Essence is an in-game currency used to purchase skins and other in-game items - but it is not an ERC20 token.
Users do not need to have their wallet connected to the Dapp to earn Essence. In fact, they won't need to have a wallet at all.
Users playing NWB as a free-to-play game will earn Essence by completing in-game missions and achievements. Likewise, no NFTs or Paladins will be required to earn Essence.
As a non-tokenized asset, the area of operation for Essence will be restricted to the game. Essence will not offer interoperability with the Dapp, nor be tradeable in secondary markets. Its behaviour is essentially that of an in-game Web2 currency.
A diagram of Essence lifecycle can be seen below: