Let’s talk about RCE

There have been several posts addressing the lack of RCE within EU. What I do miss is a sustained analysis and concepts about it.

What we are paying for

The most of us are playing EU for fun and the most are disposed to pay for it. MA stated that their income comes mainly from decay. Please note that this is strictly ingame related (decay decreases the amount of money in circulation within the universe) and has nothing to do with MA’s balance sheet. The rest of the bill we pay is markup to other users and both costs are related to each other as we will see.

Here an example:
Assuming a payout percentage of 95% (i.e. looted Ped/spend PED) 1 spend PED will have 95 PEC returned in items. As the player tries to recover the loss he is selling for 105.3% markup. The crafter that bought his items for 1 PED (TT 95 PEC) makes another item from it having a TT of 90.25 PEC (assuming again 95% payout). To recover his loss he has to sell for 110.8% markup.

We have seen, crafting leads intrinsically to increased markup and we’re not talking about resellers here. Let’s continue.

The miner/hunter that provides resources buys the crafted item for 1 PED. He has now to recover the markup on the item as well. This leads to a markup of 120.8% and he will use it till the item is decayed. The crafter has to react and must sell for 138%. In the next step the miner/hunter will raise markup to 136.3% and the crafter to 154.3% and so forth and so forth if everyone tries to recover loss. Please note that this is an extreme example and the single steps are achieved after quite some time.

Inflation

We have seen that trying to recover from loss due to decay leads to inflation when PED cycling. How can this inflation be controlled?

1. New players: they are using basic equipment without markup and have to recover only 5%
2. UL Items: When crafted items are UL then the miner/hunter will raise his markup only once. However, if crafters can’t sell then also the miner/hunter can’t and therefore we need again new players.
3. Eliminate crafters: if all items do come from loot then there is no additionally decay from crafting but also nothing that a miner/hunter can sell to.

This list might be continued but I’m merely sure, that the only way to reduce inflation is due to new players that do try to enhance. Therefore, I might conclude that it is crucial for EU to have a constant influx of new users.

This is only one aspect of RCE maybe you know others? Let’s talk about it.

result from a discussion with Witte
FUN
When we look at the actual markups I have the following impression about fun and MU:

Hunting: highest fun factor, lowest MU
Mining: moderate fun, normal MU
Crafting: no fun, best MU (except when crafting for skilling)

How does the use of TT materials (ammunition, bombs/probes) affect your scenarios?

For example, it surely reduces the effective markup paid by the hunter who paid 110.8% for the first crafted item...right? Since the decay on the gun that cost 110.8% is only part of the cost to fire the gun (the rest being ammunition with 100% markup). So that this hunter does not need to sell loot for 120.8% to break even?

In other words, maybe ammunition and bombs/probes serve to control inflation and therefore reduce the reliance on fresh players?

Am I understanding your logic?

For crafting the obvious solution is to make L items that are cheaper than their equivalent UL but decay so that it would be broken at the same time as the UL version.

So if an UL item is 10ped and it decays 1pec each use, the L version would cost 5ped and decay 0.5pec each use.

This would give crafters a market and allow markup on each item and the user wouldn't loose anything infact they would gain in the long run.

As this would increase the L usage they could buy more materials from the hunters and miners knowing that they could sell the items or trade the finished item for more materials. All people would get a % mu as long as the L items never ended up costing more than the UL one.

For me that would be the essence of an RCE not the global - hof - ath addiction machine we have.

I never understood why MA made it so hugely the other way with disposable L items (well I do but still can't believe they were so short sighted)

Noodles said:

How does the use of TT materials (ammunition, bombs/probes) affect your scenarios?

For example, it surely reduces the effective markup paid by the hunter who paid 110.8% for the first crafted item...right? Since the decay on the gun that cost 110.8% is only part of the cost to fire the gun (the rest being ammunition with 100% markup). So that this hunter does not need to sell loot for 120.8% to break even?

In other words, maybe ammunition and bombs/probes serve to control inflation and therefore reduce the reliance on fresh players?

Am I understanding your logic?

Click to expand...

Yes it does, as does bombs/etc being used in making mining amps.

This is partly why L melee isn't so eco, as there is no TT based component to reduce the weight of the markup.

You forget skilling and hofchasing. There are players willing to pay the 5% (or whatever) fee in the hopes of raising their skills to acquire the ability to craft (hunt/mine) or get a huge HOF. They dump the results of said crafting to the TT (basic filters) or for a low markup (OA-101). Others may be willing to buy paint at very high levels even though they know they will not get the ped back to skill coloring and create fashion items. Rare, well designed items may well sell for a premium, but the player knows they are going to take a loss, and in that case exactly what the loss will be, in order to get there.

This is actually a lot more common in other games where the majority of skilling items for crafting are made at a loss and vendored. Other items may be good for a while until enough people get the ability to craft the item that the market becomes saturated. This is the biggest danger with the UL system.

Another control on inflation is the players themselves being unwilling to pay 125% for a low level melee weapon, for example. Your example doesn't happen in practice because supply and demand do actually come in to play. Person A may need to sell at 125% to make a profit, but person B is happy to sell at 115% either because he is not losing so much, or because he doesn't care, or because he doesn't even know he's taking a loss. This is, of course, mainly tied to the L system.

So, First you have the L system where, as you said, if there were no other inputs the markup would increase forever. Second, you have the UL market where for crafted goods lets say, the supply of any crafted UL items is for all practical purposes infinite, and therefore the markup should eventually drop to Zero.

At any given time there is a balance of UL and L items, it used to be completely UL, it may be more L now (I don't know for sure), but it is constantly changing. L armor is possibly the best example. More people using L armor will drop down the price of UL armor, but, that will naturally raise the price of L armor. Therefore, you have a dynamic economy there.

An influx of new players is still good to prevent stagnation, of course. Remember though, that a group of new players can collect a large amount of low level resources that higher level people are willing to pay for. At the same time the low level people are consuming the goods the high level crafters may make keeping the ped flowing.

Add to that the real life market influences of people being able to create and destroy ped as they choose and there is yet another factor involving inflation making it difficult to control. you don't need new players if the old players are willing to keep adding money into the system. However, I don't see anywhere near the inflation in this game as I've seen in many others where the value of the base currency is effectively nothing.

The funny thing is, in response to spike, I think the UL system was the extremely short sighted one. it is the L system that is necessary to keep the economy functioning well.

Sorry for the stream of conciousness style of the post, I hadn't really organized my thoughts and it ended up going a little long

Noodles said:

How does the use of TT materials (ammunition, bombs/probes) affect your scenarios?

...

In other words, maybe ammunition and bombs/probes serve to control inflation and therefore reduce the reliance on fresh players?

Am I understanding your logic?

Click to expand...

the example I've outlined is different and aimed to show the extremes.

It basically shows that that the cost of decay is passed in cycle. For instance, the first 5 PEC loss leads to 105% markup. As with crafting TT is further reduced to say 90 PEC so total loss is now 10 PEC. The hunter then adds another 5 PEC to it and so on. Due to consuming PEDs (ammo for instance) one produces decay that is passed to the next player cyclewise.

The extreme here is that I've outlined only the steps from one markup increase to the next. In practice the first 105% markup will be valid till the hunter upgrades. The next 120% comes in when the hunter has consumed his L weapon. As there are many hunters at different lvl the increase is a slow progression over time but in the end we will reach the stated values.

SpikeBlack said:

For crafting the obvious solution is to make L items that are cheaper than their equivalent UL but decay so that it would be broken at the same time as the UL version.

...
I never understood why MA made it so hugely the other way with disposable L items (well I do but still can't believe they were so short sighted)

Click to expand...

L items that are cheaper might have some advantages. As they reduce money put into the universe they will also limit inflation with this.

I don't think that MA has made any errors as RCE's are not well understood yet and still in development.

Karmic said:

You forget skilling and hofchasing. ..

Another control on inflation is the players themselves being unwilling to pay 125% for a low level melee weapon, for example. ..

An influx of new players is still good to prevent stagnation, of course. ..

..
Sorry for the stream of conciousness style of the post, I hadn't really organized my thoughts and it ended up going a little long

Click to expand...

Yes, offer and demand are regulating the market but this only works with new players. The contrary is true when you close the circle.

np about the "stream of consciousness". This thread looks for any kind of suggestions.

Assume an item takes long time to craft (say 1 month). Not with the crafting system that we have atm, but with a system in which the crafter has to craft components that must be combined. The crafter is then not only after decay but would like to get compensated for his time as well.

This would initially rise prices but as the cost for time is quite higher than decay, the inflation effect of decay is negligible.

This is another extreme example but shows that "added value" might help to improve an RCE.

Ppl will sell thier own moms for cheaper than they are worth. Thats where you get the continues loss.

Miners have been cutting their own throats for years. If you were to sell lyst for what it actually coasted you to find it, for even say +0.05, lyst would cost you about 115%+ This is off set by what Karmic has basically said. You have ppl in this game that, no matter what, they are willing to take a loss for the peds to keep playing.

If player X has 100k of lyst hof, no matter what the price should be, they under cut for the quick fix. This causes the resource to drop in value, so the miners that payed 500ped to find 100ped back of shit, get screwed cause there's no way in hell they can get a decent price for it with out a miners union

What? like the pilots didnt have one?

But this applies to all professions.

Market becomes flooded but one sided. Only the lottery whinerD) is making a profit(if that covers their 90%losses). Loots good for the 10%(and it does change) but shit sucks else where, bad.

As far as RCE, well, they provide a service, with out happy players the RCE crumbles. What they are praying off of now is the hopelessly addicted. Sad truth is, they are going to continue.

falkao, excellent analysis of the issue. While those things might seem obvious to you i see an lot of people playing like this chain of markup does not exists (and then complain here on EF).

Well, there are an lot of personal ways around this issue but i will not go into that.

More important is, and i mentioned that several times on EF already, that the economy needs (more) money influx that does not directly go into economy of hunting, mining and crafting but still generates markup for those professions.

As the economy is at the moment it is basically an circle. Miners and Hunters supply Crafters, Crafters supply Miners and Hunters. Thats oversimplified of course but the fact remains that we do have very little "end customer" turnover.

An end consumer in EU is someone who buys goods that he does not use to improve his performance in the "loot generating professions".

Clothes, furniture, face masks, cosmetic surgery, collectables like coins, decoration... Every piece of luxury goods that is sold provides markup to the producers and suppliers of the resources and does not affect the chain of markup like you describe it.

What i am talking about is virtual luxury, we have that already, but not at an scale that is needed to relief the markup pressure on the main professions. It is obvious that MA does try to adress this but things did not work out really well (yet!) for several reasons.

What upsets me an little are the silly and ignorant remarks here on EF and ingame from hunters and miners when MA implemented the face masks in example. "Barbie world, unnecessary stuff, other things are more important".

While i myself couldn't care less about stuff like face masks, clothes and other virtual luxury goods i at least try to recognize what MA is trying to do here and how it helps my economy as hunter in example on the long run.

Remember the big hype in the media when every company thougth they need an "branch" in SL? Well, did not work out so well on the long run in SL for several reasons. IMO EU would be the better plattform for that. Now imagine the hunters and miners supplies the crafters and the crafters produce the furnitures, terminals and stuff for those "end customers". That is an example how to bring markup into the game. Can be done in lot of other ways too and that might be partially the job of the new planet partners!

There are several other ways to bring money into the game that can be earned by players in the main professions. But the issue with end consumer products has imo the most potential. And the playerbase has to recognize that and should encourage and support MA and the planet partners to go that way.

Leona said:

..
More important is, and i mentioned that several times on EF already, that the economy needs (more) money influx that does not directly go into economy of hunting, mining and crafting but still generates markup for those professions.
...

Click to expand...

absolutely correct. We need more "added value" that brakes the decay cycle.
It could be with virtual luxury but there are other ways as well like
with consumables as food, regeneration when having an apartment, skill increase when getting a massage ....

MA did something for the big investors market (LA's, Malls, TI, CND) but not that much for consumers.

Hm...

You can write a PhD on this toppic... it's way too complex to talk about in a forum thread. Reaons being simple:

Firstly, economists can't even understand and control real economies... (for example inflation in the real world is a real problem, there are means to control it but only if it is moderate).

Secondly, a Computer game has an artificial economy. So in other words, the law of supply and demand does not really apply anymore since in a computer game supply can be set by the game designers.

So partly, when it comes to discussing inflation, there is a simply answer: Increase supply and you will stop inflation. Except, that you would completely destroy the rest of the economy and this is much more complex.

A Virtual world will never be like a real economy but always be based on "assumed" parameters which are set by the game design. In that way it is bullxxx to talk about real RCE. Real RCE is not possible in a computer game of the current design.

A to a short note on UL and crafting. I have never undrestood why MA have not made "repair" a task for crafters. This would benefit the economy much more, except that MA would earn less... It would however make crafting much more interesting.

Well, in my opition the system has one BIG problem and that is that in the crafting we don't get all the TT return in the crafted item, but a big part in return in residues with none or very low markup. Lets say the avarage long-run TT return on a maxed BP is around 80 %. About 50 % is the crafted item, 30 % is in form of residues mainly from globals/HOF.

Because of this the markup on the crafted becomes very high on items crafted by high markup componets.

Example 1:
(assuiming residues have no markup to make it easier)

Item 1 cost 1 ped TT to craft, with no markup on the input. On avarage he gets back 0,50 TT of item 1, and 0,30 tt residues. To break even the markup on item 1 must be (0,5+0,2)/0,50=140%.

Item 2 , cost 1 ped and is crafted by item 1. The cost included markup is 1,40ped. To break even the markup on item 2 must be (0,5+0,6)/0,5=220%

Item 3, cost also 1 ped and is crafted by item 2. The cost included markup is 2,2 ped. To break even the markup on item 3 must be (0,5+1,4)/0,5=380 %.

Example 2:
If we got all the TT return in the crafted item and no residues it would look like this:

Item 1 cost 1 ped TT to craft, with no markup on the input. On avarage he gets back 0,80 TT of item 1. To break even the markup on item 1 must be 1,0/0,8=125 %

Item 2 , cost 1 ped and is crafted by item 1. The cost included markup is 1,25ped. To break even the markup on item 2 must be 1,25/0,8=156%

Item 3, cost also 1 ped and is crafted by item 2. The cost included markup is 1,56 ped. To break even the markup on item 3 must be 1,56/0,8=195 %

You see in these two examples how fast the markup "accalerate" in the crafting "chain" with the system as it works right now. With a "no residues" system (example 2) it would not accalerate as quikly.

AJack10600 said:

A to a short note on UL and crafting. I have never undrestood why MA have not made "repair" a task for crafters. This would benefit the economy much more, except that MA would earn less... It would however make crafting much more interesting.

Click to expand...

You answered your own question there, mate...

RCE - Free Market economy with Real Cash.

With that type of strategy anything is possible and any answer provided by anyone is the correct answer.

lets talk about R CE
lets talk about you and me
lets talk about all the good things
and the bad things that may be

http://www.youtube.com/watch?v=qzfo4txaQJA

falkao said:

absolutely correct. We need more "added value" that brakes the decay cycle.
It could be with virtual luxury but there are other ways as well like
with consumables as food, regeneration when having an apartment, skill increase when getting a massage ....

MA did something for the big investors market (LA's, Malls, TI, CND) but not that much for consumers.

Click to expand...

- Personal Luxury items in general - Interior & Exterior
(Inc vehicles & any associated operating components)

- Construction of personal estates.

- Extended consumables with useability & functionality attached
(Inc as mentioned food/drink boosters)

- Business orientated systems & associated components
(Building of fuel stations or other business content systems).

- Virtual asset procurement systems powered by participation loot.
(Much like the corporation card concept offered previously)

- etc etc etc ... bleh gets tiring spewing out concepts ... etc etc etc

Consumption outside of the main core spheres of activity in extended spheres of activity and/or for personal luxury is the key.

Lastest wrap up reply > https://www.planetcalypsoforum.com/.../166181-getting-ridiculous-2.html#post2098977

^^ Based on RCE V.Life and participation affordability for the mass market.
(Inc common everyday gamer afforability)

billairboy said:

Well, in my opition the system has one BIG problem and that is that in the crafting we don't get all the TT return in the crafted item, but a big part in return in residues with none or very low markup.

Click to expand...

sure you'll get higher markups when residue is involved but amount of recovered PED's is the same, it's only the base that changes.

billairboy said:

Example 1:
..
Item 2 , cost 1 ped and is crafted by item 1. The cost included markup is 1,40ped. To break even the markup on item 2 must be (0,5+0,6)/0,5=220%

Click to expand...

I was not able to understand how you've calculated this.
To craft item 2 the crafter needs item 1 with a TT of .5 plus .2 (loss from before). What else is involved?

Lavawalker said:

..Consumption outside of the main core spheres of activity in extended spheres of activity and/or for personal luxury is the key.
..

Click to expand...

poetic phrase?

What I've tried to show in the starter example is, if you have a closed world where money is drained out by decay and the only possibility to recover from it is within the same activity, you'll get inflation and the only possibility to limit it is either having constantly new players or stop playing.

Therefore the closed circle must be broken for example with virtual goods that have a use. We already have this with clothes.

One is willing to bind PED's on a good looking coat that costs 2k. To make it a quite lower TT amount was needed nad hence there is space for markup. This obtained markup is a real one. It will remain bind on the good and the ava buying the coat will not try to recover this "additional value" with his activities as he sees it as a good or investment or whatsoever.

AJack10600 said:

...

Secondly, a Computer game has an artificial economy. So in other words, the law of supply and demand does not really apply anymore since in a computer game supply can be set by the game designers.
....

Click to expand...

Check markup on HL14 (looted) and LP485 Apis (crafted). Both weapons can be considered as equal but markup is different.


What I'm looking for in this threads are suggestions as there have been claims that EU's RCE is weak. What do we need to make it better working? Furthermore, I'm not talking about loot here.

falkao said:

poetic phrase?

What I've tried to show in the starter example is, if you have a closed world where money is drained out by decay and the only possibility to recover from it is within the same activity, you'll get inflation and the only possibility to limit it is either having constantly new players or stop playing.

Therefore the closed circle must be broken for example with virtual goods that have a use. We already have this with clothes.

One is willing to bind PED's on a good looking coat that costs 2k. To make it a quite lower TT amount was needed nad hence there is space for markup. This obtained markup is a real one. It will remain bind on the good and the ava buying the coat will not try to recover this "additional value" with his activities as he sees it as a good or investment or whatsoever.

Click to expand...

Yes, clothes is one example of a number which have been implemented to date.

Yet these outlets are not regarded as a consistent repeat mechanism to provide enough of an avenue to alleviate pressure for those working in the areas for gathering the required materials to produce/enhance the products in question (In your example clothing)

There needs to be much more in the way of outlets that provide continued consumption for other spheres of activity within the economy.

Otherwise the above that you have said becomes very very true:

either having constantly new players or stop playing.

Click to expand...

A limited economy where there is only limited opportunities for consumption before saturation occurs which then quickly falls into a pattern of axing market value;

Thus devaluing the value/viability and stability of economy and further involvement within. (& Ofc further negatively impacting the overall activity and injection of equity by those participating in the economy)

It is a very slippery slope to manage an economy to ensure its health in a non destructive manner where people don't get screwed over.

falkao said:

What I'm looking for in this threads are suggestions as there have been claims that EU's RCE is weak. What do we need to make it better working? Furthermore, I'm not talking about loot here.

Click to expand...

You can not disconnect them. They are a fundamental part of the whole system. Loot is responsible for the price of the crafted items directly. How can you not take loot into consideration?

This is the core problem in any economic theory, we simplify things, we take out components and make assumptions. The outcome of our models just don't tie with RL anymore.

falkao said:

I was not able to understand how you've calculated this.
To craft item 2 the crafter needs item 1 with a TT of .5 plus .2 (loss from before). What else is involved?

Click to expand...

I meant that to craft item 2 you need 1 ped of TT of Item 1 (both item is 1 ped tt). So a run of 100 "clicks" will cost you 100 ped * markup of item 1, 140% = 140 ped. You get back on avarage 50 ped of item 2 and 30 ped residues. To break even you need a markup on item 2 = (140-50-30)=60 ped. The price on the 50 ped of item 2 will be 50+60=110, the markup 110/50=220%

Golf = Luxary Activity

Golf will provide another opportunity for crafted luxury items. And as for the golf balls, having looked at the course, players will be loosing quite a few of them.

Crafters can make the new ones, while newbs can scavenge for the lost ones.

Mostly just subscribing though. It's been a while since we've had a good Falkao thread.



Miles

billairboy said:

I meant that to craft item 2 you need 1 ped of TT of Item 1 (both item is 1 ped tt)...

Click to expand...

great, now I've got it.

As already mentioned, ped's to recover is the same but markup will be higher when residue is involved due to the lower base, i.e. .5 instead of .8. Hence markup% goes up and might be psychologically got wrong.

AJack10600 said:

You can not disconnect them. They are a fundamental part of the whole system. Loot is responsible for the price of the crafted items directly. How can you not take loot into consideration?
....

Click to expand...

Maybe you've got me wrong. I don't want to discuss loot and its distribution in this thread but loot itself is the driving factors as it turns PED on card into TT on items.

Miles said:

...

Crafters can make the new ones, while newbs can scavenge for the lost ones.

Click to expand...

hehe, were are the caddies?

Leona said:

..As the economy is at the moment it is basically an circle. Miners and Hunters supply Crafters, Crafters supply Miners and Hunters. Thats oversimplified of course but the fact remains that we do have very little "end customer" turnover.

An end consumer in EU is someone who buys goods that he does not use to improve his performance in the "loot generating professions".

..

Click to expand...

that's the point but we're only participants and its up to the developer to decide what and how to implement something. I'm sure MA had already long lasting discussions about it and its always difficult to predict if something could work or not.

To break this supply chain seems necessary if there should be an RCE.

The problem with implementing opportunities is they simply are greedy.

Lets take the banks for example. Why in the f#ck is it licensed? Why couldnt it had been for anyone who wanted to pay a small % for the app? Because its over priced bs, thats why. Trying to sell a monopoly instead of letting ppl do what they want.

All the other potential ways to make profit Im sure they think about a lot...till they can get the damn decimal point repeating 0.999999999999 etc profit with the hidden taxes.

If they had a tax 'free' zone / nrf free zone... something. Make the adds cheaper. Let ppl trade rl shit like ebay give the damn game some options besides you lose.

As the game should work they should be taking 1% profit from all actions + decay and leave the rest alone. Maybe im missing something but isnt everything payed for by depositors? If I got 99% returns back they still profited. No reason for the "dynamics" that are going on now except reverse exploitation. Any thing I sell would be to another player and im sure the deposits have payed for the seed money at this point. What the deposits dont cover is greed.

Normally I would take, "We are trying to raise money to make the game better.", as an excuses but its making the game worse.

Harvest said:

..
Lets take the banks for example. Why in the f#ck is it licensed? ..
.

Click to expand...

SL had them and MA wanted one as well.

Are we already at the end of our talk about RCE?

We have addressed inflation, business opportunities that should break the decay chain and that's it?

When I started PE I had no idea about a virtual universe, especially not one with an RCE. My expectation was mainly the following; if you undertake activities like hunting, mining or crafting then you have to pay for it but you get compensated with value. Investing some more time, RCE will offer the opportunity to let this value grow. Now it seems that I have to exchange the word "will" with "might".