The Team from Illuvium & Soulbound Tokens

the team from elrond

In This Issue

  • The team from Illuvium talks about their AAA creature based universe.
  • Erik has a report for you on Soulbound tokens.

Premium members also get the following:

  • My latest portfolio updates
  • Rekt Capital has the latest technical analysis for you on the market.
  • Rebecca has all of the latest news for you.
  • Upcoming NFT drops
  • Defi Dad has a tutorial for you on how to earn up to 35% APY with USDC/DAI on Uniswap on Optimism.
  • Jesse has a ton of hot new airdrops for you. 
  • Hot new token sales.
  • Rebecca breaks down this week’s trending coins.
  • Jesse has a deep dive for you on LooksRare.

And much more!

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Illuvium Inverview

What is Illuvium? 

Illuvium is a AAA studio building a creature-based universe of multiple games running on the Ethereum blockchain and run by a DAO (Decentralized Autonomous Organization).

Operating as a DAO allows the token holders to guide the project.

The holders of $ILV vote for Council Members who consequently vote on proposals.

Permanent in-game items are ‘minted’ as NFTs, which exist on the blockchain, allowing players to own the items they find or buy.

Players trade these items freely.

Learn more about Illuvium by visiting Illuvium.io or watch the game trailer here

How are you using NFTs in the game?

All of our characters, weapons, armour, and cosmetics are NFTs, giving players verifiable ownership and trading assets for real currency.

Our characters are all tied to a bonding curve which makes them increasingly rare to find, until eventually a new set is brought out, and you can no longer collect the previous.  

What benefits are there to owning Land?

Land Owners earn approximately 5% of all in-game revenues.

This is possible by generating the fuel required to pay for in-game actions such as Travelling, Curing shards, Reviving Illuvials, and Forging weapons.

It is also possible to find rare blueprints that allow you to craft skinned weapons. 

What does the ILV token do?

There are two use cases for the ILV token.

Governance and Revenue Distribution.

In the Illuvium Ecosystem, 100% of in-game revenues (minus fees) are sent back to stakers on the platform.

The community also governs us.

Owning ILV gives you the right to nominate and vote for a council member who will represent your opinions and ideas. 

What is your strategy to get people to play the game?

First and foremost, it’s building a fun game to play.

Too often, games in Web3 are positioned as fun, only to turn out monotonous within the first few hours.

We are looking to change that by building an incredibly immersive experience with many different playstyles to grab gamers.

We are also planning to host the largest E-sports tournaments in history, beating DOTA’s 44m prize money last year. 

Who are your most prominent partners, and what do they bring to the table? 

IMX has been incredible; they allow us to run the game with subsecond transaction times and zero gas or minting fees. 

Chainlink has also been a great partner of ours.

Their technology is far ahead of everyone else.

It makes it easy to choose them for our price feeds.

Synthetix, Aave and 1inch helped us out in the early days by giving us brand awareness within the OG DeFi community. 

Framework also assisted us massively with onboarding the right capital. 

What comes next for Illuvium?

Our Land Sale begins June 2nd, this is the first time we have sold any NFTs, and we have over 150K registrations, so we are hoping for the communities sake it’s a decent sale.

Next month we release a PVP version that includes yield for Survival Mode.

Soulbound Tokens by Erik

Basically everything in crypto has been tradable thus far. After monetary (fungible) tokens came NFTs, unlocking a market for unique, non-fungible online assets. But some things are not tradeable, yet still vital to a functioning (online) society. Anything that has to do with identity and reputation. Can those assets also go on-chain? Enter: Soulbound Tokens on Ethereum. Will this be the use case of the next bull market?

What is a Soulbound Token?

The Soulbound token (SBT), exists only on the drawing board and can be viewed as a type of NFT that cannot be traded.

Why not?

Because it is inextricably linked to a particular identity, or ‘Soul’.

A white paper co-authored by Ethereum founder Vitalik Buterin introduces this new type of token.

Consider the following items, of which it would be nonsensical or even illegal to trade them:

  • Your university degree
  • Your driver’s license
  • Your credit score

Collecting these personal credentials is valuable in real life, so these should also be valuable in a decentralized economy.

But as mentioned, the fact that something has value doesn’t mean it should necessarily be tradable.

Some things are bound to the ‘Soul’?

What is the Soul? It is a wallet to which SBTs can be transferred that represent such non-tradable properties. 

SBTs can be:

  • issued to a wallet (Soul)
  • made revocable by the issuer
  • public or private

The creators of the concept believe that crypto needs these kinds of tokens to take a new leap forward. And there’s some merit to that idea.

Bitcoin solved the double spend problem for online money.

But it wasn’t designed to solve the problem of duplicating personal identity – by bots, for example.

What Inspired the Idea of Soulbound Tokens?

It is known that Vitalik Buterin, the founder of Ethereum, is not a big fan of NFTs as a speculative financial instrument.

In his view, owning a pricey NFT doesn’t tell us much more about the owner than that he or she is wealthy.

Inspired by World of Warcraft (WoW), where players can win Soulbound items, Vitalik got to thinking.

In WoW, killing a powerful monster is the trigger for getting a ‘Soulbound’ reward: it stays tied to you as the player.

No other player, no matter how much money they have, can buy it from you.

You killed that dragon and no one else.

So while a traditional crypto wallet shows how much money you have, a Soul shows what you have achieved as a person.

Use Cases of Soulbound Tokens

In the white paper, the authors call this principle of non-transferability essential to building a Decentralized Society (DeSoc).

A society where the achievements of individuals and the relationships between them are encoded on the blockchain through these Souls.

Diagram

Description automatically generated

In the above diagram (thanks to Leo Glisic for the image), you see an example of the sort of tokens that go into a Soul.

It also makes clear that a person can have more Souls.

After all, they are wallets.

The top use cases listed by the authors of the whitepaper are:

  • Establishing provenance (origin) 
  • Unlocking undercollateralized lending markets through reputation 

Let’s discuss these. 

Use Case 1: Establishing Provenance

Take the example of an artist who wants to combat deepfakes imitating his art.

The artist has a large number of relevant SBTs in his Soul.

He or she can mint NFTs from that Soul.

The presence of the SBTs in his wallet make it likely that he is indeed who he claims to be – while staying pseudonymous if he wishes so.

There is no obligation to reveal one’s real-life identity in order to set up a Soul.

Another interesting example comes from crypto blogger Milkroad. Suppose, he thinks out loud, I want to hire a writer.

How cool would it be if I could do that based on a track record of actual on-chain behavior?

See, anyone can say they know a lot about DeFi.

But suppose that person has a “degen score” based on the accumulated on-chain activity of his wallet.

That speaks to real experience.

It is again important in that case that the tokens in such a wallet are SBTs and therefore not transferable.

Use Case 2: Uncollateralized Lending

Current forms of lending in defi are almost always with other (crypto) money as collateral.

For example, you lend USDC with your Ether as collateral.

But that’s not a popular form of lending.

People ‘in the real world’ borrow with their ‘reputation at stake’.

In the world of traditional finance, that is done with a credit score, which is centralized.

But not everyone has access to it: it depends on your prior history of lending. 

By making loan markets open source, they can emerge bottom-up.

The data on correlation between certain SBTs and credit scores can ensure that lending can even take place within groups, so without a bank intermediary in between.

So SBT’s could unlock this huge market.

But Can’t You Just Sell That Soul?

It’s not impossible for a person to have multiple Souls. In other words, Souls don’t correspond to persons one-to-one.

And although the Soulbound tokens themselves are not transferable, the Soul (the wallet they come in) is.

It’s just not likely that there will be a lively trade in Souls. 

Why not?

Because suppose a developer has a Soul with an impressive number of SBTs in it, all proving what he is capable of.

Of course, in principle he could sell that Soul.

But the point is: what’s in it for the buyer?

He can’t code.

So while he might be able to fool his audience for a very short time, he won’t fool them for long.

So, from a game theoretic perspective selling souls would not be likely to happen.

Compare it to Bitcoin mining: it’s more profitable not to cheat than to cheat after you’ve gone through all that trouble spending so much energy.

Conclusion: Why are Soulbound Tokens Important for Ethereum?

SBTs could be important for the long-term success of Ethereum (and other layer 1 chains).

To gain more market share, crypto should expand its scope to ‘real’ world use cases.

So far, Decentralized Finance is mostly ‘playing with itself in the sandbox’.

Swapping tokens back and forth that are not linked to the real world is only a limited use case.

We need to venture out!

Final Notes

Thank you so much for your support, and I truly hope that today’s issue will give you insights needed to help you master your wealth.

If you are reading this it means you are on the free version of the Wealth Mastery Investor Report, which is great for news and tips on the crypto markets.

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See you next time!

Lark and the Wealth Mastery Team

 

Legal Disclaimer

TCL Publishing ltd (director Lark Davis, owner of Wealth Mastery) is not providing you individually tailored investment advice. Nor is TCL Publishing registered to provide investment advice, is not a financial adviser, and is not a broker-dealer. The material provided is for educational purposes only. TCL Publishing is not responsible for any gains or losses that result from your cryptocurrency investments. Investing in cryptocurrency involves a high degree of risk and should be considered only by persons who can afford to sustain a loss of their entire investment. Investors should consult their financial adviser before investing in cryptocurrency.

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Join the Wealth Mastery Investor Report by Lark Davis

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