ILV is the Illuvium token but is not required to play. It is associated as an ERC20 token on the Ethereum blockchain.
It has 2 main functions:
Governance : Collaboration with the community on proposals to improve the game, as well as choosing the initial governance model, the so called "ILLUVINATI COUNCIL" . The SIL has voting power in the protocol.
Liquidity mining : Here you can earn more ILV. Betting on ILV gives back the return, receiving a share of the vault's distribution.