Market Discussions

I approve of this idea. Not because it would help the game but because it would move me, part of EVE's 1%, even further above my peers. I mean, it would completely kill the game a bit later, but who cares about that?


Let's play this little scenario out:


Bonds become available by EVE bank, secured by CCP. There is no risk. The bond is for 1m each, with a payout of 1%.



I invest 100b into bonds immediately. This provides me with 100,000 bonds. Each one pays me 10,000 isk upon maturity. Each maturity date I earn 1% compounding, or 1b after the first one. Let's be generous using the OP's original numbers and say the maturity is for one month (a ridiculous ~12.5% per annum, risk-free). It is now possible for me to quit eve, sans logging in once a month, and continue to train my character and stay subscribed - indefinitely.


That is, of course, assuming PLEX prices stay the same. But why would they? There are EVE trillionaires. They're earning 10b/month. Do they plex 1 account? Do they plex 10 or less?


Let's say this EVE trillionaire, named Chribbbbbba, who does not own several titans, decides to invest half of his wealth to forever play this game. He no longer has to do any work to stay in the game, nor pay money from his bank account. Every month he pulls a magical 5b out of his ass. Within two years he can afford an extra titan at pre-bond prices. He's earning a spank ~7% per annum for doing nothing. Oh and did we mention this scales infinitely?

Let's be super generous and say that people don't know about, don't care about, or really are not using this new bond system. Uptake is only 25% of total wealth (mostly the super wealthy investing all their unused isk). Every year, the money supply from this system alone increases by 3.2%. Every year people who are not investing in this system are essentially losing 3% of their income to inflation. And the next year. And the next year. Pretty soon anyone who was unsubbed or does other isk-faucety things is experiencing a serious decline in their real wealth. Within 5 years anyone who rats for a living is seriously space-poor, experiencing something like a 20% decline in their real income. Anyone who has chosen to keep their money sitting in a wallet is now 20% poorer, able to afford 20% less PLEX (using PLEX as a 2nd currency).


Anyone choosing not to invest in these magic bonds is now dwarfed by the early adopters. The only way not to hemorrhage money is to exponentially increase effort expended (if you're a faucet earner) or to invest in magic bonds. Uptake is now 50% of total wealth. Inflation is a staggering 8% per year. At the 7 year mark all held isk and bounties is close to halved in real wealth. Bonds are now the predominant isk earner, and the only way to prevent being forced out of the game if you want to keep playing (this is assuming we don't get a massive price collapse on all non-PLEX commodities, owing to the hyperinflating time:isk ratio). Ratting is now completely dead as an activity. All other ISK faucets (sleeper tags etc) are meaningless in the face of bond investment. PVE is completely dead. Assuming the EVE playerbase is not already dead, it soon will be.

But wait! OP says! We'll just double isk bounties, PVE will be revived!

http://en.wikipedia.org/wiki/Hyperinflation


The money supply is now suffering under the strain of ~10% inflation per annum from bonds, ever compounding. To keep gameplay balance from utterly exploding all other faucets must be increased at the same rate. The EVE economy, which before was precariously inflating (acknowledged MULTIPLE DOZENS OF TIMES at fanfest and dev blogs by normal CCP and their economist) is now completely dead. There are two classes of people. The landed wealthy - Those who adopted bonds early, and the income earners - Everyone who did not and rely on normal methods of earning isk. Because EVE is a game, without life necessities aside from PLEX (which will always be floated to the ISK), there is no reason for the super wealthy to transfer isk down the chain. The economy probably reverts to a barter one, owing to the complete worthlessness of generated isk.


So where does that leave the players?



Anyone subbing to the game is completely hopeless, being unable to earn a half-decent income from any source.

PVEers/Missioneers are, as previously mentioned, screwed. They have no meaningful isk generation. Their wealth generation is reduced to wrecks, salvage, item drops, faction mods, etc. Why generate those at all when there exists much more lucrative forms of item generation, say... mining? L4 missions disappear. C1/C2 are dead. (except as reaction/PI holes). C3/C4 struggle on a bit longer, then are mashed between the hyperinflation ruining their income and their risk (no K-space statics for C4/etc). C5/C6 continue to exist solely because of their ability to generate vast quantities of items for T3s.

Market traders are, for a while, unaffected. They, after all, earn their money through others' transactions. However most of that income comes from consumers - not producers. Wormhole dwellers sell tags to NPC orders. The new super-wealthy never need to engage in pump & dumps or any other orders, because they can transact with NPC bonds. As the money supply flowing through PVE becomes nil, so too does their incomes. They die out.

Individual miners are, more or less, unaffected. These people always live hand to mouth. The price of their effort may or may not increase at the same rate as the money supply, and if it does not, well... there's always bots. Mass miners who work for isk are completely screwed, but that's obvious.

Continued because post limits.

As an economy nerd you just gave me an orgasm.
Realistically speaking tho, the system would not work well with the current eve framework. If you introduced some risks on those bonds however, interesting things could come out. Risk free bonds would be a disaster, but what if there was a risk ? It's politics, after all.

What sort of risks did you have in mind?

Sorry, after the first paragraph or two, I didn't see any mention of what purpose they serve. Who is the large organization seeking to take on debt in order to finance short term? who has the ability to control money supply to pay back the bonds?

This looks like a solution without a problem. If you really wanted to try it, having the NPC corps offer you the chance to buy bonds, pay dividends based on taxes, and have it take from the same pool bounties do (which there isnt one ATM) etc. and recirculate the money woul work, but you'd have to have a group basically act like a central bank, setting the payout.

And the best part? None of this encourages gameplay on any level at all.

Look at the last bit again: "with a bit more faucet than sink to allow for economic growth"

Further, even countries like Singapore who have balanced budgets by law still issue government bonds (in all major tenors) to support the market with the "risk-free" index.
*Money raised by government debt issuance in Singapore are only used for investments.

Additional the rational behind my suggestion was never aimed at balanced books or money supply. These were merely additional benefits.
The main retaional was to expand the sandbox and eventually allow a player operated debt market to function.

I want to create the foundation for a functioning private debt market.
And since one of the best ways to value debt is: "Risk-free" index + Risks (credit risk, liquidity risk, covenants, market risk etc)
It would be natural to create the risk-free index first.

I completly disagree with you last paragraph. Many players in eve love Market PVP and expanding the sandbox and making EVE a more advanced financial game would be a huge gameplay improvement to many.

There are countless threads in the forum where people demand a stock market or investment opportunities alike

This entire idea is ludicrous and out of place in an economy built on currency faucents, currency sinks. CCP doesn't need to accept bonds, becuase they don't need to borrow isk for any reason, because the game is based on faucets and sinks. Furthermore, why would i ever invest isk in a real person ie on this forum if I can get a risk free return somewhere else?

Claims to want to promote a private market for debt.

Proposes a system that would squeeze or obsolete player-offered bond offerings by having NPCs offer a zero-risk version of the same.

Let me first say that I admire you for your alternative career path in Eve. You create content and fun beyond the normal boundaries of the game.
But as stated earlier the “risk free index/rate” do not mean you avoid all risks. It simply refers to the fact that the security does not hold default Risk.

The benefits of creating a “risk free rate” are:
1. Fairly easy for CCPs programmers to implement and later the same framework could be used for more securities (including player issues).
2. It raises awareness amongst players for capital market investments.
3. It creates a benchmark which other assets and liabilities will be valued against.
4. Its a system which is more realistic and closer to RL solutions.

A form of asset backed municipal bond linked to faction ware fare is an interesting suggestion. And if you want other forms of securities created, first step will be to create this CCP bond.
Later when players or municipals wants to issue other debt securities it will be much easier to implant as game mechanics and investor awareness already exists.

Why don’t you enlighten us and tell us how you believe a bond is valued?