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On Governance V2 - Illuvium

By Deraji | ILVFi | 28 Dec 2022

I’ve recently had the opportunity to partner with a number of individuals within the Illuvium community including team members, council members, and other smart people committed to the DAO to develop an initial framework for our next phase of governance. Today, I’d like to share some details around the proposed improvements and provide my perspective on the benefits of these changes.

Illuvium’s Community Manager and the new council including myself are formally sponsoring this IIP, the full text of which is available here. Below is my commentary on the proposed structure, as well as additional rationale why certain changes are being proposed and how this new structure benefits the DAO.

Why change?

Having had the honor to serve on the Illuvinati council this previous epoch, I learned a lot about how Illuvium works, both the challenges with the current system and opportunities to truly achieve the founder’s and community’s vision for what this DAO can become. At the highest level, Governance v2 offers a system to progress towards two somewhat opposing forces.

  1. Ensure the best, most informed individuals make choices for Illuvium.
  2. Ensure the community is heard as we advance towards further decentralization.

Hopefully we can all agree that the two factors above are beneficial, and I hope the new structure moves us further along this journey.

Progress, Not Perfection

I’ll also highlight a keyword for you to consider as you learn about the changes proposed in Governance v2 - progress. We did not set out for perfection, or to find the one system that will last Illuvium through the entirety of its hopefully lengthy existence. I’ll be the first to admit, this system isn’t perfect. There are already places where we can see improvement needed, but rather than further refine the system, we decided that it would be best to try it with the goal of revising the system as we live and learn.

Proactive, Not Reactive

We did set out to proactively implement changes that offer progress. Something else that is likely to come up in the discussion of Governance v2 is that the roles aren’t clearly defined, and some areas of the new structure may have less work than others at this stage. That’s absolutely correct. However, by building the framework and testing it out, we can hopefully again adjust proactively as we continue to grow and the team successfully launches the various aspects of the roadmap. Allowing governance to lead enables a more effective system than constantly playing catch-up.

Getting Into the Details

With that said around the intent and spirit of Governance v2, what the heck is it?


The biggest change is a shift to a multi-layer, subcommittee based structure. Going back to the concept of ensuring the best people are making the decisions, specialization makes sense. A number of different committee configurations were considered, though in the end, the proposal involves four unique groups.

  1. Community
  2. Strategy
  3. Game
  4. Marketing

These committees work towards getting specialization on the council, and avoid council members having too broad a scope to be truly effective. By clarifying the role and expectations for each subcouncil, we can recruit talented individuals from our community, as well as ensure individuals are clear on their council expectations. 

Very briefly, here’s the intent of each subcommittee.

Community - Ideate IIP/ICCPs to bring to each respective Sub-Council, Vet IIP/ICCPs, Understand and represent community sentiment

Strategy- Steer broader strategic direction, including DeFi products, whitespace gaming opportunities (outside of existing products), Inter-Game economics, Monetization, Governance

Game - Steer all Intra-Game elements across the full suite of Illuvium game products, including Balancing, Content Ideas, Intra-Game economics, All Gameplay Decisions

Marketing - Steer Marketing Opportunities, Strategic Events, External Partnerships, Guild/Infrastructure Relationships

In addition to the four subcommittees, there is an additional group, the Treasury Board to maintain the treasury and financial responsibilities of the DAO. With the exception of the Treasury subcommittee, the community will have a majority voice at every level. At this time, the Treasury is maintained by those most informed on monetary issues and regulations, though the Treasury board will report to the top council.

The Illuvinati Council

Similar to today, at the highest level of Illuvium, the DAO will be represented by five individuals. This group will have the ultimate authority of the DAO. To further ensure these individuals represent the most qualified, informed individuals, this group will now be composed of selected leaders from each of the sub-committees and the Team Admin.

The Team Admin

One other observation during the DAO’s existence so far is how critical it is to have team representation at each council meeting. For the past several epoch’s, we have been lucky enough to have Kieran win a seat. With Kieran present at council meetings, discussions are much more fruitful.  Beyond merely bringing connection to the team, he also brings a critical perspective around the regulatory requirements or limitations as the GameFi and blockchain industries take form. A challenge to having Kieran as the representative on the council are the extremely high demands on his time and difficult schedule.

Governance V2 implements a new position on the council - the Team Admin. Rather than requiring a specific team member to run for election and win a spot against all community candidates, one position on the council will be reserved for the team. This will enable the team to choose who best to represent them, both considering who has the right information to be effective, while also ensuring their capacity enables sufficient time dedicated to the role. The Team Admin, along with the Governance Community Manager (GCM) will serve as conduits to the team, bringing in other core contributors to council discussions as necessary again to ensure the council has all necessary information. This position may be Kieran in the future, but it doesn’t have to be, and whomever most appropriate to serve this critical role will be guaranteed a seat.

Ensuring Team Involvement

Team involvement isn’t just critical at the top level of council, but also on the sub-councils. With the exception of the Community Sub-council, positions will be dedicated to a core contributor on each of the Marketing, Game, and Strategy sub-councils. Similar to having a team member on the top council, this ensures the council has a connection to those actually performing the work. This structure smooths the communication between the different sides of the DAO, with the core contributor member bringing critical information from the team, while the elected community members can curate and refine ideas from the community to maximize the use of everyone’s time and ensure ideas are built to their fullest potential.

Another way to think about this - representatives from both the team and community aren’t required to immediately speak on their constituent’s behalf, but rather there is clarity for what information they need to gather and share with their council. Community members are required to represent the thoughts and opinions of the broader Illuvium community, while team members are required to gather necessary information and insight from the core contributors. Ultimately, the council and individual members are elected to do what they see as best for the DAO, but they are responsible for representing these aspects of the broader Illuvium.

Guaranteed Community Majority

A very important aspect of creating Governance v2 was maintaining progress towards further decentralization and valuing the community. As such, you’ll notice that with the exception of the Treasury board, the community maintains the majority voice. Each sub-council along with the top Illuvinati council have mechanisms in place to ensure this community leadership.

Even for the top council, where each sub-council selects their representation, there is a maximum of two positions that can be held by core contributors.

Expanded Community Involvement

Beyond ensuring the community has the majority control, we also sought to expand the number of community voices directly responsible in governance. With the current structure, there is a maximum of five individuals formally responsible for decision making, and with access to higher level debate forums. These positions could be filled by anyone, and I already shared why it’s important that core contributors also represent the DAO to ensure effective, actionable conversations and decisions.

With the expansion and sub-council structure of Governance v2, the number of community elected positions of authority increases significantly, raising the number of voices and sources of ideas from the previous structure. Not only are there more positions, at the highest level of Illuvium governance, there is a minimum of 3 individuals who will represent the community on the top council. This should bring greater diversity of thought, along with more focused and fruitful discussions at multiple levels.


That does bring us to everyone’s favorite topic in the IIP channel. In Governance v2, we evaluated the role of compensation and found it critical for a variety of reasons. First, governance and community representation are essential, and compensating individuals for their time in service to the DAO shows the commitment to these roles. These are not ceremonial positions, but rather service positions requiring commitment and engagement.

Compensation helps to incentivize this engagement, placing a responsibility with clear expectations on those elected to the council. 

Further, by compensating these positions, it ensures individuals who otherwise may not have been able to participate can do so, either by showing the dedication of the DAO to reward them for their time, or enabling individuals to commit the time necessary though appropriate compensation. Ultimately, we want the council to bring specific expertise to serve the DAO, and compensation allows us to attract new and hopefully higher level, greater specialized individuals.

Given the stage of the project, it was also important to keep expenses within reason. As such, the total compensation of the new system is nearly identical to the council expense in Governance v1. Previously it had been aligned that council members receive $5k per month. At five council members, this means the total expense was $25k monthly. Under the new system, elected subcouncil members will receive $1.5k per month, and chosen top Illuvinati council members will receive an additional $1.5k per month. Given the new structure members, the new council expense of Governance V2 is $24k or $30k per month. This is potentially a slight increase, but reasonable given the greater clarity and breadth of all council roles.

At the direction of the Illuvium CFO (Danny), we made another change to how the council is compensated at the end of the current epoch. To best preserve Illuvium’s stablecoin capital runway, it was advised that council compensation be changed back to $ILV rather than stable coin. This provides a benefit in several ways. First, it means that the DAO does not need to convert Treasury holdings into stablecoin to cover this expense. Further, it incentivizes council members to make decisions that positively impact the $ILV price, further aligning incentives and council behavior. Per Danny, the majority of council compensation has been held or restaked, which is further facilitated by paying directly in $ILV.

Clarity & Standardization of Process

Written well before we took on creating Governance v2, we prepared extensive documentation clarifying the IIP process to better enable everyone to engage in preparing and evaluating new proposals. We ultimately held off in sharing this until now to ensure it aligned with the new governance model, but in the end, this should aid in good ideas coming from everywhere, with a clear process in place regarding how to make ideas a reality within the Illuvium DAO.

A critical improvement in Governance v2 was putting the Community sub-council at the center of the process. This body of five elected community members is the first stage of formally evaluating and expanding ideas from the community. Once ideas are approved at this stage, they are routed to the next appropriate sub-council to further refine the idea and ensure actionability of the proposal.

Please check out the new clarified process here!

Providing the Team Focus + Awareness

By making the community council central to the IIP process, this should further increase value from ideas while enabling the team to focus on implementation. While having core contributors active in Discord has been incredible for accessibility and clarity, as the DAO continues to grow, we’re likely to receive an increasing number of ideas from the community. Through the sub-council system, the elected community members have a key role of monitoring these discussions, building, and bringing those ideas back to their council discussions, or helping to shepherd community ideas through the process.

The sub-council system removes a burden from the team, allowing them to focus on execution of the current products, seeking team input when appropriate, while curating ideas to ensure the community feels heard while not distracting from delivering a successful product. Our hope is that the new system is the best of both worlds, facilitating amazing conversations, building ideas from everywhere while not getting in the way of execution.

We look forward to feedback in this area to ensure this benefit is realized.

What am I proud of?

It has been my honor to serve this community this past epoch, and there are a number of things particularly tied to Governance v2 that I am proud of. In particular, I’m proud to have helped build the new IIP process to bring clarity so good ideas can be recognized and realized from anyone in the community. I’m proud to have developed a Code of Ethics for council members to ensure we’re all focused on the expectations for this critical role to the DAO.

I’ve been very lucky to develop closer relationships with various team members, content creators, and smart community members. I’m honored to be selected to continue serving the DAO this epoch, and I hope these relationships persist, enabling me to continue helping build Illuvium as a leading GameFi project and decentralized governance model.

Where are my concerns?

As I started this, I know Governance v2 isn’t perfect. We made progress, but there are still areas where I see future improvements. My personal big three “R” factors impacting Illuvium’s success remain (1) runway, (2) retention, and (3) regulation. I believe we’ve moved the needle regarding runway, though the macroeconomic market makes that a challenge for everyone in the space. Retention is all about attracting mainstream gamers and keeping them coming back, and regulation remains the elephant in the room for the entire blockchain space.

As such, I’m proud we did what we could to promote decentralization and community focus in Governance v2. However, financial transparency and reporting remain a concern of mine, and something I will continue to explore in the future as regulations are clarified globally. The structure feels good for now, but this is also a big area that I think can be refined and further improved moving forward.

A second area of improvement is specializing governance influence based on your engagement in the DAO. Most specifically, it is converting voting power for the Game subcouncil to be determined not by holding/staking $ILV, but rather holding Illuvium gaming NFTs combined with a multiplier for hours played. This ensures those most committed to the DAO’s gaming infrastructure have the greatest influence over its governance.

Balancing Decentralization with Bureaucracy

A frequent concern around the new structure is added layers and bureaucracy burdening decision making within the DAO. This is absolutely a risk and consequence of the structure, however with decentralization being of paramount importance, this is likely necessary. To quote the African proverb, “If you want to go fast, go alone. If you want to go far, go together.” Decentralization is about going far. Fastest decision making is always done by a single individual. This structure ensures input from a greater number of voices and perspectives, with layers intentionally included to refine and improve the process. The community and councils alike will need to maintain perspective on the impact of this structure, but for now, we believe this achieves the objective of balancing expert perspective with decentralization.

How does this get implemented?

While we haven’t been able to implement this past epoch, I do see all aspects of the Governance v2 being ready in less time than the current epoch (December 2022-June 2023). My personal preference is for the new council to continue the work this group started, listen to feedback from the community and team, and once ready to vote, approve this new structure.

I also encourage them not to wait until June 2023 to implement this system. A more significant effort will be needed by the Governance Community Manager to facilitate a larger election, ensuring there are sufficient qualified candidates to fill all available spots. However, due to all of the improvements offered by Governance v2, I would like to see the next council prepare an IIP that not only approves this new structure, but also ends their epoch early.

Having been selected by the community to serve again this epoch, this is a personal priority, and I hope we can realize these many benefits as soon as possible.

Thanks as always for reading, and please share your thoughts and feedback on Discord

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Crypto curious thinker, amateur economist, geriatric millennial gamer passionate about Illuvium. Happy to share my economic and financial assessment of this unique blockchain NFT Play-to-Earn project.


ILVFI focuses on the upcoming P2E game, Illuvium, the first proposed AAA-quality video game based on blockchain technology and NFT ownership. We'll focus on both the game play, as well as the in-game and ILV governance token economics.

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