FW cash outs create no ISK

Oct 25

I’ve been meaning to write about this subject for a while, but with one thing and another I kept putting it off 😉

How can I stand behind the title in the face of the billions of ISK people have been making with Factional Warfare (FW for short) cash outs? Because it is completely true. In fact, and hear me out, FW cash outs are an ISK sink!

The TL:DR before people flame me 😉

FW rewards a player Loyalty Points (LP) not ISK
Buying many of the items from the LP store cost that player ISK (which is actually removed from the game).
The FW player comes out of a cash out with less LP and ISK, but with items worth ISK to other players.
The FW player puts the items on the market (costing a small amount of ISK which is removed from game)
Other players buy the items, giving their ISK to the FW player (minus the market fees which are removed from game).

No ISK is created in the process but a small amount is removed. The new-found billions the FW players have in their wallets has come from other players’ wallets. This isn’t unique to FW either, this is the case with all LP stores (which is why CCP like them, they are one of the few actual ISK sinks in game).

Now you might at this point say I am splitting hairs but here is the issue. If you speak to CCP and complain about how FW is creating ISK, their in house economist will smile politely and tell you that you are incorrect. If you are going to engage with CCP on certain issues you have to make sure you are not making basic mistakes with the subject. CCP are usually looking at the economy as a whole so you have to as well.

Sources and Sinks
Players as a whole also seem to confuse many of the ISK sources and sinks in Eve. I’m not an economist, but I’ve listened to one talk about this subject and also in some cases had the “Hold on, wait, that isn’t right… ooooh I see now >.<" moment. So what are the sources and sinks in Eve? Well I'll list the common ones here but I might have missed a few. Sources

Mission Agent Rewards
NPC Bounties
Insurance Payouts
Incursion rewards
NPC Buy orders (tags etc)

As you can see, not very many.

Sinks

Insurance Payments (i.e. insuring a ship)
LP Store purchases
Market Transaction Fees
Manufacturing job Fees
NPC controlled Corp tax
Buying NPC supplied items
Sov Bills
PI Fees/Taxes
Clone Replacements / Upgrades

Edit: This is a good link with numbers, thanks to Cass Lie for passing it on – ISK Faucets and sinks for 2012-01

More sinks, but they are not capable of dealing with the amount of ISK added to the system on a daily basis. In fact the amount of ISK in Eve grows by trillions every day. Also it is interesting to note that each time CCP remove an item from NPC supply, such as POS control towers, they actually remove an effective ISK sink.

Next I’ll tackle a few of the common points raised.

Blowing up ships removes ISK from Eve
Incorrect, blowing up a ship (usually) causes an insurance payout. In the case of a concord kill the insurance isn’t paid out, but still no ISK is lost. Even the player losing the ship doesn’t lose any personal ISK when the ship is destroyed. They do however lose the ship and a number of the modules.

But when the player replaces the ship, they lose ISK.
If the player decides to replace the ship then yes, that player’s wallet will drop; but that ISK goes to another player, it isn’t removed from Eve (apart from the market transaction fees which are a fraction of any insurance payout).

Buying Plexes creates ISK
Incorrect. Buying a plex gives you a plex, selling it on the market gives you the market price in ISK from another player. No ISK is created and only a small amount is removed (via the market transaction). A plex item sale is no different from any other market transaction in Eve.

Using a plex or otherwise giving it to CCP removes ISK from Eve
Again incorrect, using a plex removes a plex from Eve (and gives you the Plex’s true value, which is 30 days more gametime). If given to CCP (such as as entry to a PVP tournament) they may choose to give it to another player as a prize in which case it isn’t removed at all.

So mission runners and ratters are the biggest ISK source in Eve?
I believe this was the case the last time I saw any figures. It could change depending on how many insured ships are lost during that time period. But yes, Mission runners are causing the creation of trillions of ISK in Eve each day not FW or other LP based systems.

In the end, if you are talking about ISK being created or destroyed in Eve, you have to take the bigger view and not just your personal wealth (or lack of ;)).

Edit:
I’m not saying there isn’t/wasn’t a problem – I’m saying that you need to specify the correct problem when talking with CCP 😉

none

Comments

Chanina

October 25th, 2012 at 8:38 AM

You are absolutely right about FW is not a isk faucet. The expression is used too often and most times in the wrong context.

The problem with the cash outs was that the isk think was reduced to 1/4 of what it should have been and the result was a way too good way to earn money (!earn not create!).

We have the same problem in eve like we have in real world, it is just about distribution of the money. It is not health if everyone has to give some of his hard earned money to exact one faction in the game (the tech controlling one) just because every T2 item/ship you want to use is made with stuff from them.

Same goes for FW. It is only a small fraction of players who have access to cheap faction mods and imps and many players who want them. And seeing freighters full with imps getting ganked leaves the impression that there are people getting rich who don’t even know how rich they are or how to handle it right.

TL;DR: Your post is correct. But just because the problem is called by the wrong name doesn’t mean it isn’t a problem 😉
Tea

October 25th, 2012 at 8:48 AM

Oh yes, I should have made that clear, the T5 discounts reduced the ISK sink side of the cash out significantly.

I also agree it was a big problem (which hopefully the new changes will fix a bit). The issue in the past has been that players shout about how FW is creating billions of ISK and that causes CCP to tune out of the argument because FW doesn’t create any ISK at all.
Cass Lie

October 25th, 2012 at 9:11 AM

Mission rewards are rather insignificant as an isk faucet in the big picture. Not so long ago Tippia pooled numbers from Diagoras’ tweets and wrote a comprehensive post regarding the amplitude of isk sink/faucet distribution: http://blog.beyondreality.se/?q=node/3 I highly recommend reading it.

Also, the guys running the missions “the correct way” are actually blitzing them and making their money by converting loads of LP, so in their case it could a net zero or even an isk sink.

Nevertheless, the point still stands that FW used to create out of line individual wealth. How that translates to the plex prices is a more complicated matter and depends, among other things, on the magnitude of the FW isk sink, but I think it’s safe to say that the net effect was still an upwards pressure.
Zzzzleepyhead

October 25th, 2012 at 10:12 AM

Thank you for this post! Finally something real to give to people that says destroying ships is an isk sink and fw a faucet, instead of having to write example after example everytime..
I would however say that in the case of an insurance payout you have a faucet and if the insurance is void (concorded och expired) it will be a sink.
Simple example: you pay 2mil in insurance and when the ship explodes in righteous fire you get a payout of 8mil. This in turn means that 6 new millions have entered the game.

-Zleepy
Tea

October 25th, 2012 at 10:18 AM

The rewards themselves are indeed pretty low, thanks for the link 🙂
fulis

October 25th, 2012 at 12:56 PM

T5 didn’t reduce the LP store’s effectiveness as an ISK sink as you still paid the same amount of ISK for a given amount of LP.
coelomate

October 25th, 2012 at 5:13 PM

Something big people often miss in the faucet/sink equation that is a bigger factor for game economies than real world ones: accounts going inactive, accounts coming out of inactivity, and the velocity of money.

I’d wager that over any given time period, lapsing accounts vs. Resubbing accounts nets out to a very large isk sink, albeit a reversable one.

Related to that is the velocity of isk transactions. I speculate that a big reason plex prices jumped was due to isk hoarding by fw players who saw plex as a solid investment (either to use or store value) despite not otherwise seeing a huge surge in their demand for other products.

New Eden has some luxury type items, but in general somebody earning (not creating) bank from FW probably didn’t see their demand for goods increase linearly with their supply of isk, but in the unique case of plex it may have either been true or close to true.
Tea

October 25th, 2012 at 5:18 PM

CCP did provide figures for ISK on inactive accounts, but I don’t know if they were made public. I haven’t included that as a sink because it hasn’t actually been removed (and as you say it can be reversed), but it is true to say ISK on inactive accounts (along with plex and the like) is at least out of circulation.
Vaethin

October 25th, 2012 at 5:58 PM

You are actually incorrect about one thing:

Destroying a ship may not take ISK out of the game, but it reduces the effective value of everyone’s ISK. To clarify what I am talking about:

– Imagine EVE online with no one ever losing a ship. It would be incredibly hard to find a buyer for a ship, because the only time someone buys a ship is their very first time. Less demand for ships results in cheaper prices because every supplier is desperate to sell his stuff and cheaper prices mean, that you can get more ship for less ISK.

– Compare this to EVE as it is now: Every time someone loses a ship he has to replace it in some way. Yes, he does get some money from the insurance, but by investing that into a ship/materials he is also increasing demand for these items. With more demand suppliers can ask for higher prices because they are more likely to find someone who is willing to pay that price. Your ISK has less value and thus you’re taking purchasing power out of the game.

Nice article nontheless!
Tea

October 25th, 2012 at 6:08 PM

I think I’ll leave an article about ISK value, inflation and other such things to an economist. Certainly an interesting idea to see how ISK value changes over time though.

TeaDaze.net

FW cash outs create no ISK

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