I think that sometimes when people think about the term "loot pool" they envision a swimming pool full of money free for the taking.
A "loot pool" is nothing more than collection of funds designated for a specific purpose. There has to be a source for that money. I think that we can all agree that the source of the funds for the loot system somehow comes from our deposits in to the game.
Ok now we agree on that so lets break this down step by step.
You deposit $1,000 USD (10,000 PED) into the game. Let’s take that a step farther and say that 1,000 people each deposit $1,000 USD into the game so that is 1 million dollars total. Now without anything else happening to that money and with it still sitting on everyone's PED cards ask yourself: "what would happen if MindArk spent that money themselves or gave it away in loot but then all of those people decided to withdraw their deposit?" The answer is Mindark would be screwed.
This means that MindArk has to classify Player Held Funds as a liability aka a debt. If you have money your PED card, or even tied up in TT value, then that is money that you can immediately withdraw whenever you want. This means that as long as you have that PED value, then Mindark owes you that much money.
Now before you guys freak out and think that I am making things up or that this is just a theory please read MA's own financial report. Here is the link to the most recent one:
http://mindark.se/press/financial-reports/documents/Semi-Annual-report-Q2-2009.pdf
On page 3 of the PDF MindArk talks about what they call "Contingent Liabilities" and here is their description of it:
MindArk defines user holdings as the net of users’ funds deposited into and withdrawn from the Entropia Universe. This means that at any given moment the users in Entropia Universe own substantial sums of unused assets in the virtual currency, PED. These user holdings are treated as a financial undertaking that is shown as a contingent liability under memorandum items. On June 30, MindArk’s contingent liabilities totaled approximately 58 million SEK compared to approximately 39 million SEK on June 30 the preceding year.
Ok, now if you are still with me there are two points that we can agree on here. One is that the loot we get has to somehow come from the deposits into the game. The second is that MindArk clearly tracks and defines Player Held Funds as a liability or debt which means they can’t just go and spend it all.
So at this point we took 1000 USD from your bank account and put it into the game via a deposit. That is it. Now from here there has to be a way for two things to happen. The first thing is for you to spend that money (PED) and in some way generate revenue for MindArk that is free for them to keep without owing you anything. The second thing that has to happen is that you need to derive some kind of enjoyment, entertainment, satisfaction, or value out of what you spend which will cause you to deposit and spend more again and again.
So then we have the standard professions so let’s think about them for a moment.
You buy an Ore Finder OF-105 for TT+20 PED and then you repair it up to the full TT amount which is 82 PED. Now a couple of things happened and didn’t happen here.
First that +20 PED markup simply went to another player so it’s still Player Held Funds, or a Contingent Liability because they still "owe" that money to another player. The TT value of that finder also simply transfered from you to him.
Next is that you repaired your OF-105 which actually changed nothing. MindArk didn’t make any money when you did that because all that happened was PED transferred from your PED card into that OF-105. Because of its TT value, MA still has the same Contingent Liability.
Make sense? Good.
Now you go and buy the other necessary mining equipment and each has the same scenario when you purchase and repair. Next you visit the Trade Terminal and buy 100 PED bombs. Now all that happened here is that PED transferred from your PED Card into the TT value of those bombs which are now in your inventory. It’s the same Contingent Liability so far.
Next you go out and start mining. As you mine, each time you drop a bomb looking for ore there are two major things that happen:
The Decay from the finder disappears from the game economy and is now recorded as "Gross Profit" for MindArk. This is a direct reduction of Contingent Liabilities and is now disposable income for MindArk.
With each bomb that gets dropped the TT value leaves your inventory but even though this TT value leaves your inventory it doesn’t really change MindArk's overall Contingent Liability because someone else (or you) will loot that TT value back somehow.
In addition to both of those things, now the dynamics of the loot system come into play. Fast forward through your entire 100 PED mining run, let’s say you come back with 80 PED TT value in resources but those resources have a 200% markup so the total value of your finds are 160 PED. When you sell this ore, the market value has no bearing on any of this, it’s simply PED changing hands between players and it’s all just a contingent liability, the same with the TT value. Notice though that 20 PED disappeared here. You went out with 100 PED of bombs and came back with 80 PED TT value. Yes you turned a profit because of the market value when you sold it to another player but where did that other 20 PED go? Is it missing? Did it disappear? No, that other 20 PED is in the "Loot Pool" (yes I said Loot Pool) and it will be looted at some point by another player.
In the above scenario you generated decay for MindArk's profits and you left 20 PED behind in the loot system and the only reason you made a profit is because the ore you found was worth 200%. We all know that most resources are worth a lot less than that.
Now let’s revisit something that Marco said:
No, MindArk’s revenue stream is from decay. So it is not an urban legend. All other areas (auction fee, ammo, etc) are cycled back into the economy.
Ammo gets cycled back into the economy (loot system) and decay is MindArk's profit which means that it leaves the game economy.
Now think about hunting for example.
Go out with 300 PED ammo for your BLP weapon, after amp, fap, armor, and gun decay you ended up generating 200 PED decay. So now you have a total hunting cost of 500 PED (ammo + decay). Even though you are only putting 300 PED ammo into the loot system, just to break even you need to come out with 500 PED total which is 200 PED more then what you put into it in the first place. Ouch.
Everyone else who is mining and hunting are hoping to do the same thing. They are each feeding MindArk's profit through decay but they are only cycling their ammo/bombs/probes into the loot system, yet they all want to get at least their ammo + decay back.
The math doesn’t work there and this is why we have such shit loot always.
MindArk takes the decay but only the value of the ammo and bombs cycle through the loot system. Meanwhile everyone is hoping that they will get back at least their ammo plus decay costs. Well something has to give.
All of the various fees in game also cycle into the loot system. All of the estate maintenance fees, all of the event fees, auction fees, advertisement system fees, etc enter the loot system. Of all of these things, the auction fees are really the only thing that as a significant impact on the loot returns simply because of sheer auction sales volume. Even all of these things put together aren’t enough to balance the loot system out.
Crafters don’t generate decay but they do generate two things. First they create (L) items that will decay by the end user. Second they create a whole bunch of TT value losses while they craft. Crafters depend on the markup of the items to break even or make a profit. Meanwhile Condition crafters who like to gamble on full condition add a dramatic amount of TT value losses. Because crafters are losing PED on stackable items and not through decay, this is all money that cycles back into the loot system.
PKers are also a fantastic source of PED for the loot system. Each time they fire their gun at another player, they are simply dumping PED into the loot system because they aren’t getting a chance to loot a creature in return.
Missed shots are a strait dump of PED into the loot system. For those of you that want to donate to my next hof, please buy 1000 PED ammo, stand in Twin Peaks or something and shoot it all off into the air
In summary, there are all kinds of ways where PED enters the "Loot Pool" aka "Loot System" and there is nothing magical about it. If you accept the fact that there is a system which controls loot then you accept the fact that there is a Loot Pool... or whatever you want to call it.
Even though we have all of these other ways for PED to enter the system, it is all offset by the big HoFs and ATHs that we see all of the time. If MindArk would reduce the dramatically large loot amounts per X amount of players then we would have a more balanced loot system which in turn would lead to a more active and happy player base.
