Spiral Knights - Market Strategy

Market Strategy

21 replies [Last post]

Tue, 01/11/2011 - 09:08

Shoebox

Okay, since nobody else is doing this, but everyone is whinging about it, I'll step in like I always do and make a thread that everybody will post in but nobody will read.

***ENERGY EXCHANGE***

People complain about the market fluctuating too often and too quickly and I am, in general, worried at how easily the current exchange can be controlled by one player, thus netting them 100% of the profits. I outline the way to do so in this thread here.

I will propose some change that not everybody will like, but will probably end up doing 100% more good than bad in the long run.

***Ideas start here, you can stop reading now***

Currently, the exchange technically has two markets, since both buying and selling are individually influenced by their own levels of supply and demand. Not only is it bad having two price standards for exactly the same item, I have been able to generate profits when the time is right, upwards of 100k in under 2 hours.
Without losing any of my own energy stocks. This means that if I wanted too, I could continue to buy energy low, sell it high, and then buy more energy.

What needs to change:

First, there needs to be one consolidated price for crystal energy. This is not a static price.

Trading energy will change, from being able to offer any price you want, to any price within a range of the current, average price. The instant trades will allow you to buy and sell energy at the base price, so when the game is more popular, people will be able to buy and sell their energy (hopefully) instantly there.

In the market window, you will be able to post your own buy or sell offers, altering your price within the 20% range (10% above or below the base price for energy), as well as see a timeline of the prices energy has gone for previously so you can try to decipher when to buy cheap and sell high, still netting you a profit in crowns, just not such an enormous one.
Obviously, this system would be subject to pumping and dumping and other kinds of economic lingo, but the hope is that enough people are trading at the base price or lower that these tactics ultimately fail.

Obviously, if somebody has an offer below the price you're currently offering to buy for, you will buy that energy instead of the energy at the price you're offering, lower offers take priority over higher ones.
Same for selling.
It essentially tries to give you the best bang for your buck... Or, uhh... Crown.

If, for whatever reason, an instant transaction cannot be processed, the exchange will notify the player that it cannot be completed, then ask them if they want to trade at the next best cost, or place an offer on the market.
This way, impatient people still get what they want.

For those of you who have read this far, it may have come apparent that this sounds a lot like the Grand Exchange on Runescape, and well, that's because it's almost identical to it.
It's pretty much the only way to have an open market without it being controlled by Gold Farming Chinese Kung Fu Dragon Warriors.
No, seriously, it is.
Trades outside of the exchange won't be controlled, however. Since doing everything in this game costs you some level of energy, it's not necessary.

Anyway, that's it, go and post things now.

Tue, 01/11/2011 - 12:16

Evolution

Legacy Username

I agree that the energy price

I agree that the energy price needs to be set around a specific number. The current system is somewhat similar to the one Puzzle Pirates uses for Dubloon trades. The price of dubs there is heavily determined by the amount of active players. (in my experience that is at least) The major flaw about that is when activity goes down, dub prices go up. This pushes the free (or partially free) players away from the game, which makes the game far less enjoyable for the paying players. I can see the same go down for Spiral Knights if the market is completely free. Although there aren't that many group activities yet, I'm sure (or at least I'm hoping) many more will come.

---

As far as your proposal goes; I'm not familiar with the Runescape system, but it sounds pretty good. Determining a decent base price for energy is the part left to be discussed then, but I doubt that can be properly done before the energy balancing is final.

Tue, 01/11/2011 - 14:38

JPINFV

Legacy Username

The current system is exactly

The current system is exactly similar to the one Puzzle Pirates uses for doubloons except that it's increments of 100 instead of increments of 1. 2 exchanges, one for buying and one for selling.

While games can be played with the dual market system (yes, I very much did some speculating when crew/flag halls came out), the benefit I see is that it does adjust. Outside of development adjustment, does the market system in Runescape allow any variation based on supply and demand, or does it always fluctuate around a set point provided by the developers?

If it's just the average price, is it an instant average of every offer on the board, a 24 hour average, a 7 day average, or a 30 day average? The longer the average, the less reactive the market is. Which is good because it's less likely that someone can push the market, but also the less reactive the market is to changes and spikes in demand (e.g. demand due to new releases, shorter boosts in activity such as winter and spring breaks, etc). Additionally, once you put constraints on the market, you start running into issues of excess and drought. Why buy now if I know that all of the current offers are near the bottom and, as the average dives, I will be able to buy at a cheaper price? Similarly, if I know that all of the current prices are near the top of the 20%, why shouldn't I hold out until the average catches up?

Additionally, I think it might be easier to control the market right now simply due to a lack of volume. It's not that markets with higher volumes can't be pushed, they just can't be pushed as easily.

Tue, 01/11/2011 - 15:53

Shoebox

Fiddlesticks vs. Pick-up Sticks

Why buy now if I know that all of the current offers are near the bottom and, as the average dives, I will be able to buy at a cheaper price?

If your plan is purely to profit from buying and selling Energy, then go ahead and wait.
The longer you wait, the more likely it is the price will change.
If you're not going to be playing the market, then there's a pretty good chance that waiting will cost you playtime, since everything in the game costs you energy.

does the market system in Runescape allow any variation based on supply and demand, or does it always fluctuate around a set point provided by the developers?

It's a live market (updated once every two hours, with higher priced items fluctuating once every 2 days) that floats around the price point set by the developers (or player defined price points pre-exchange). All items are subject to trending based on supply and demand or just merching. As more people buy an item at an inflated price, it's average price slowly climbs up.
Same for items that are being sold en masse, the price will go down as people go lower than the average price in order to dump it quickly.
As an example, low level crafting materials subject to botting or farming, like Yew logs, absolutely crashed due to massive amounts flooding the market.
Items that people always pay top dollar for, like Party Hats, are consistently rising.
Busy items, like Rune Plate items, fluctuate rapidly and are a good way to quickly pump and dump for a quick profit.
In case you want to see what I'm talking about without having to go and make an account: The Grand Exchange.

Supply and demand will predictably change depending on a few external stimuli:

Update content: New levels, items or monsters
Events: I don't really need to explain why this effects things
Sales: Energy sales or additional bonuses for buying it will most likely effect the price of Energy as people scramble to make their money from it
Merching: Large scale dumps or pumps for energy in the lead up to these events, as well as purely random dumps of large hordes of Energy all at once
Overall activity: If there are a lack of players, like there is now, it's likely the market will change as there are more buyers on than sellers or vice versa.

With these things in mind, the price will most likely stay consistent, considering it is something everybody needs.

Determining a decent base price for energy is the part left to be discussed then, but I doubt that can be properly done before the energy balancing is final.
A decent price would be common buy and sell prices and averaging them together. Anywhere in the range of 4,500~6,500 is a fair starting point. It won't stay at that base price for too long, however.

Tue, 01/11/2011 - 16:10

JPINFV

Legacy Username

Especially since this isn't a

Especially since this isn't a spawned item (CE only comes into existence by buying with real money, so the devs can't play with the drop rates), what's stopping someone with significant funds from pushing the trend point anyways? With enough crowns, a group of players can always empty the exchange.

Tue, 01/11/2011 - 16:29

Shoebox

In order to gain significant

In order to gain significant funds, you would need to have Energy already to go dungeon diving.
Besides, at a base cost of even the lower range I suggested (4,500 crowns), 1,000 Energy is 45,000 Crowns, 10,000 would be 450,000 Crowns.
Which is only about $25 worth of Energy at it's current price.

So really, there's no danger of that happening.

Tue, 01/11/2011 - 20:47

Nooblar

Legacy Username

My question would be why

My question would be why restrict it? With that system it sounds like forcing one side to tank will drag the other side with it, where as the current system, even when buy energy dropped to 1k, sell energy was still at 5k whenever i looked at it. This would mean you could force people into posting their sell offers lower than they would want them to, or making them wait. Once the game has a large enough playerbase, the numerical weight of the masses will buffer the market against large scale sustained manipulation, and observant players can profit off fluctuations with or without being part of any scheming. Add on top of that the playing the margins for patient number minded people, countered by the fact that more people playing margins will ultimately narrow those margins, and the economy becomes an avenue for subtle, mainly passive, PvP for profit.

And, just to toss it out there, 100 energy costs you 30 cents. Thats the baseline average, and thats the real counter to any arguments about energy prices needing to be controlled. The company has secured pricing at 30 cents per hundred, roughly. If you are interested in crowns per energy, you'll need to take that up with the players.

Wed, 01/12/2011 - 02:41

Evolution

Legacy Username

Nooblar, the problem is

Nooblar, the problem is though that a larger player base doesn't guarantee you that. On top of that, a constant large/active player base isn't guaranteed either. To relate again to Puzzle Pirates, which holds a similar system: Quite some years ago the exchange price went around 800 PoE (in-game currency) for 1 Doubloon. This has been pushed up to around 2.400 PoE for 1 Doubloon due to both inflation and a major drop in the player base over the years. With a price this high, new players who wish to play free (at first or always) have a 3x harder time making it round in the game. Compare it to Spiral Knights. Right now people are already complaining about the lack of (cheap) energy. If such a free market is allowed there too, then a time will come where the exchange price will go up to the point where new players will again be pushed away?

Wed, 01/12/2011 - 11:29

JPINFV

Legacy Username

If the price is set by a

If the price is set by a moving average, won't, over time, the same price increase happen?

If the base price is set by the developers and that base price becomes a significant price ceiling, won't there be shortages with no one selling? What's more of a disadvantage, relatively expensive compared to historical data, or no energy on the market at all?

Wed, 01/12/2011 - 12:32

Nooblar

Legacy Username

In ypp, that happened because

In ypp, that happened because PoE became more common and/or dubs were being sunk too fast to keep 800 as the market ratio. Once it hit 2400, the devs brought out black boxes, and then more better black boxes, both of which sunk PoE out of the economy, and have brought the market price back down to 1800. The ratio doesn't move over time, unless the overall spawn/sink rates change. The reason that our number on SK are fluctuation is because payouts are getting tweeked, and regular new content is creating abnormal market forces.

Also, what about the risk of manipulating both sides of the market at once, with the suggested system? And how do you figure that more total buy/sell offers wouldn't increase the buffer against change? And how does it avoid the ratio changing over time anyways?

Wed, 01/12/2011 - 12:32

#10

Evolution

Legacy Username

Why would there be a shortage

Why would there be a shortage on people selling? If the price is set right I doubt we'll run out of sellers&buyers solely because of the price limit? For the price limit there needs to be kept in my mind though that you can't make profit from 100 CE bought with crowns, unlike how it was so far for a long time.

One thing though, we need more areas that we can spend crowns at. Right now there's recipes, a bunch of pre-made items (for which the more expensive ones only cycle through at random), Tier 2&3 gates, alchemy and PvP. If for any reason the CE market would collapse as it stands, it would much rather be because of the lack of crown-spending options than from a limited sell&buy price?

Wed, 01/12/2011 - 12:37

#11

Nooblar

Legacy Username

Even if the spawn/sink rates

Even if the spawn/sink rates for crowns are not in tune with the spawn/sink rates for energy, they will still find a stable point eventually, even if that stable point might be very many crowns, for very little energy. And if that is the issue, then the need is more ways to sink crowns, not a revamp of the market. As long as there are two currencies, they will find their own exchange rate, and it that doesn't match the legislated exchange rate, no one will trade.

Wed, 01/12/2011 - 13:00

#12

JPINFV

Legacy Username

"Why would there be a

"Why would there be a shortage on people selling?"

Basic economic theory regarding price ceilings. The entire point of a free market is that as price increases (since dollar costs for CE is stable) you start getting more people supplying CE. If I'm not buying energy at 5000 crowns/100CE, I might consider it at 10,000 crowns/CE. If the price is kept artificially low, then demand can outstrip supply, but there's no or little incentive to increase supply. If the price is kept artificially low, why wouldn't there be a shortage of supply when demand is higher than it should be?

On a side note, imagine what would happen if the government mandated that gas prices had to return to 1995 levels?

Wed, 01/12/2011 - 17:32

#13

Shoebox

edited

The whole point of this idea is to keep trading around the average price so people don't leave energy in trades outside of the range then buying all the energy out so that they can be the single market player and make 100% of the profits.
If you plan a massive buyout on energy to try and fix the price near what you want, the market price won't update instantly, allowing a possible recovery so the price doesn't go from being 4,500 to 10,000 in the space of a couple of clicks.

It's a player's market, meant to benefit players, as well as allow smarter players to currency trade for a profit.
Not destroy the economy in seconds if they have the means and set a viral trend, forcing people to pay a price two to three times more than before.

Wed, 01/12/2011 - 19:06

#14

Nooblar

Legacy Username

Nothing in the current system

Nothing in the current system forces you to pay anything. If the market spikes or plummets on one end, wait for it to come back.

This system would allow one person to get more crowns with their credit card than the current system would, if they were just dumping energy into the market, which defeats the self balance the current system has between free and pay users. Under the current system if one person drops 100 bucks of energy, all at once, after the first half or so they will be getting very few crowns, and everyone else will be getting very cheap energy they can hold onto for a little bit. On the flip side, someone suddenly dumping tons of crowns they figured out how to magic up would very soon be stuck trading 20k crowns for the 100 energy, allowing people with energy to turn it into crowns, then wait for the market to recover and turn a tidy profit. Both systems make it so a single person taking action to cause a steep, temporary sway, is seeing the ultimate loss, while the people with the patient outlying bids are the ones who make the money.

But for the sake of asking, when would your version of the market change its price range, and based on what information?

Also, i don't want to lose the ability to zero out my crowns before a run by putting in a lot of low buy offers, and this would take that away from me, which i don't like.

Wed, 01/12/2011 - 19:17

#15

JPINFV

Legacy Username

edited

Way to keep changing the system. Is it either a developer set price or an average? It seems to change depending on what the counter argument is.

Wed, 01/12/2011 - 21:09

#16

Shoebox

edited

And even more, in direct relation to a post you made!

Hence, a price point is set, then from there either grows or deflates depending on market trends.
The average is always changing but the range always stays the same, so only a set amount of the price can be increased every two hours.
It doesn't STOP the price growing, it just slows it down so some select people can't go and screw things up for everyone else.

Also, clearly it is an issue, if developers actually have to step in and add PoE sinks to stop people over inflating the price rapidly.
Not to mention that at one point I remember Energy being a standard 11k crowns per 100 because people just followed the trend someone else set.
Turning off a lot of players at the time.
Which, with the current system, is still entirely possible to do!

And let's not forget that with the two separate markets, with the buy price being lower than the sell price, if you have the best of both sides (the best buy and sell offers available) you're gaining 100% of the profits on the market! Which is an extremely flawed system, especially with a larger playerbase.

But what do I know? I only made 100k off the market in under 2 hours because I controlled the instant prices.
That's a flaw, not a feature.

Thu, 01/13/2011 - 09:00

#17

Gyre-Of-Guile

Developer

Profits are perfectly reasonable.

But what do I know? I only made 100k off the market in under 2 hours because I controlled the instant prices.

So in other words: you posted a sell offer with a lower price than any other sell offer. You lowered the price of energy for people who just want to trade their crowns so they can keep playing.

Speculating helps make the market work. If you think you can make a profit on the exchange by buying and selling: go for it! If other people think that they too can make a profit, they'll join in. As long as the difference between the top buy and top sell offer is greater than 2% (the trading fee) then you *can* make a profit. But if enough people are motivated to do so, the profit margin will shrink. And if the price moves significantly in any direction, you could get screwed and end up losing money.

That's what makes it work.

And: there are not "two markets". It's one market. The two prices you see are commonly referred to as "bid" and "ask" prices.

Look at a real stock quote: http://finance.yahoo.com/q?s=aapl

Look below the "last trade" price and find the bid and ask. See the little spread between them? If the buyers and sellers agreed on a price, then a trade is executed and those offers are removed, leaving a gap again.

Thu, 01/13/2011 - 13:00

#18

Poseidon

Game Master

Moderated

Moderated several posts above, let's stick to the subject folks.

Thu, 01/13/2011 - 15:39

#19

Shoebox

My point is that it's a

My point is that it's a market system that only benefits those with an incredible amount of time to sit and stare at that market window box.
It doesn't fit the casual nature of the game because it requires people who do want to make profit on the market to just sit there all day.
Not to mention that using all of your profits, you can buyout other people's offers and set your own price. Reverting days of price deflation in a few clicks.

Also, unlike a stock market, the current level of trading offered is almost no risk, as if you can't sell your energy 'stocks', you can just use them to play the game instead.
There is absolutely no reason I can see for having this entirely unregulated market, until I see those two prices on the exchange become within that 2% of each other and stay there consistently.
Which in the... 3 months or so Spiral Knights has been up, I've never seen happen.

Thu, 01/13/2011 - 16:11

#20

JPINFV

Legacy Username

If someone wants to take the

If someone wants to take the time to sit and stare at the market all day long, then what's stopping you from seeking other ways to earn crowns?

If someone wants to grind out levels to make crowns, should OOO limit them too (say, only 20-30 levels a day, max) because their play doesn't meet someone's definition of "casual?"

If there's a 1000 crown margin, how much effort does it really take to just throw in a few orders?

If the price is set by an average, what's stopping someone from pushing the market anyways, especially with the current lack of crown sinks?

Fri, 02/11/2011 - 22:53

#21

BehindCurtai

Legacy Username

Real life commodity trading

Real life commodity trading here.

If there is money to be made by buying and selling on the inside margin, then people will trade on the inside margin. This will cause the buy and sell prices to get closer to each other, reducing the profit.

Don't forget that there is a 2% trading fee. There is no endless profit.

Expect around a 4% difference between the buy and sell prices when things get stable. That was my experience when I played the doubloon market.

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