Welcome to the alpha please newsletter.

Hey everyone, I had the privilege of chatting with Kieran Warwick, co-founder of Illuvium.

I strongly believe that gaming will be the category that onboards the next hundred million participants into crypto.

Illuvium is taking on the challenge of being the first AAA game on the blockchain and Kieran has some alpha for you below.

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What’s your crypto origin story?

My first exposure to crypto was through a company that my brother started, which was essentially taking physical payments and turning them into digital. We had this platform that was in 1000 retailers across Australia. Randomly one day a Bitcoin company came to us, and this was back in 2016, and they wanted people to be able to buy Bitcoins using cash and then allow the system to turn that cash into digital. We would do all the accounting on our side through these retailers and then once the payment was approved, we would credit the bitcoin to their account. That gave me my first exposure to bitcoin.

Eventually I found ETH and a bunch of other alt-coins. I was so bullish on ETH that I went all in. I put like $80,000 back then into ETH and I got absolutely wrecked. I think it was like $8, and then it went down to like $5 and I was just like, oh my God. It was either put money down for a house, or buy Ethereum and invest in it. I lost it within like six days or something, margin as well. So I pretty much lost everything and I was really, really burnt. I was just like, fuck crypto. I'm now going to build something else.

I then did a food tech startup for a few years. Kain, my oldest brother, who started Synthetix, got me back involved in crypto. He was doing really well back in 2020 and he basically said, man, just get back in. He said the market has come back, it's looking really good. And so he loaned me 100 grand and I started trading again. And then I made just a stupid amount of money in a small amount of time over that mega bull run.

I just stumbled upon a token called AXS during that time, which is Axie Infinity. I started doing a ton of research on it, and I was like, wow, this is going to be the next frontier of gaming. And so I reached out to my two other brothers. One happens to be a really good game designer and the other one happens to be one of the best modellers in the world and we just started from there.

Have you always been a gamer? Did you play games growing up?

Yeah, our dad was big on computers and I had three older brothers, so we were exposed to computers really early on. When the internet came out we were connecting up our laptop, our desktops, and trying to work out how to play the first LAN games and stuff like that. We've been gaming on consoles and desktop since the early days. The other day I listed all of the games that I could think of that were notable growing up and there were 60, 70 different titles that I had played from childhood. So, yeah, massive, massive gamer. Always have been.

Do you think of yourself as building in the crypto industry, or are you actually just building a game using just available technology?

We're just building a super fun game with the available tech that we have. That's what people get wrong in this space.

If you look back a couple of years ago, a lot of people were just building to try and be the first crypto game or it was like an experiment. Crypto gaming is already like two or three years down the road. And so we had enough to go off to say NFTs are really cool technology that we wanted to use. It allowed us to offer true verifiable ownership of assets inside a game. We want to build a game that is like a modern day Pokemon and also has the competitiveness and replayability of something like League of Legends.

What is Illuvium's vision?

We want to build the world's first triple AAA interoperable blockchain game. It's essentially a new genre of gaming. An IBG is where we you can use same assets across the entire ecosystem, just a seamless universe where you can jump from genre to genre to genre and utilise all of the same characters, weapons and armour. In our case, we've got a city builder game, we've got a creature capture open world exploration game, and then we've got an auto battler, which ties it all together. Big ambitions. Big ambitions.

What does the short term roadmap look like?

Arena is about to go into private beta three, which is the last beta before we open it up to everyone. Arena is an auto battler type of game. We're hoping to have Overworld and Zero in private betas before the end of the year. So, by the end of this year, three of the nine games that we plan to release over the next 10 to 15 years will be playable in a private state.

How have you felt about the early Arena beta reviews?

It’s been really good. We're so critical of ourselves. When I played the private beta One, I played it for pretty much two weeks straight. I got a little bit addicted. We've got some gamification where you can you try and get the highest score on the leaderboards in the lowest amount of time and that becomes pretty addictive.

You're playing against the computer right now, you're not playing in PvP. Private beta two is an upgrade of that version that just goes from having 40 characters to about 140 characters. And it also has a few improvements, like checkpoints and stuff like that. I am really excited about PvP, as it’s going be super competitive.

Illuvium seems to have really high standards. How do you balance those high standards with the pressure to ship updates?

We've just forgotten about it. We're still pre-launch where we've told people it takes a long time to build really good games, and we're the only one. There's a few more that have come out now, but realistically we're the only one that's even close to having a AAA game. I'm comparing Illuvium to mainstream games. For us, when we put out our private beta, even though it doesn't have PvP, you can still see the level of polish in the graphics, the gameplay, the balancing, the UI. Everything is to an extremely high standard, but when you compare that to AAA games in the mainstream, it's still not there. But when you compare it to web3 games, people are like, holy shit, just let them build.

Illuvium @illuviumio

🚀If you aren't a hardcore gamer with extreme reflexes and dexterity; don't worry. Illuvium: Overworld is just as much of a strategic experience as it is an exploration action game. Our goal is to remain accessible, fun, and engaging to players from all walks of life.🥳

So to answer your question, it was tough at the start, but as we've shown, this is not a short term project. We have huge ambitions. And as you can see from private beta, even if you're not playing it, you can easily go onto YouTube and see all the different streamers that are posting up content.

It's a proper AAA game, and it's the first one of its kind in web3. So, we kind of get away with having things a little bit more delayed than most communities. In the real world, these biggest AAA games take around five or six years sometimes to ship. That's the crazy part. If you really look at from that perspective, we're 18 months in right now and it will probably take two years full build before Arena can compete with Dota Underlords and Team Fight Tactics, but that's three years faster in a brand new studio. When you consider as well that we're building two other AAA games as well, it's pretty insane. And the only reason we can build at that rate is because we're using this new model of studio which is completely decentralised.

Decentralisation is a spectrum. Where do you think Illuvium will eventually fall in terms of that spectrum? How decentralised will the game actually be?

Obviously there are some decisions that stay centralised, but it's mostly on the marketing front. We're very transparent with the games in terms of what we build, what titles we build next. The white paper was pretty detailed and we said to people this is what we're going to build. We gave power to the community before we had even launched our Genesis token of ILV. We had a token called Pre ILV and that had one purpose and one purpose only. It allowed you to vote on proposals that got put to the DAO.

Illuvium Zero was a proposal that came internally because we thought it would be really cool if we could add this game to the ecosystem. If that didn't get approved it wouldn't be built. People could have easily said no, but it was approved. A lot of people say that we've got a fully decentralised model. Ours is truly decentralised. The only part where I'd say it sort of falls down, and even this to a certain extent is still decentralised, is the operations and the marketing.

It was still a decentralised decision by the DAO for the internal team to have the power to make those marketing and financial decisions.

Why did you choose Immutable X? And what did that process look like when you were evaluating different blockchains?

The most secure blockchain is Ethereum. When you're looking at onboarding hundreds of millions of players who theoretically don't know anything about crypto, you want to make sure that you have the most secure blockchain that you can possibly offer them.

When we looked at Ethereum, the throughput just wasn't there, and we weren't willing to go to Solana, or any of these other side chains that have popped up. And so we decided to start looking into different layer two solutions.

At that point, we looked at Optimism, which Kain our brother was a massive, massive fan of. In terms of the onboarding and offboarding of the currency it just wasn't a seamless enough process. At that time it took two weeks to off-board any tokens back to layer one or two weeks. I think they've gone down to about ten days or seven days now. But again, when you're talking gamers who don't really care, they just want their funds to be able to go on and off whenever they feel like it. It's not a very good experience. So that was optimism out.

zkSync was the other one that we looked at on Ethereum, and they were just a little bit behind Immutable, but they're both very similar systems. We looked at Immutable as well and they were the guys behind Gods Unchained. They've had a whole bunch of experience with their own game and all of the pain points that came with launching that on Ethereum. They were essentially building into their model using StarkEx and they were much further ahead. They were based in Australia as well; they're actually in Sydney, which is where we started. Our dev teams were able to work with them pretty much on a daily basis to work out exactly what we needed and transaction times. The amount of transactions were slow and kind of small at the start, but they promised us that they would increase the throughput and the amount of transactions that the network could support over time.

They were about twelve months delayed, but we were too. And so now we're doing tests on a pretty frequent basis and throughputs there can support millions of transactions every single day. It was a really good decision in the end.

You’ve got ILV, sILV2 and FUEL. How do all of these currencies work in your economy?

ILV isn't used for anything in game or anything to do with the economy apart from whatever in game revenues that we generate. We take that Ethereum and we purchase ILV back off the market and then we distribute that back to people who are staked in the protocol. So that's the only ILV use case.

In terms of sILV2, that's just our way of giving stakers an option to utilise. Let me explain this. With staking you have rewards that you earn. You have a choice to take your rewards in ILV, but if you do, they vest over a twelve month period. We didn't like that for gamers because they want to use their rewards. You can forego that twelve month vesting period if you want. So, the maximum number of sILV2 that could be circulating is the amount of token rewards that we have allocated as yield, which was 30% or 3 million. About 20% of people, so 20% of all tokens, that were yielded, have been taken in sILV2. By far and large ILV is still more popular. But, there's been about 600,000 tokens that have been yielded in sILV2. And that sILV2 is pegged to the price of ILV. You can use that for is things in game.

That explains the sILV2 component. The other side of that is when someone accepts their yield in sILV2, it means that the equivalent amount of ILV is never minted. It effectively reduces the full amount of ILV that's ever going to be circulating. And so right now I think we burned something like two and a half percent of the sILV2, which means we will have like 9.75 million circulating instead of 10 million.

Then we have the fuel system, which you need to extract. There's three different fuel types in Illuvium Zero. Only land holders can extract that fuel and they have different types on their land. You might have all three, you might have one, you might have two. You can extract that fuel and then sell that into a balancer pool where we provide 19 parts and the landholder provides one part. And so the landholders have agency over 5% of the fuel system, which And essentially means they have agency over the different elements in game.

For example, in-game travel takes Solons. Let's say traveling to a new region, a tier one region, costs you $10. If at this time there's a huge amount of the Solons in circulation and no one wants to sell them, then the price can divert from its peg. The maximum is 25% either way right now, as we’ve got in on rails. If those landholders decide, we're not selling Solons into the pool, then the price will go off its peg, and it can go up to $12.50 for people inside the main game to travel, because they're the ones that need to buy that fuel type off of the landholders through this Balancer pool. And then likewise, if there's a whole but then when people are now getting a huge premium, they might sell it. That could cause a mad rush, and everyone dumps a whole bunch of Solons into this pool. It can go down to $7.50 for people to travel because there's an abundance of Solons in the pool. And everyone starts traveling because it so cheap. And then eventually it dries up because people have bought all the Solons. You eventually find an equilibrium across the three different fuel types of fuel types as well.

Zyo @ZyonikGaming

Travel is done via Jet Pack / Mag Boots, this allows for insanely satisfying gameplay and full exploration of every zone. Fuel, which comes from Illuvium Zero Land, is used by Players to Power your Travels. 2/6 🧵#Illuvium ♊️

The system is really cool, and we eventually want to remove our rails. So, theoretically, if all of those landholders were to not sell any Solons into the system, then it would make travel cost a ridiculous amount. But, the whole idea is that some landholder is going to cave and go, well, I'm making literally 100x on my fuel, so I'm selling it now. I think you can always count on people to take profit. It's a real world economy then. It makes being a land holder fun because you have agency on the economy prices.

You sold about $72 million worth of land earlier in the year, how central is land to Illuvium?

Landholders will make 5% of all revenue. If you look at what Axie Infinity was doing at one point, they were making something like a hundred million dollars a month. We are arguably going to be much bigger than that if we can get the market size that we want. Let's say, even if it is 100 million, you're talking $5 million a month split up between 20,000 landholders. It's pretty crazy.

Is Overworld the game that takes you mainstream?

The market size for auto battler games, if you just take Dota Underlords and TFT, is about 75 million monthly active players. So, yes, Pokemon has upwards of 200 million at any given time, and that's four times as much as these other types of games. We have cast a wider net. Clash of Clans is an extremely popular game on mobile, which is similar to Illuvium Zero. Illuvium is about having an interoperable universe of three different genres of games that seamlessly integrate together. You cast a much wider net than just a trading card game.

Rhamphy | Rhamphyre.io ♊️🔥 @Rhamphy

The @illuviumio Overworld is here!! Simply amazing 🔥🔥

What about this tweet?

Kieran.eth ♊️ @KieranWarwick

When the market recovers, we will perform a mega raise, likely one of the largest in history, to ensure we have the runway to build out our 20-year vision.

We were looking to do a mega raise 14-15 months ago, and then whole bunch of stuff happened and the bear market hit, so we decided to just hold off on doing that. But once the market comes back, we want to be funded regardless of any sort of bear market conditions or whatever like that. We want to have enough in the bank to get through the next 20 years and build out the vision of the nine different games in the universe.

What do you think you need to do in the next two years to get that runway?

Well, as stupid as this sounds, we had investors lined up. The reason that we didn't pull the trigger is we wanted to involve the community. We built a thing called Forge app, which we haven't used yet, but essentially that allows us to go to institutions into the community and say there's X amount of tokens up for grabs. It's essentially like a really advanced OTC desk and that took us about four or five months to build. VCs see our vision. We gave them access to our private betas and they were like, okay, if Axie just raised 300 million based on a fairly indie like game, then these guys are going to be the next Blizzard. It's just that in these market conditions no one is spending any sort of money.

When will gamers come round to NFTs?

Gamers don't hate NFTs, they hate NFT games. Right now crypto is full of investor gamers, as I like to call them. People who loved gaming when they grew up, but they're here to make money. And when a true gamer looks at these games and they go, wow, I can make $20, and I can own these cute little fluffy things that look like a game that I played back in 98. They just say fuck that. I'm going to go play Call of Duty, or I'm going to go play Fortnite or Mario Kart, or any of these games that are really polished and AAA. The gameplay, the maps, like the design, everything is all about fun. NFTs right now are connected to bad games.

Whereas once we have a whole bunch of games that come out and are trying to do what we're doing, things will change. The other day I spoke to the guys who created Heroes of Might & Magic, which was a game that I poured hundreds of hours into when I was young. They're building a Heroes of Might & Magic game in web3 and that brings over the fantasy loving people. You've got a whole bunch of car racing games that are coming out which will compete with the likes of Need for Speed, except you can own your cars and you can take them to the next game and the next game. Once we have like 10 or 15 titles that have fully launched and open to the public, that's when people aren't going to care what they're called, right? It's all going to be about the fun at that point. Right now there is absolutely no game that is out in web3 that I can say, put down your Call of Duty, put down World of Warcraft down, and go and play this web3 game.

In the future, people will forget the NFT acronym and just say I'm playing a fun game again, and it just so happens that I can own my assets.

Do you think that gaming gets completely disrupted with this model of ownership?

I think the obvious answer is it will change gaming forever. Take Pokemon Go, for example. Pokemon Go was amazing fun. I played it for ages. Tons of my friends played it. You go around the real world capturing these creatures that you've grown up playing and you love, but it stays under the ownership of Niantic.

Now, think about if Niantic brought out a new game, a Pokemon Go, except they said, now you can own your assets and you can take those assets, you can trade them, you can potentially earn a little bit of money. If you're a superior collector, you go collect something super rare. There's other people around the world that want to collect that and are willing to pay you money for that. Let’s imagine Niantic said here's Pokemon Go with an ownership model, and didn't say anything about NFTs or anything like that. They release a marketplace and it is all underpinned by blockchain. Now let’s say Niantic released a new Pokemon Go after the previous version and took ownership away, do you think gamers would be happy? Do you think gamers would accept that? Or would they just revolt? These mainstream publishers aren’t stupid, they are waiting until someone else brings out a game that changes the negative connotation of NFTs.

Grant Warwick @VonNeumannILV

@KieranWarwick The dream

In our case, we're building a Pokemon like game and obviously we don't have the nostalgia there, but we're trying to build an IP that people absolutely adore where they love the characters. And if you think about that, people are going to have to make the choice, do I want to go and play Pokemon, where I don't own any of my assets. I can sit there collecting and collecting and collecting, but once the new version of the game comes out, I have to start all over again and I can't sell those assets and it's meaningless. Then this Illuvium game comes out and it has these new age monsters and you can actually own them. It's the same sort of open world immersion, in my opinion. I just think it's obvious that people are not going to accept mainstream publishers not giving them ownership of these assets. It just won't make sense.

So, we're just early?

It takes five years minimum to create a game like GTA. Imagine if you were going through your progression in GTA, and you knew that when GTA brings out their new version, you could get all of those items and weapons and armour and stuff like that that you'd accumulated in the previous version. You just bring into the next version. It's just got better graphics and new storyline, all of that kind of stuff. As a gamer, I would not be happy if they took that away two or three years down the track. It seems obvious to us now. I think we just need the time.

Are there any other web3 game developers that you are impressed by?

Yeah, so the guys from Nor, they're building like a running man style of game where you actually lose your NFT if you die in it. That's a really cool concept. The game designer there comes from mainstream games he's been building for 20-30 years. Fascinating to watch his take on crypto gaming. He's very aligned with us.

You've got Civitas, which is like a civilization type game. They're really using DAOs and Sub-DAOs as a way to integrate and make a very political environment inside the game. They have a team of like 70-80 different experts that have built AAA games all their lives.

The guys from Heroes of Might and Magic are going in on web3. The designer there was one of the pioneers of free to play. And when he first was talking about that, people were like, you're going to fuck the gaming industry. Then a few good games came out that offered that, and people were like, I'm not fucking paying for a game again. We can play Fortnite and it doesn't cost us anything. So, subscription models became obsolete and he's now looked at blockchain gaming and has said it's just the next step.

What are you bullish on for the future?

I'm just bullish on seeing a few mainstream studios start building games from the ground up and saying that we believe NFTs have now matured, audiences are now ready for them and we think it's the next step in gaming.

Any advice for crypto investors right now?

Just do the research. There are so many games. Too much VC funding has gone into games that are just a trailer and a white paper. Now, VCs are starting to realise that doesn't work and we've got to actually invest in games that have real teams, real ability to go out and develop actual games. And so that's been one thing that's been frustrating to me. You see this with VCs and retail investors as well. They just FOMO into these things that are all money first, not gameplay first.

How to get involved with Illuvium:

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