Player Features and Ideas Discussion

This mechanic is not to replace or try to mimic the original loan contracts. Those were bad and you should feel bad for thinking this would try to replicate it.

Rather, this intends to put forth an idea much similar to Wall Street financial security, but modified to be less scamtastic as possible or at least as much scam potential as a normal contract.

First what I am suggesting is similar to the loans and bond offers they have on Market Discussion. This is not to replace that, but rather enhance hopefully small time lenders rather than large collective groups.
Instead of loaning out physical goods like the old loan contracts, this instead puts the assets in escrow in the station of the loan requester of choice we will get into that further.

The collateralized debt obligation loan contract will entail three separate parts.

The collateral.
The loan.
The interest premium.

The collateral is of course being any good that you of course can put into contracts (minerals, weapons, PLEX, BPOs, ships etc). This will be visible similar to what you see in current contracts with the listing of goods and other modules that is contained if there are containers, ships, etc. Personally, I would add a total count of what EVE suspects the collateral in ISK much like you can find when doing courier contracts. This number would be in green to show what you would receive in case of default in the loan.

Now I know, this will be scammed by unscrupulous players, but it’s only as bad as those persons in Jita selling carbon instead of charons. Lender beware.

Next is the loan itself. This number will be set by the person requesting the loan as they will be creating the contract to put on the open market. There might be a way to request certain collateral for lenders, but I think that would be too complex and it would be best to let the borrower make the contract and put the collateral up what he has rather than requests. (You could always negotiate the collateral and loan terms with the player and then have the player create a private contract to the lender). The loan field itself is how much the borrower is requesting. For a safeguard, this number should be big and in red and have a popup reminding the lender than this is the lending amount. I don’t know how other feels, but the loan could be capped out at less than 10 billion for the invariable person who did not read the terms of the contract. (This could be negotiable so if you have feelings if loans should be capped or not please post a reply). Then at the same time setting the loan amount request, you would also set the payback period. This should be rather short with 2, 4, or 6 weeks as the choice (long term loans could be problematic in general). The borrower will have up until that time to pay the loan back. They can pay early if they want. If they fail to pay the loan by the deadline, the lender received the collateral in the designated station (this location should be clear and visible like courier contracts so if it’s a citadel in low sec the lender should be aware of this issue).

Lastly, there is the interest premium. This will be a flat fee paid on the acceptance of the loan. This helps reduce default and early payment risk. This is unlike the bonds on Market Discussion where they pay interest every month. In effect, this is a zero-coupon bond which the interest is paid upfront. This also reduces early payment risk for the lender and they see the exact terms of what they will be paid for interest instead of trying to figure it out in a spreadsheet with compound interest etc.

For example, this would work as such.

Player A needs 1,000,000 ISK to buy a ship to increase his income. All he has is a 100,000 ISK and a skill book worth 1,000,000 that he will eventually need down the road. Player A then creates collateralized loan contract, requesting 1 million isk and puts the skill book up for collateral. He also offers 100K isk as the interest premium for accepting the contract.

Player B sees the loan contract in all the contracts. He accepts and puts forth the 1 million isk for the loan and immediately received back the 100K (this might be redundant the more I think about, technically he is only paying $900K so he might only give that much but that is negotiable. We can talk about in discussion). Either way, the borrower needs to put down a down payment in good faith into the contract to discourage scamming.

So player received a net of 900K isk (if he really wants an exact million he could ask for 1.2 million and 100K for interest premium, these numbers are up to the borrower to set, but like a courier contract it has to be reasonable for someone in the market to accept).

Now, let’s he has two weeks to pay it off. So two things can happen.
Either, he makes money with his new ship he bought and pays back the $1,000,00 in the contract before the deadline and gets his skill book back.
Or…
He gets ganked and goes totally broke and fails to pay the loan in two week, so in this case, the lender gets 100K plus the collateral which he can either use or sell on the market to get his money back.

Now there are a couple of problems that may happen. Let’s say someone puts up a PLEX as collateral and then the PLEX market crashes to record low prices. The borrower may choose to default on the loan and not pay it back because he got more ISK for it that way. Also, in case the price rises, the borrower would prefer to keep the PLEX instead of repayment of loan. However, the lender cannot force a default through the terms of the contract until the time expires. (Though this might lead to interesting situations where the lender finds and ganks the borrower so he gets the collateral).

Anyways. This is intended to create a micro-lending market where although scamming can happen for those who do not read the terms, it allows for a reasonable amount of sureness in the trade.

If you read the Markets subforums you will see there is demand for loans as well as people who want to earn interest.

Apparently it works rather well now that Chribba is involved. I am just proposing a contract system that works like real life collateralized loans. That is the only way to make loans secure.

I said there would always be potential for scamming but it would be no more than a regular contract.

Do you do contracts? If so have you been scammed?

I have this super safe idea to control the market. Can someone loan me say 95 billion real quick, you should get it back in notime.

Skill books might have been a bad example. Theron requests on market discussion usually use BPOs as collateral as their market value only increased with research.

People request these loans and people lend the money all the time as long as Chribba is invoked, so the need for secure loans is a real thing.

No, it doesn't.

And even if it did, why is that a good thing?

The way I understand it is that it would be a way of creating a collateralised loan using the contract system. There Is a use for this as third party services such as Chribba, while very useful to the player community, aren't free. Chribba charges 250m flat fee AFAIK so while that is fine for super sales, it doesn't really work for "micro loans"

It is also true that people can sell their collateral and buy it back. The reason that people offer collateral for loans in the MD forum is because they don't want to part with their collateral and are willing to pay to hold on to it. The example of skillbooks was o.k. for something liquid but a better example would be something that the player doesn't want to sell, e.g. if they want to hold on to it for speculative purposes but are willing to "rent" it (in effect) and pay a premium (interest).

While the idea fills a gap between low value loans and the multi-billion collateralised loans that are found in the MD forum, whether it's a good use of dev time, it's hard to say without knowing what the demand would be and that is entirely speculative.