Market Discussions

Dear MD Forumites,

Looking through the last couple of pages of MD threads, I noticed that there are no services offered that focus on the holding of collateral.
Most loans/bonds/IPO's that do offer collateral are handled by members of the MD community that have proven their merit, or are handled by Chribba in case of ridiculously huge offerings.
As these incur some steep costs imho, I believe that these people are not directly available for the more small loaners amongst us.
However, I could be wrong about this.

All of the above got me thinking of starting up my own collateral holding service.
But before I start up any such business, I would like to throw out some ideas about it, find flaws in my business plan, and with the possible help of the MD community come up with the answer to the question of starting it or not.

So, here it is:

Collateral Holding Services

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How?
By using a privately owned corporation, so that I can easily differentiate between privately held assets, and assets that are held as collateral.

Location?
Most likely in the Jita system, depending on cost and availability of offices.
If not possible in Jita, I will look into setting up offices in an adjacent system.

Pricing?
As this will take up quite some of my private time, I will charge a small fee.
I was initially thinking of a fee of 1% of the total loan amount, to be paid when delivering collateral.
I have thought about using a flat rate, but I could not come up with an amount I would agree with should I be a loaner myself.

What happens when a loan defaults?
I will endeavour to return the amount of ISK due as soon as is possible, RL permitting, by dumping to buy orders.
Should investors/lenders so wish, I can put up sell orders, and will endeavour to return the amount of ISK due withing a timeframe of maximum 1 week.
Any leftover ISK will be divides as following: 75% to investor(s), 25% to myself.

How is Collateral calculated?
Either at agreed upon by offerer and investor(s), or by using the following calculations
BPO => 90% of NPC sell price, regardless of ME/PE
BPC => Nope, don't even think about it
Ships => 80% of highest buy order at the moment of the loan
Modules => 80% of highest buy order at the moment of the loan
Faction items and ships => 80% of highest buy order value OR 80% of average contract price (scams excluded)
Minerals => 50% of highest buy order value, but I have my doubts about this value

How will I stay transparent?
I am more than willing to release Corp API to anyone that is using this service, and will use the EvE Online forums as a place of public record keeping, where confirmations will be made if collateral is received or not.

How about the book keeping?
All collateral will be held with a privately owned corporation, and I'll keep records by using Google Docs (most likely).


That was all of the stuff I have recently thought out about this.
If any of you have any remarks or questions, shoot!

And that is exactly the reason why I posted this, to get an idea about wether or not to start it up.
If it turns out that nobody is looking for another service like this, then I won't go ahead with it.

On the other hand, should people deem this service to be necessary, then why should I not go ahead?
The economic side of EVE is something I have learned to appreciate at first, and now I really love it.
To me, the service I propose is just another facet of the economic side of EVE, but a facet I will not force unto other player for my own enjoyment.

There are. Actually Grendell and me are expecially focused on MD related collateral holding.




Costs are not that huge, in fact they have to be compatible with the underlying operation / investment still being competitive / accessible even with that overhead.

Actually, collateral holding to those who are trusted enough, is just a facet of a broader service and it's often included in a package. Some examples from the past (I might miss some details off the other Collateral Holders):

- Grendell and I have held collateral for free when we were among the investors.
- Chribba and I have researched the BPOs we used as collateral. I tend to research them with my own alts, Chribba locks them down in an alt corp so that the investee may research or produce the BPs. Please Chribba correct me if I am wrong.
- I include at least part of a collateral holding fee in the cost for an audit so who wants full service gets a discount.

Some times collateral holding costs rise, and even then they are commensurate with the task at hand.

IE when I get asked to hold collateral for a lotto, I have to factor in the fact that I might be the one handing out hundreds of tickets reimbursements.

When I get asked to hold collateral for a Wormhole, I have to factor in the risk of being ambushed / ship exploded and even eventually podded (it's often 1-2 jumps in null sec after all).

Going more on the 3rd party side of things, swapping caps and supercaps has costs (you could have to setup a POS in low sec = time, costs, logistics and potential losses).

I looked at the topics for specific mentions of collateral holding services, hence I did not find you and Grendell directly.
Off course I know that both of you offer collateral holding services, which I should have clearly stated in my OP.
For that, I apologise, no slight was meant to either yourself of Grendell.

As for costs, the only true ISK cost would be setting up a corporation, and paying the monthly rental fees.
Hence why I went for a cost of 1% of initial value.
I am not looking to make a huge profit out of this, I am merely looking to enjoy another facet of EvE gameplay, any additional earnings are just like icing on the cake.

On the subject of collateral for Cap/Supercap trades:
I am not planning to go into that, not now, not tomorrow, not in the near future.
These things eat so much ISK that you need someone that has a track record like Chribba.

You have a classy name and a very beautiful avatar.

Go for it (and heed VV's advice).

Nope. not feasible. relies purely on trust.

the KEY to being financially safe in eve, is to never put someone else in control of a situation where they can screw you if they want to ( or even don't want to )

IPOs/Stock/Bonds/CDs/Options/ETFs? Don't even think about it.

This makes no sense. Surely people would just abuse that as a way of having a nice BPO collection with zero opportunity cost?

@OP

The Costs involved are steep, but you have to look at the services being offered by these members. (Towers with labs)

Your Collateral service offers no 'value add' to BPO's, I wouldn't pay you to hold collateral, Simply for this reason.



So what Your saying here is, if the loan ends up defaulting (heaven forbid), or not to terms. You get 25% of the collateral & the original fee & return only 75% of the investees isk.

Essentially, you are only 'securing' 75% of a loan to the investors, why? surely your fee should be enough to make a few forum posts & accept a contract. sell item directly to buy orders incase of default??? I Strongly suggest you re-think this number.

what you offer to give back to investors is your 'product' & at only 75% is not real good. did i read that right?????? or did you mean 75% of the profits over the loan amount? like selling a covetor BPO for 3b and splitting the 1b 75/25???

on the other hand, You also offer to hold collateral for more volatile markets, like ships/modules etc, not alot of ppl would offer that, so good luck to you.

@Vera Algaert
I never thought about the psychological effect an avatar can have on people.
I will have to read all the information you posted, as that is another leaning experience waiting to happen.

@Candy Oshea
You are right that I do not offer any added value on BPO's, as there is no way for me to perform any form of research on the BPO's, or make copies, Emma is just not skilled for those things, and I do not own the infrastructure to perform said activities in a privately owned POS.

On the matter of the 75/25 division:
This would only apply to the amount of ISK that has been "earned" over the original amount.
To use your example: If the collateral offered for a loan/bond/IPO is a Covetor BPO with a worth of 2B, and it sells for 3B, I would return the original 2B to the investors, and I would distribute the remaining 1B with the 75/25 division among the investors as well.
Please note that in my example, the Covetor BPO covers a full 100% of the offer.

In short, the collateral would still be covered for the full 100%, where any leftovers will be divided amongst the investors and myself.
Tarrif is subject to change off course, all still hypothetical.

@Vaerah Vahrokha
I realise full well that the person holding Collateral will be held accountable if **** hits the fan, and simply ducking will not be a viable exit strategy.
It is exactly for that reason that I will have to make sure that certain safeguards are in place beforehand, should I ever start any such operation.


I would also like to thank all of you for providing this invaluable feedback, as I realise I have a long way to go before starting this venture.
Now, it's back to the drawing board for me.
If, however, I decide to go through, I will make sure that I can safely handle any and all business offered to me.

Handling of payments and collateral:
Start of the investment
Once collateral is received, I will inform investors of this, and ask them to send ISK to myself.
Once all payments are done, the total amount is transferred to the person offering the investments, once collateral has been received.
This could also work the other way round, first the collateral, then the investors send ISK.

End of the investment
Once maturity is reached, payouts will be made by either myself or the person offering the loan/bond/IPO, depending on what has been agreed upon.
Should investors request that I perform the payouts, I will respect their choice.
In the event that repayments are not confirmed within a reasonable timeframe, API checks will confirm repayment to the investors, after which collateral will be released.

Perfoming the API checks:
Repayments handled by myself: I will request an independent API check be performed, where any cost incurred will be for myself. Should this take too long, I will provide investors with a limited API key with which they can verify themselves.
Repayments handled by the person offering the investment: I will perform the API check myself, after which ALL investors will be notified of the results.
In the event that the person offering the investment will not release a limited API key, thus not allowing an API check, the investment will be regarded as "having defaulted".

Should the person offering the investment be stupid enough to send ISK to the wrong person, the amount that is due will be deducted from the total amount of collateral due.
At that point, it is up to the person offering the investment to get his/her money back.

Back to the drawing board:
As has been made clear to me, I have need of safeguards.
Chief amongst them, is the ability to quickly repay investors.
For this, I will be in need of either assets that can be quickly liquidated (should collateral prove hard to sell), or have liquid ISK on hand to the value of at least 1.5 to 2 billion.
I am hard at work on the liquid ISK situation, but I have yet to obtain assets that can be quickly liquidated.
In short, I need to raise my NAV by quite a margin before I think myself capable of confidently handling this all.

I have deliberately chosen a small fee, as I am not looking to get spacerich with this, I am simply looking for a means to better enjoy how I play EvE Online.