Market Discussions

Now that I have progressed to a certain point in EVE, I have a question to pose to the brilliant MD community regarding the viability of a BPO research & third party escrow combination service. Essentially, I am now space-rich enough to occasionally acquire BPOs of higher value (0.5 - 2B). I am wondering if there is a niche in this game for a service that will hold a newly-purchased BPO as collateral for a loan while charging me some amount to research said BPO during the loan's duration.

The Problem
The richer I get, opportunities to grow more and faster only seem to increase. However, this growth is highly dependent on access to capital. I have mainly acquired that capital through expensive, unsecured loans on MD.

What I would like is to break into the secured loan market, where I could pay 2% or lower monthly interest rather than my current 12%. The problem is that selecting good collateral items is tricky. The vast majority of my wealth is in raw materials, which would be messy and possibly counter-productive to tie up.

A Possible Solution
An idea for a special service occurred to me one day - one that might be incredibly valuable to me.

What if there was a trusted, third-party service that would not only hold collateral but also perform research on a BPO used as collateral? That person would naturally want to be compensated for the use of a research slot, but that might be just fine at the right price point.

Example:
I want to acquire a new loan for 1.75B.
I purchase a new Dominix BPO for 1.75B
I apply for a 1.75B loan on MD @ 2% monthly interest. A research/escrow service acts as 3rd party for the loan.
I agree to pay X amount to the service for researching the BPO.
I get to use the 1.75B for other purposes for the loan's duration.
After the duration is over, I pay back the loan and get my researched BPO back.

This Seems Complicated! Why Is It Worth It?
Each party involved can benefit more from this kind of arrangement.
Investors get paid interest as usual.
The 3rd party gets paid for researching the BPO and handling it as collateral.
The loanee gets a lower interest rate plus the ability to get a new BPO researched while simultaneously leveraging its value as collateral.

What do you guys think of this idea for a specialized 3rd party service?
Is it viable? Why or why not?
Has something like this been done before? (I tried searching, but I'm not even sure how to search for this type of service.)

That's good to hear!

I would think this would still be attractive, because it still grants the ability for the borrower to move forward with BPO acquisition and research without tying up as much capital during the research period. Characters still have a limited number of research jobs available, and BPOs can still take ages to fully research.

What kind of prices have you and others charged for this type of service? If I went with something like this, it would likely in the ballpark of 2-3B at the moment. If that involved 2 separate BPOs, how much would the researching fee be to research both?

Sorry for all the questions. I am trying to wrap my head around the costs and benefits based on the numbers.

Let me see if I get this straight.
In order to obtain a loan on MD for 1.75 bn you plan to first go out and buy something for 1.75 bn isk that you already have in your wallet, then use that thing as collateral?
That's alternative.

Correct. It does sound silly on its face, but it makes sense when you consider opportunity cost. If you simply use your existing 1.75B to fuel your industrial operations, you lose the progress you could have made towards researching a new or existing BPO. If you do a 2-3 month or longer loan, that progress is significant and valuable.

For this to make any sense, you must meet one of these criteria:

• You own an expensive, but only partially researched BPO.
• You were already planning to acquire a new, expensive BPO.

Currently, I meet both of those! Another way of putting it is that instead of using X amount of isk to do industry or trade, you still use it for that and get a BPO researched, too. As long as the sum of the loan interest and 3rd party fee were less than or equal to the value gained by increasing the BPO's research levels, the deal is worth it to the borrower. You must also consider the value you can gain by having a BPO at a target research level months sooner than the alternative.


Awesome! I may be contacting you in the future. :)

While it does sound silly on the surface, thinking about the possibilities reveals why it would useful. PH could use her capital to purchase an immature investment (BPO), use it as collateral to exchange it for capital to invest in other high return fast maturing investment, all while her initial investment matures. Hopefully the ROI's and fees end up being lower in the long-term once the newly matured BPO begins to pay itself back through use after being released from collateral holdings.

I too have a lot of research slots, but I'd prefer it if you just bought my researched BPOs instead ;).

This is definitely something that can work, I'm doing it at the moment for for two people, as BPOs tend to appreciate at much more than you would pay per month in interest. One caveat is that I don't like to put expensive BPOs in a POS for very long.

I didn't think too much about having to pay the extra interest for longer research times and an extra two months on a BS BPO could be quite offputting, but in the case of a Dominix 10/20 BPO (1.66b) at 2% interest per month for 8 months you're still looking at a saving of ~700m before third party fees compared to retail price. Stations only cost 10% more ISK than a POS, so it's not a whole lot for most items (less than an extra 30m for a Dominix 10/20 BPO), the index is much more important and there are low indexes to be found. Using a POS is possible, but then there's the issue of defending and fuelling it. If this sort of thing became popular or someone want quite a few BPOs done I would consider setting up a dummy corp and characters for it.

The POS is most definitely the responsibility of the owner and not their clients, which is why I would be wary about setting one up for something like this.

You don't have to worry about any changes to POS or the introduction of Citadels, your stuff will be safe.