[GW2] The Speed of Gold

Since ArenaNet has ordained EVE Online to be a spiritual guide to gems in Guild Wars 2, I figured it would be worth taking a look at some of the EVE Online blog bits, which were linked to me by smarter people than I. EVE Online is all about economy. PLEX, which are  1-month subscription coupons, are traded on a market for ISK (gold). Players with a few extra bucks to spend might forego a 3D movie and buy a PLEX to turn it into ISK for their next big spaceship project. Simple economics says that the more demand for PLEX the more ISK someone can make in selling one to the market.

Moonshine-still economics says that this will also get players “farming” more ISK to get more PLEX, and eventually PLEX will be an unworthy amount of time-played value worth of ISK. That’s the way economics works on 180-proof corn mash anyway.

Except, it’s the opposite. The market moves money from a point of stagnation to one of use. This is called “velocity of money.” CCP discusses the effect of PLEX on this velocity:

The correlation between the velocity of money and the CPI seems to change by the end of 2008.  From January 2007 to October 2008, the correlation between the two series is 0.86, which is quite strong for a non-academic case like this one.  From November 2008 to February 2012 the correlation is -0.01, which is just about as uncorrelated as possible.  So, what happened in November 2008?  PLEX was introduced.  PLEX seems to increase the velocity of money in the New Eden economy as it “liberates“ ISK from people with more money than they know what to do with and gets it to ISK needy people that create and sell PLEX.

In Guild Wars 2 a lot of fans have voiced worry over gems inflating gold, and the actual gem price inflating. On gold since the velocity of money would be increased, the price of [Tangible In-Game Item] will stay about the same since people that want to spend money on the [TIGI] will have the spending power to do so. Inflation of gold to buy gems will likely occur, but it will do so slowly once the market matures. Check out for example the 700 day price chart for PLEX.

The big unknown however in correlating EVE Online with Guild Wars 2 is going to be the destruction of gold. There are some decent gold sinks, but unlike EVE Online I think it is rare when a Guild Wars 2 play session is going to put a player at a net loss. I am sure the player market is going to monitor gems to great lengths either way. I hope ArenaNet does too.


16 thoughts on “[GW2] The Speed of Gold”

  1. It honestly sounds more like STO’s version. Dilithium is easy to acquire, but has a daily cap to keep it from being completely overrun (a high cap, but a cap nonetheless). Dilithium has sinks in crafting, loot, and some ships, but these aren’t really that deep, nothing like Eve. The best thing to use the dil for is to trade for c-points, just like the gold->gems conversion. Its similarities are greater since you can’t trade dilithium or gems for gaming time, just store points (no sub on either game).

    In STO, though, this has caused what appears to be a severe inflation, considering you need ~500k dilithium to acquire the amount of C-Points needed for a max level ship. In time, this is equal to roughly 2 months of daily cap-hitting dilithium grinding.

    1. There is another, imo, big difference, though, in that the primary currency received from non-daily quests in STO are credits, which can neither be traded for dilithium nor Cstore points and are thus relatively worthless. Mobs in GW2 still drop gold; they don’t drop dilithium in STO.

  2. I’ve heard about a lot of little regular expenses for Guild Wars 2, but not many big gold sinks yet (they may emerge as people play). I do find it amusing that fans can rage about there being small fees for armour repair or trait changing, then rage about gem economy and the lack of gold sinks in the same breath.

  3. There is one huge difference between Eve and GW2. The subscription fee. In Eve, demand for PLEX is driven by a constant player need for PLEX to pay subscription fees.

    In GW2 once most players get the vault space and a few character slots unlocked, there will be very little they actually want the cash shop gems for.

    1. What you are saying is there is no “gem sink” which I think is not correct looking at GW1’s cash shop. People still spend money on costumes and other non-necessities.

      So long as the items in the cash shop stay relatively meaningful to players, this wont be a problem.

      Yes, it is different because you don’t “need” gems like you need plex, but the demand is still there for gems I think. And if not, Anet is in trouble for a whole different set of reasons.

    2. I agree. My personal plans are to buy some character slots, at least enough to try every profession, ideally with in-game gold I use to buy gems from someone. After that I don’t have much interest in the other cash shop items and my need for gems will rapidly approach zero.

    3. ah! :) my point exactly!

      the demand for Gems in GW2 is not going to be nearly as strong as that for PLEX in EVE

  4. The difference is in that EVE had players with large amounts of money before they introduced PLEX. They also have the economy that is fully run by players. If you want to build better ship, you need to invest in things, in things that some other players made. Everything from mining operations to assembling parts and selling involves players. There is no middleman in form of an NPC. In GW2 you have other means how to acquire better weapon or armor. Just making it yourself is not as time-consuming and not really viable option as it becomes later on in EVE.
    In EVE PLEX serves as a medium that keeps economy in check. And it is possible because whole economy depends on players. In GW2 that will not be the case. Yes, you can farm things and sell them, but once you have the best armor and weapon there is no initiative to continue with it. Ok, there is always reason ‘for more money’.
    It is the whole concept of EVE that makes PLEX this successful. EVE is basicly gear based game, just like WoW. Instead of getting better armor you are constantly trying to get better ships. Instead of levels, you are training abilities. It is neverending gear treadmill that makes PLEX work well in EVE.

    PLEX in EVE is somewhat essential for players. With that they are basicly buying their play time. In GW2, with gems, players are buying cosmetics. In that regard, PLEX is a resource that will always be in demand while gems are not. Sooner or later there will come to point when everybody have enaugh money and everything they wish for.

    I really do not see how gems will work in similar way in GW2 since, while there will be people willing to buy gems with money and they will set up exchange rate there will not be enaugh gold in game. Also, with beeing able to change servers at will this brings new issues at playing the auction house.

    1. “I really do not see how gems will work in similar way in GW2 since, while there will be people willing to buy gems with money and they will set up exchange rate there will not be enaugh gold in game. Also, with beeing able to change servers at will this brings new issues at playing the auction house.”

      but it’s exactly the opposite!

      since the Gems satisfy non-essential needs, their price in gold must fall over time until it stops at levels where if it falls any lower, nobody will supply them.

    2. But that’s wrong, EVE is far from a gear-based treadmill, considering that its a weird treadmill when you physically cannot do things with end-game ships that you could with mid-game, such as enter high-security space or even dock a ship, or take it into wormholes.

      Your idea of EVE being gear based falls apart when people fly ships which take less skills to fly for certain jobs. EVE is not gear-based, to suggest it is is a simplification, EVE presents the player with various problems, in which the best tool must be selected, but that tool isn’t the ship that only the 2 year old players can fly, for example, if you need a ship that has good ECM, you fly a falcon, the ship that suits best, not the “best” ship you can fly.

      EVE’s economy works because of the sheer amount of ship destruction, but more importantly, the range of ships demanded by the game. Unlike warcraft et al, the economy does not exist mostly at or for the endgame, the economy exists for all players who demand a range of ships, from the easiest to fly to the hardest to fly. If anything, the game is tool-based; the concept of better ships flat out is alien to the game, because there is no “best ship”. Such is the nature of the gameplay; there are far too many parameters for there to be a best ship and far too many roles. But going back to an earlier point, because the economy exists to serve everyone everything, rather than just a select few items/armours/weapons etc, the economy is far more fluid than other games.

    3. “Also, with beeing able to change servers at will this brings new issues at playing the auction house.”

      The auction house will cross all servers, so changing servers will do nothing.

  5. nice overview Ravious! ty.

    a point I don’t see discussed as much as I’d like to in regard to RMTs in GW2, is that the value of Gems in GW2 will be subject to the open market for it.

    now, this sounds trivial and everyone’s probably at “but we know this already, big deal” but still, i think there’s a key difference in the case of GW2 and especially in comparison to EVE

    in EVE PLEX has undisputed value, as it’s RM worth is defined as equal to 1 month subscription and since each player of EVE needs to pay that monthly – they worth of the PLEX is clearly established

    in GW2 100 Gems are worth… whatever 100 Gems can buy in the Shop. It does not have so much of an absolute and undisputed worth to a player, since most of the items are either cosmetic or more or less easily attainable through gameplay.

    Now, Gems of course will be subject to the laws of supply and demand, which means that on the market people will supply gems, but the demand part in GW2 is different from that in EVE because one simply does not need armor dyes and XP boosts and whatnots as often and as unequivocally as a player needs to pay a monthly sub in EVE.

    my prediction is that actually offering gems on the market will not yield as much gold and won’t sell as fast as people think now. (which means there won’t be such a big incentive to farm gold as people imagine)

    whether the currently known money sinks – such as the teleporting fee, the armor repairs etc – will hold, we’d have to wait and see, but i’m mildly optimistic :)

  6. Yeah, as others have pointed out, saying this is “like EVE” is wrong to the point of probably being counterproductive. But EVE has more recognition than STO or Spiral Knights.

    Also, moonshine causes people to work regular jobs, um… more in order to make more money to spend on moonshine?

    So… yeah.

    Analogies… work on that.

  7. The analogy to Eve was probably chosen more for recognition, and to assuage peoples worries, by showing that others have done something like this, and the world has not ended yet.

    More to the point, I think the less universal demand for cash-shop items in GW2, as opposed to Eves case where everyone needs a subscription somehow, will work in GW2s favor, so long as Arenanet manage to introduce some recurring demand for the cashshop items.

    PLEX has a very central role in the Eve economy, and the very high-demand subscription you can buy is a significant part of that. Given the chance, everyone wants PLEX. I don’t think Arenanet want to put Gems quite that front-and-center in their server economies, and having recurring, but not universally demanded items (like a 1 hour xp boost or whatever), will encourage that, just as the subscription makes PLEX such a driving economic factor. Not everyone will see a need to get Gems, and so other factors in the server economy has a more noticable impact on the value of gold.

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