintain high expectations and engagement due to its transparent operations and robust team of creators. The Illuvium game universe is a 'game first/crypto second' project, and it boasts a tokenomics model that supports decentralized ownership and staking rewards. Although Illuvium benefits from positive tailwinds, there are also clear headwinds associated with the game launch tied to both crypto and traditional gaming-related risks and challenges.

The Scoop on Illuvium: Interoperability and AAA Gaming

We believe Illuvium could become a long-term winner in the crypto gaming ecosystem and even potentially compete directly with traditional AAA web2 games. Illuvium promises to build dynamic and interoperable functionality between three games within its universe, a feat not yet accomplished within the traditional web2 gaming space.

llluvium Series of Games: Overworld, Zero, and Arena

Source: VanEck.

Within the Illuvium ecosystem, interoperability means assets within one game can transfer between other games and therefore impact what happens in those other properties during gameplay. For example, players can collect Illuvials (Pokemon-like creatures that exist in the universe) in the Overworld game and can then use them as playable items in the Arena game. To be able to travel between regions in Overworld, players first need to mine (or buy) fuel in Zero. This would be similar to if items collected in Mario Odyssey could affect the player's race speed in Mario Kart.

“Interoperability” is a classic metaverse buzzword with a fair bit of hype but currently lacks execution. Part of the problem is that although the underlying technology of blockchain can prove ownership, the transfer of assets between closed worlds - specifically games from different studios - is not functional. However, the transfer of said assets between games created by one studio - in this case, the studio behind Illuvium - is something that the Illuvium Game Universe aims to pioneer.

We consider this the halfway point between a fully realized, interoperable metaverse experience and the currently siloed platforms that exist today. It’s a big step in the right direction.

Interoperable Metaverse Experience

Souce: VanEck.

Illuvium's Successful Fundraising Allows for Focus on Game Development and Art

The web2 gaming market is loosely bifurcated between triple-A games and indie games. Triple-A games require a much larger budget, development period, and marketing spend, while indie games are cheaper to make and easier to launch. Consider the difference between games like Fortnite or Call of Duty versus low-fi casual games like Among Us or Fall Guys. The vast majority of crypto games launched so far would be considered indie by traditional web2 video game industry standards. We believe Illuvium represents the first true triple-A game to be launched within the crypto game ecosystem. Naturally, this necessitates a longer runway and more funding.

The funding behind Illuvium has come primarily from token issuance and a massively successful NFT land sale. In March 2021, the project raised approximately $5.5 million in a seed round, and $38 million at TGE (Token Generation Event). In June of 2022, Illuvium raised $72 million (amid a bear market) in a land sale of nearly 20,000 NFTs representing plots of land in the game environment. These plots of land hold consumable digital items that need to be mined via Zero to facilitate gameplay in Overworld.

Illuvium’s ability to raise such a large war chest gives it a heavy advantage over other crypto-native games. It will allow it to compete directly with the web2 triple-A gaming category. Development and marketing are the two main drivers of the cost that make games so expensive. Because Illuvium has been so successful in its organic marketing strategy, it has allowed the project to focus more on game development and art. Illuvium has 60-70 developers working on gameplay and around 90 artists fleshing out design. Illuvium’s advantage against other crypto games cannot be overstated when it comes to development and art, which is a direct result of successful fundraising and a highly talented and skilled team. The question then becomes – Can Illuvium compete with traditional triple-A video games that are already dominating the market (Fortnite, Pokemon, etc.)?

llluvium Series of Games

Source: lluvium.

Illuvium's Tokenomics Model and the ImmutableX Partnership

Illuvium has the potential to be the first blockchain game to successfully create a token economy that thrives and rewards its gaming community for spending more time in the game. Players and investors may benefit from the growth of Illuvium in multiple ways due to the structure of the in-game economy and the characteristics of the gameplay that the Illuvium team has created. Illuvium will attempt to drive value back to the users through both their ILV token holdings and the NFTs that players will accumulate from gameplay.

Illuvium intends to redistribute 100% of the revenue generated by the game back to ILV stakers by using ETH spent in-game to purchase ILV and fund staking rewards. Stakers will also benefit from the revenue generated by trading via the Illuvidex - the game’s marketplace - where a 5% fee on volume is used to repurchase ILV and distribute it as staking rewards. There are 10 million ILV, of which 5% went to pre-seed investors, 15% to seed investors, 15% to the team, 15% to the treasury, 10% to the Illuvium launchpad, 30% for staking rewards, and 10% for in-game rewards.

Additionally, players who don’t want to buy the ILV token will still be able to profit from their gameplay, thanks to how the Illuvium team has designed gameplay. Unlike other blockchain games that use NFT characters to breed more NFTs (which can be inflationary), Illuvium is implementing a “fusing” mechanism that allows players to combine three of the same Illuvials into one stronger Illuvial with evolved characteristics (which in turn is deflationary). Furthermore, each type of Illuvial is associated with a bonding curve, making them rarer for every additional illuvial captured. These two mechanisms will help drive the scarcity of Illuvials and bolster Illuvial trading. Eventually, players will seek to buy certain Illuvials rather than capture them due to their rarity in the open world.

Illuvium is also launching via the ImmutableX layer-2 scaling solution for Ethereum. This partnership makes sense for Illuvium in many ways. First, they can avoid paying for minting millions of NFTs, which would be economically impossible on most blockchain - ImmutableX’s zero-knowledge rollup technology allows them to provide a gasless blockchain experience for users and supports their goal of becoming the destination for the top web3 games. Second, ImmutableX has partnered with GameStop and their community of over 50 million gamers which can provide Illuvium direct access to one of the largest communities of web2 gamers. Third, ImmutableX is an aggregated liquidity layer for NFTs, meaning NFT items can be sold directly through in-game marketplaces rather than requiring users to purchase or sell their NFT assets in third-party marketplaces such as OpenSea.

All Aboard the Illuvium Hype Train?

Illuvium is easily one of the most highly anticipated crypto game releases in history. The project has a substantial social media following, its own token, and NFT collections that are actively traded on secondary market websites like OpenSea. Many would argue that Illuvium is the first true triple-A crypto title in that the size and breadth of development far exceed the majority of other live or beta games in development.

Illuvium has managed to build successfully, and maintain, a steady drumbeat of sustained hype and attention in the years the game has been in development. As a result of Illuvium's massive social media following, the game already had an organically built player base before its release. According to Illuvium’s founder Kieran Warwick, the project’s marketing strategy focused on organic growth instead of paid efforts. Illuvium focused specifically on DeFi communities by creating promotional NFTs to entice users to join and engage with the Illuvium community. Illuvium’s discord membership grew to over 70,000 members within three months, placing it in the top ten discords of the entire world in 2021.

Since then, Illuvium has maintained a steady drumbeat of anticipation and community-building by building the project out in the open. This equates to regular updates on game mechanics, art, and other development-related teasers to keep the community engaged.

In addition to a strong social media following, Illuvium’s token ILV boasts a nearly half-billion-dollar market cap. While the token has fallen significantly from its 2021 highs, a fully diluted valuation of $485m indicates that crypto investors are betting that the game shows serious promise.

Investors Still Holding Despite Significant Decline

Illuvium (ILV) to USD since 3/31/2021

Illuvium (ILV) to USD since 3/31/2021

Source: Coingecko as of 1/6/2023. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities mentioned herein.

Illuvium Competitor Traction
Game Fundamental Social
Status Fully Diluted Value ($) MAUs F2P Mode? Mobile Access Twitter Discord
Axie Infinity Live 1.8B 93k ✔️ ✔️ 907k 1M
Splinterlands Live 70M 324k ✔️ ✔️ 63k 176k
Alien Worlds Live 123M 592k ✔️ ✔️ 119k 42k
Benji Bananas Live 28M 395k ✔️ ✔️ 15.7k 2k Live - 260k ✔️ 11.4k 12k
Star Atlas Early Access 102M 60k ✔️ 315k 210k
Illuvium Beta 394M 30k+ ✔️ ✔️ 348k 193k
Big Time Early Access - - ✔️ 255k 402k
Upland Live - 129k ✔️ ✔️ 96k 72k
Delysium Beta - - ✔️ 116k 74k
DigiDaigaku Building - - ✔️ ✔️ 71k 26k
Shrapnel Building - - 52k 39k

Source: Dappradar and Coinmarketcap as of 1/5/2023. Past performance is no guarantee of future results. Not intended as a recommendation to buy or sell any securities mentioned herein.

The position of Illuvium in comparison with its competition is favorable, especially considering the game hasn't launched yet. In terms of social followers and market cap, Axie Infinity is by far the leader. Still, once Illuvium's games are released in 2023, we believe that it has the potential to become the leader in all categories.

Four Possible Risks: Illuvium's Success Remains Uncertain

Even though there are many positive tailwinds behind Illuvium, there are still risks inherent to launching a new crypto game. A failed launch can happen even to traditional studios - just look at Cyberpunk 2077 in 2020. We outline four possible challenges that could pose risks to Illuvium’s success.

1. The hype train fails to leave the station. Two of the proposed three games are now released in beta form, but the full game hasn’t yet been launched with full functionality. It's possible that the game won't be well received once it's released in its entirety. The tides of popularity and momentum in gaming can change rapidly, and they can change even more often in the crypto gaming world.

2. Regulation in the U.S. classifies ILV token as a security. With the collapse of FTX, many crypto analysts predict that new regulations could classify a large swath of non-bitcoin crypto tokens as securities. If this were to happen, Illuvium’s tokenomics model could fall apart, and US players would not be able to buy the ILV token for staking purposes.

3. The community onboarded months ago isn’t engaged anymore. Illuvium’s token was launched in the first half of 2021, and the NFT land sale occurred in the summer of 2022. Early token holders will be approaching a two-year holding period before a game is launched. Two years of anticipation is standard for triple-A video games, BUT from a metrics point of view, how many of those original players are still engaged? Weekly average users and token price mean much more than social metrics, so the game needs to launch before more meaningful engagement metrics can be analyzed thoroughly.

4. Fortnite (or a web2 equivalent) successfully integrates NFTs. As we saw with the Reddit NFT integrations late in 2022, a successful launch of a web3 product from a web2 platform is going to attract both new and existing web3 entrants. If an existing web2 game successfully launches an NFT, this could theoretically pull players from the Illuvium ecosystem and reduce engagement.


Overall, Illuvium is poised to be a significant player in the world of crypto gaming in 2023. Despite the challenges of a bear market, the game has maintained high levels of interest, an engaged community, and a robust team of creators. If Illuvium is successful in its full release in 2023, it could serve as a model for other game studios looking to create web3 games that can potentially compete with web2, triple-A games. The release of Illuvium will be closely watched by many, as it could have a significant impact on the entire gaming industry.

To receive more Digital Assets insights, sign up in our subscription center.


Ethereum (ETH) is a decentralized, open-source blockchain with smart contract functionality. Ether is the native cryptocurrency of the platform. Amongst cryptocurrencies, Ether is second only to Bitcoin in market capitalization.

Illuvium (ILV) is an ERC-20 token that powers the Illuvium game.

Please note that VanEck may offer investments products that invest in the asset class(es) or industries included in this blog.

This is not an offer to buy or sell, or a recommendation to buy or sell any of the cryptocurrencies mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its employees.

Cryptocurrency is a digital representation of value that functions as a medium of exchange, a unit of account, or a store of value, but it does not have legal tender status. Cryptocurrencies are sometimes exchanged for U.S. dollars or other currencies around the world, but they are not generally backed or supported by any government or central bank. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional currencies. The value of cryptocurrency may be derived from the continued willingness of market participants to exchange fiat currency for cryptocurrency, which may result in the potential for permanent and total loss of value of a particular cryptocurrency should the market for that cryptocurrency disappear. Cryptocurrencies are not covered by either FDIC or SIPC insurance. Legislative and regulatory changes or actions at the state, federal, or international level may adversely affect the use, transfer, exchange, and value of cryptocurrency.

Investing in cryptocurrencies comes with a number of risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks. In addition, cryptocurrency markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing. There is no assurance that a person who accepts a cryptocurrency as payment today will continue to do so in the future.

Investors should conduct extensive research into the legitimacy of each individual cryptocurrency, including its platform, before investing. The features, functions, characteristics, operation, use and other properties of the specific cryptocurrency may be complex, technical, or difficult to understand or evaluate. The cryptocurrency may be vulnerable to attacks on the security, integrity or operation, including attacks using computing power sufficient to overwhelm the normal operation of the cryptocurrency’s blockchain or other underlying technology. Some cryptocurrency transactions will be deemed to be made when recorded on a public ledger, which is not necessarily the date or time that a transaction may have been initiated.

  • Investors must have the financial ability, sophistication and willingness to bear the risks of an investment and a potential total loss of their entire investment in cryptocurrency.
  • An investment in cryptocurrency is not suitable or desirable for all investors.
  • Cryptocurrency has limited operating history or performance.
  • Fees and expenses associated with a cryptocurrency investment may be substantial.

There may be risks posed by the lack of regulation for cryptocurrencies and any future regulatory developments could affect the viability and expansion of the use of cryptocurrencies.

Investors should conduct extensive research before investing in cryptocurrencies. Information provided by Van Eck is not intended to be, nor should it be construed as financial, tax or legal advice. It is not a recommendation to buy or sell an interest in cryptocurrencies.

NFTs are not an investment. Rather, NFTs are digital memorabilia intended solely for entertainment purposes. As entertainment memorabilia given to you as a gift, NFTs have no value and are not intended by VanEck to ever have any value. Neither VanEck nor anyone else will take or not take any current or future action that is designed in any way to maintain the value of NFTs, or to cause their value to grow or increase. You must not attempt to obtain an NFT from VanEck if you view it as an investment.

All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future results.

© Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.

1 - 3 of 3