IIP-39

IMPLEMENTED

Simple Summary

Fuel sales are planned to be launched via an order book system allowing buyers and sellers autonomy in a free market system. This proposal suggests the balancing systems and processes necessary for the fuel production system and interrelated land sales.

Abstract

Fuel production is determined by the number of land plots in Illuvium Zero, the amount of fuel produced per plot, and the speed and duration players have developed their plots. The proposed system provides four levers to balance fuel production. A manual balancing process combined with a top guardrail will initially be leveraged by the team and community. Afterward, the introduction of additional land plot sales and an automated balancing system will be introduced.

Key quantitative parameters for the balance must be developed together. The details for these items such as the Cost of Fuel for Travel, Maximum Fuel Supply and Supply Curve per land plot, Maximum Fuel Price (Top Guardrail), and Land Sale details must be defined and approved in future ICCP(s).

Motivation

Allowing landholders and players to set a price that works for them is an added benefit that lets people play the market and engage more deeply with the ecosystem. Experienced players can effectively act as an arbitrageur. At the same time, novices will still have the option to hit a ‘buy now’ button and know they are getting the best price currently available. The system is simple and easy to understand. Additionally, it removes the need for liquidity.

The solutions to manage the supply of fuel must include mechanics to address the initial ramp-up of the games at launch, steady-state, and future content and player base changes. As such, this IIP proposes an all-encompassing approach with flexibility allocated to the council and especially the team in implementation details.

Specification

The proposed system includes the following specifications:

• Manual and Automatic Fuel Supply Balancing: Manual adjustments can be made to the fuel supply after open beta launch, while evaluating and preparing for a move to an automated approach.
• Guardrail Introduction: A top guardrail or ‘maximum price’ at which unlimited fuel will be available will be set via future ICCP.
• Future Land Sales: Future land sales, with a smaller volume than the initial 2022 land sale, will take place after open beta based on increasing demand for fuel.

Overview

Below is a complete overview of the system:

Fuel Balancing

The parameters for the economic framework of the ecosystem including fuel production per land plot, fuel price at the guardrail, and in-game fuel value (such as energy per travel) will be shared as an internal recommendation of a holistic system by the team and passed by ICCP by the council prior to open beta launch. Initially after open beta launch, balance changes to these parameters will be made by the team, in consultation with the council.

An automated balancing system based on recent market evaluation (i.e. supply, demand, price volatility) will be modeled internally in parallel to the live manual adjustments beginning at open beta launch. After evaluating and improving the model, when sufficient robustness and stress testing of the model has been completed, at the discretion of the team and council, it will be moved into usage in a future ICCP.

Fuel Guardrail

Enables players to set unlimited buy orders for Fuel at a fixed price (top guardrail). Players can specify the amount of fuel they wish to purchase at a price pre-defined by the council and team. To maintain the revenue sharing model with landowners, 5% of this fuel sales revenue will be distributed to landowners proportionally based on their weekly fuel sales.

Guardrail Positioning

The price of unlimited fuel supplied by the DAO will serve as an appropriate upper bound for fuel accessibility and a mitigation against major price volatility. A lower guardrail will not be introduced in this proposal as the balancing mechanics described above should be sufficient to remove fuel production if needed to reduce price volatility.

The market price when below the guardrail will serve as a discount for players when compared to the set price of the guardrail. The user interface should convey this clearly as any price below the top rail resulting in 'bonus' fuel or some form of discount.

Land Plot Sales

As player demand for fuel increases, small, predictable sales of Illuvium Zero land plots will be leveraged to scale fuel production. These micro-sales will not begin until a minimum of four months after open beta, pending fuel demand increasing. The specific mechanics to determine if sufficient demand has been achieved to trigger land plot sales will be decided in a future ICCP.

Launch Timing

Illuvium Zero will be launched in open beta as early as technically feasible prior to Illuvium Overworld. This allows land plot development by players to occur, allowing a steady fuel supply from landowners within weeks after Overworld launches.

Rationale

An automated system for future land sales and fuel supply balancing is preferable to manual adjustments as it provides more predictability to players. However, an automated system has a higher risk of working effectively compared to adjustments by the development team until the economic system is in equilibrium and the automated fuel balancing model has time to mature.

A top guardrail will be used to position the actual price of fuel produced by the DAO. This ensures that the overall market positioning of Overworld and in turn, the entire Illuvium ecosystem is appropriate.

By structuring player-generated fuel as a discount compared to the top guardrail price, it moves Illuvium Zero players into a symbiotic position with Overworld players instead of an opposing position.

The timing needed to develop Zero land virtually ensures that for the first weeks or months after Overworld launch, the price of fuel will stay at or just under the top guardrail. Launching Illuvium Zero weeks in advance reduces the time to reach a stable, free-market equilibrium. The top guardrail should be rarely used the longer the system runs.