Nerfing the Market Makers

Last week we had a great and constructive discussion about the market makers and their roles in the game over at our discord channel. I promised to show some of the MM statistics we gather, so you don’t have to guess what is going on.

Before I show the graphs I want to repeat what purposes the MMs have from our point of view:

  • They provide means to bootstrap the economy at the very beginning when many commodities are not readily available because they’re just not being produced by players yet
  • They keep the prices of the most basic consumables and construction materials within reasonable limits
  • They are not meant to be farmed for money. Don’t rely on the MMs and build your base on the assumption that they will always be there!

Eventually we would love to get rid of the MMs and switch to a purely player-driven economy.

In the past, when we noticed that a certain MM was used to farm large amounts of cash we nerfed it, to prevent that individual players create endless cash inflow.

Over the time we received lots of suggestions on how to change or adapt the MMs so they are not as farm-able as they are and we spent hours discussing them. In the end we decided to not change the MM system right now, since that would be a rather large feature we don’t have time for. Instead we adjust the prices here and there to prevent abuse.

One of the questions that came up last week was, if it was fair that the basic prefab MMs got nerfed (except one) while the agriculture MM are untouched. From my viewpoint it seemed like that hard-working Katoans and Morians envy the players over at Promitor, because it is so easy for them to generate money. I want to show you the MM stats to see if the accusation holds and to in order to provide you with more solid data.

The following graphs show the last 14 days.

Prefabs first:



Agriculture:



So my takeaway is that the agriculture MMs are relatively stable lately with the exception of cotton, which would need a nerf in my opinion.

What do you say? Do the graphs help? Any surprises?

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Not too surprised. BTA definitely needs the nerf.

I feel that nerfing a single MM (RCO) would simply kick the can a little further down the road.

You are not tackling the root cause of the MM farming - infrastructure.

My Promitor colony can produce:

2.1021 RCO per day @ 126% efficiency = 1229.72 ICA 
13.4576 GRN per day @ 126 % efficiency = 1453.42 ICA
9.9310 NUT per day @ 126% efficiency = 1092.41 ICA
etc...

Sure, there is variable water costs, but my own water costs < 4 ICA each. People have infrastructure and will simply switch recipes with negligible profit loss as each MM is nerfed.

This is the same issue which I raised when you first started talking about nerfing the BSE MM. Everyone switched to BBH until you nerfed it too. Then, everyone switched to BTA.

The trend is clear. By nerfing the MM individually you are merely reacting to the situation. If you do not want people farming the MM, you need to be proactive. If you nerf MM, what will players currently farming that material do? They are not going to change their infrastructure if there is a viable solution using the same infrastructure.

Nerf the BTA. Nerf BDE => 500, BBH => 600. Nerf all agriculture if you don’t want the MM farmed.

Remember the butterfly effect. Nerfing Agriculture => Excess Materials => Cheaper Agriculture => RAT sales to MM are more profitable => Nerf RAT MM => Excess Materials => RAT Cheaper => Everything Cheaper => lots of MM suddenly profitable again.

Maybe its best to just remove the MM and provide us the ability to destroy materials.

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Which materials need destruction in that context?

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If there are no MM purchase orders for a product, there is the potential for any material to become so numerous that all storage space is filled.

I should have phrased it “Maybe its best to just remove >> all << MM and provide us the ability to destroy materials.” My apologies.

Im strongly against BTA nerf. Why agriculture sector printing 1k/day is good, while same 1k/day for BTAs is bad? BTA currently(with fixed by MM and expensive basic supplies) allow constructors run at least somehow and provide alternative to barely profitable other b-fabs. If you cosider BTA nerf, please, nerf whole agriculture sector too, so prices on essencial DW/RAT go down too.

PS Game need healthy and balanced consumption at t1 tier mats to allow every industial sector work properly, but currently whole t1 sector dependant ONLY on DW/RAT, which is lead to regular sick sutuations and nerfing MMs just shift situation around DW/RAT cornerstone and dont actually fix root of a problem.

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I think prdgi nailed it. Removing one MM will move the problem to the next MM. This has historical data to support that claim. I’m strongly in favor of removing all of the market makers at this point but would recommend against nerfing only specific MMs. We can’t pivot what we make and nerfing one MM will probably cause a market shift and make life very painful for some players. Let’s see what happens to a player driven economy.

I do think that the deflationary economy will have new negative symptoms we will have to deal with (and possibly destroy the economy) but that is what the test is for right?

Many of us believe the MMs only purpose at this point is to provide a way to dump economic output to print money which is a force pushing against deflation. This isn’t even close to what you listed in your post about why MMs exist.

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Instead of nerfing more MMs, think about why players are selling to them.

I don’t think anybody starts playing this game with the intent to isolate themself from the economy; there are lots of single-player games they could play instead. Rather, they get pushed in that direction as every other option becomes less profitable. The reason for the reduced profitability is falling prices, i.e. deflation.

An economy with a fixed money supply tends to stagnate or deflate. If it grows by population increase (read: more players), then the same amount of money is spread across more people, making it hard to accumulate enough capital in one place to make any sort of infrastructure investment. PrUn avoids this by giving each player some starting cash created from nowhere.

However, if the economy grows by increased productivity (read: more factories per capita), deflation still results. This can be explained in terms of currency having an actual, inherent value, associated with its ability to facilitate trade. As the economy grows, more trading needs to take place, causing an increase in demand for currency. With the supply fixed, the value of currency then must increase due this added demand, and an increase in the value of currency translates to reduced prices on a broad range of goods.

The purpose the market makers are serving right now is to arrest deflation. They do this by setting a floor on particular prices and injecting more currency into the economy in the process.

Usually a currency source would cause inflation, but in the case of market makers all it can do is hold the inflation rate at 0%. Why? because the market maker price itself doesn’t increase. Other prices will stabilize around the point where making those other things is competitive with making whatever the market maker is buying, but if anything increases past that point, a lot of people who were dumping to the MM will switch, causing a surge in production and driving the price down.

Nerfing a market maker will disrupt the economy, starting a deflation spiral until we find a new equilibrium by substituting a new market maker. Removing the market makers entirely will cause a deflationary spiral that forces players to be self-sufficient or barter to survive. Or, in a lot of cases, quit the game.

In real life, healthy economies have a small, but positive rate of inflation. This encourages investment because hoarded cash will lose value over time, and that investment causes economic growth. This contrasts with a deflating economy, where hoarded cash gains value and new investments are discouraged.

So how do real life economies maintain a positive inflation rate? Two ways: First, governments are constantly printing money and using it to buy things. This can be likened to the market makers; the stuff governments buy is of course put to use instead of being destroyed as it is in PrUn, but that doesn’t actually matter much for the goal of inflating the economy.

Second, the banking system increases the supply of money through lending. When I put my money in a bank account, they don’t just hold 100% of it in the vault. They loan a portion of it out to other people, who spend it. The people who get paid then put the money in a bank, and the process repeats itself. Now I still have my money - as long as not too many people make withdrawals at once, I can always get it back from the bank - but someone else also has money that was created through the loan. This effectively multiplies the monetary base so that the amount of currency in circulation dwarfs the amount of actual, physical cash that has been printed.

In order for the economy to survive if market makers are removed, we need some sort of replacement for the money source they provide. A player-driven banking system would be an amazing feature to have eventually, but a more reliable, stable source of currency would be something functionally similar to market makers, with two changes:

a) It should feel productive, not destructive; when I sell something to the MM I feel like I’m throwing away useful resources.
b) It should support the economy more evenly, causing a variety of goods to be profitable to produce.

Since players will ultimately run factions, I propose to allow those player-run factions to print currency as an alternative to taxes, to buy things the faction needs such as rations and drinking water to keep the CoGC running. This way resources are put to use instead of being deleted, and if the factions are encouraged through game design to buy a variety of items, then they support a wide range of industries.

There is of course the potential for a poorly-managed faction economy to suffer runaway inflation or deflation, but if that happens it will be due to mistakes made by the players, and we will have the tools to correct it if we play wisely.

7 Likes

Thank you very much for your elaborate and constructive analysis. The two items quoted above speak from my heart…MMs are a stop-gap for those very reasons. Just “destroying stuff to get something in return” simply doesn’t feel right for an economy simulation like ours. And while we’ll never achieve an actual closed loop, we will strive for that ultimate goal.

In fact, this also affects stuff like the CoGC and future features that currently require loads of materials to just be “destroyed” without them actually being “used” by the receiver. Things like that are bound to stick around for a long time, but I am 100% with you when you say such mechanics should be avoided when possible.

And with that, back to the discussion concerning MMs, inflation and deflation :wink:

Some great points made above. The most important point to repeat is that RCO is not special - lowering the MM price will mean a switch to a different commodity, and we’ll have effectively the same situation a week later.

The first thing I want to say is that the situation with BTAs and RCO is very different - Promitor is a vastly lower risk environment, and it’s that very low risk combined with the MM farming which can, in some cases, inspire resentment. (I am on neither Montem nor Promitor, so hopefully I can be impartial.)

One risk to a business is a rise in the price of their inputs once they have invested in fixed capital. The vast majority of economic activity at the moment uses pioneers, which absolutely require DW, RAT and OVE - virtually every business is sensitive to the prices of those. At current Promitor prices, around 90% of the cost comes from DW and RAT, with OVE prices fairly stable. The ideal situation is where a company produces all the inputs it uses - unlike the real world, there is no risk that it will produce inferior products, be mismanaged, have production delays, etc. In fact, if you set up RIG, FRM, and FP, you entirely control your DW and RAT costs, which makes for very low risk from suppliers. For some time, DW and RAT were very expensive (70+) on Montem, which combined with steadily dropping basic prefab prices made life difficult - it’s definitely one legitimate reason to be envious.

Deterioration is, in my opinion, a great change that will not be relevant for many weeks. With basic prefab prices dropping, people are going to wait to buy.

Another risk to a business is producing inventory - firstly, the price might change between when the production run is started and when the goods are sold; secondly, you have paid cash to produce the goods, but you won’t get it back until you can actually sell the goods, and you need cash to buy inputs to keep the factory running - in a realistic, imperfectly liquid market, you might be stuck with capital tied up in something that is useless to you for some time. The ideal situation is if you could essentially guarantee people would buy your goods, if they bought regularly and predictably, and if you could make use of them yourself if they happened not to sell.

Farming meets all these criteria. As noted, businesses invest in fixed capital and then operate it to produce profit, hopefully enough to recoup the costs - but even if they operate at a loss, so long as they lose less money than demolishing the factory and selling the refunded components, they will keep producing, and keep buying DW and RAT. At within-MM prices, the price elasticity of demand for DW and RAT is effectively zero - people simply must keep buying. They also buy regularly since even a single unit of DW is useful, and is needed frequently. Of course, if the DW and RAT doesn’t sell, you can use it as input to produce more DW and RAT, stockpiling it until market conditions are better - you can wait pretty much forever, and everyone knows it. If you’re really adventurous, you can open another business and use those supplies to operate it. And, of course, the MM will happily accept your goods indefinitely.

For similar reasons, investments in farming fixed capital have very low risks, far lower than invested in a PP1, for example. On Montem, people are selling BTAs to MM largely because the basic prefab market has seen prices drop steadily, and there’s not much else to do. There is no point buying prefabs to make a factory to make more prefabs when they’re already cheap, and when the prefab price is low, your refunded materials from demolishing a PP1 are worth very little. The larger problem is that, in effect, people buy DW/RAT constantly, but only buy basic fabs when they want to build more factories. That will change with deterioration, but that’s some time away. Montem is far more vulnerable to all the issues listed above, and correspondingly I do not believe it is appropriate to lower the MM prices for basic prefabs at this time.

The net effect is that farming on Promitor has negligible external costs, is incredibly safe, and with the MM is effectively a license to print money indefinitely with essentially exponential growth up to the area cap; it simply does not need the support of a buying MM. I would be stunned if people went bankrupt, and would rate that risk far below dropping out due to boredom. In a balanced game, low risk should come with low reward.

Eventually we would love to get rid of the MMs and switch to a purely player-driven economy.

I find this “eventually” deeply worrying. The MM is warping the game right now, and I am hearing that it’s a massive turn-off for a number of people I respect. Many of your target market are apathetic due to the perceived emphasis on risk-free MM farming, almost turning it into a single-player game - at the moment, it’s definitely not the dynamic, player-centered experience I signed up for. Worse, this will entrench itself over time, as your player base tends towards people who not only find it acceptable, but have come to depend on it. You can tell people not to rely on it, but are you really willing to remove the MM at some future point if many players do, in fact, rely on it and will probably quit if you do? They may not even be reading the announcements. Something needs to be done, as soon as possible, if you want to attract the players the game is designed for - if going free-to-play was aimed to get their attention, the game needs to be something they’ll love right now.

Let’s examine the rationale for the MM. We are long past the era when the economy needed bootstrapping; what happens after a reset is an issue for another time. Keeping the prices of basic goods “within reasonable limits” initially sounds sensible, but what’s a reasonable limit? Obviously, we don’t want a situation where fuel or water spikes and everything shuts down. That’s a good reason to have a selling MM, an upper limit. What is far less clear is why you’d want a lower limit - these are, as you said, basic consumables and construction materials. If they’re very cheap, someone will buy them and use them - perhaps the sellers take a loss and some need to shut down, but that’s not particularly bad in itself, so long as the players themselves don’t go bankrupt and quit. Back before demolishing buildings had any material refund, it may have been sensible to stop people going broke if they invested in farming, but not now. The only reason I can think of to have a buying MM is to reduce the risk of investing in the corresponding fixed capital so as to raise investment and output, but I just don’t think it’s needed for farming.

One problem with removing the MMs, as referenced in PetWolverine’s excellent post, would be the macroeconomic effects, especially if people were buying from the MM but didn’t sell - as I mentioned, Montem was buying DW and RAT near MM prices for some time. The game needs a currency faucet, and although in the longer term I would second adding the banking system as a vital next step, that will take time, and the problem is acute right now. I have a number of ideas, but I suppose this post is long enough already. (Another problem is that if a business goes bankrupt, most likely the player concerned goes bankrupt and quits the game, which is bad for Simulogics - but an economy where no businesses can go bankrupt would be dysfunctional. The usual mechanisms to prevent this in real life aside from the MM are all absent.)

One meta-problem is that the team’s background in economic-related areas looks roughly like this: Martin, logistics; molp, finance. This is obviously helpful and shows correspondingly in the game’s strong microeconomic design. However, the micro/macro economic distinction arose historically because what makes sense on the scale of the individual firm has different effects across the wider economy - deflation would be a classic example. (I respect molp, but I do not know if the finance position he held touched on these issues.) I suspect that the team’s efforts would benefit from getting an academic macroeconomic perspective, someone with accumulated knowledge that could shed light on how the wider economy would best be designed. The only truly successful game economy I know of, Eve, had an academic economist with PhD monitoring the macroeconomy. While I assume that’s not viable here, it would probably be possible to get a little input relatively cheaply (graduate students, for example), and that little might go a long way.

In conclusion, I believe that within the next 3 to 5 weeks, some kind of currency faucet should be added and the buying MMs for DW, RAT and all agricultural products on Promitor should be phased out. A tentative suggestion would be to announce well in advance that the MM price will drop by 3 currency units per day (scaled proportionately for RCO) until it reaches zero, then be removed permanently. The currency faucet is harder, but I think PetWolverine’s post makes some great points.

7 Likes

Maybe I am wrong but where’s the RAT/DW graph? That has lucrative potential also :slight_smile:

hi, in a real economy, (wich you try to simulate here) you pay 1/3 of your profit on materials, 1/3 from same profit on salary, and you are left with 1/3. to either invest in yourself, or acumulate capital.

this economy should be like that too! meaning:

  1. the salary(DW/RAT/COF… etc) should cost 1/3 max from what you can make by selling everything you make
  2. the materials should also cost a third of the final’s product cost.

corporations who can make everything will tend to stop selling to the little guy, put an expiry date on products! :laughing:

the only need for cash is to pay those taxes, so… create need for cash transactions somehow,
in a real economy you can buy realestate, tools, cars etc… with cash, then why not here? add a price tag and sell ships, high end products, even corp modules or orbital station tickets of lets say: acces… with cash… this will incentify players to actually trade for it
but then the speed of the production is rather limited, so they wont be able to do much with more stuff they buy, they should be able to flash produce in lets say half the time in certain conditions…

sorry i got carried away allready…

L.E. good luck with nerfing stuff!

2 Likes

A little late to the party, but whatever.
Deflation spiral of death is a term I have been repeating for ages and people addressed it nicely so I will pass this opportunity.
However, there is one critical aspect, one reason why we can NOT completely remove MMs. Material dump. As long as we cannot destroy materials or focus Extracting buildings on one resource, we need a way to remove unwanted side-products. All this pesky LST, FEO, SIO, MG and MAG need to go somewhere.
Addition of NA MM was a great thing, CL production would have been unsustainable otherwise. I have no objection to lowering the abovementioned mineral MMs to 1 ICA (although they are barely worth shipping as it is), but they must stay. Otherwise we end up with a lot, lot, lot of planets that are either totally useless or need coordinated effort of several players to build infrastructure at the same time not to end up with base full of Storage units full of limestone.

3 Likes

Sorry to be late to the party too.

I’d turn the question to what is the purpose of MM. It’s so people can take otherwise unsaleable product to either make a profit or remove it from inventory at a loss. Currently the meta of the game is to make stuff that sells at a profit to the MM, particularly at the early game (at a small profit) and late game (at a huge gain).

What’s not shown in those graphs is what is actually sold to actual players today. How many B-fabs are sold to actual players vs the MM. I’d guess most of players output is sold to the MM which is the root of the problem.

You can remove the MM but that would also destroy the game which I’m sure your aware. This game needs a money faucet at the entry, mid an high level of the game as it currently stands. All current MMOGs that I’m aware of have this, however PU’s MM isn’t a great device to do this from a gaming stand point.

Creating product to sell to the MM just isn’t a fun game design choice in my opinion. It’s not a thought provoking and a pretty brainless choice.

Long story short and referencing the last blog, trickle down economics was disproved many years ago and deflation is worse than inflation as is happening now here.

1 Like

Hi.
I think the fact that we’re all supporting each other’s points is a good sign. I would like to agree with the points above: 1. without MM, (until there are either banks or a long-term IOU system added to contracts) the cost of all goods will tend towards zero. 2. some goods with no demand, particularly natural resources will need to able to be “dumped” out into space.

Here are my suggestions:

  1. MM’s ONLY on the most fundamental resources upstream from DW/RAT/OVE.
  2. Either minimal MMs of 1 NIS/ICA/CIS on all other natural resources, OR a paid “garbage-removal” service.

In the medium term there are a couple “easy” ways to increase money supply without too much code:

  • allow governor to buy goods on markets in deficit financing (allowing them negative balances), essentially putting monetary policy in governor’s hands
  • allow players to mortgage their assets to Exodus Council with automatic penalties – think of the bailout loan in airline sim

Long term, in addition to a banking system there should also be a scientific research type module… where players can invest long-term in some probabilistic chance of creating a new production pathway which will allow the more basic goods to be used in new ways.

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a lot, lot, lot of planets that are either totally useless or need coordinated effort of several players to build infrastructure at the same time not to end up with base full of Storage units full of limestone.

@ Sharlindra - You have unwanted limestone?
LST sells at CIS 100 at Katoa…

I think currency should be limited thus removing all MM’s from manufactured goods and keep it at very low profit on ores, agri, water.
Give all starting planets equal fertility/water concentration.
Add corporation/player projects or missions to acquire small amount of funds, ores, goods at different tech levels with better rewards. ( Example : Fund scientific expedition - materials required : 40dw, 40 rat, 10 ove, 2 pwo. Goes for 6hrs and on completion random reward : 2500 NCC, 6 SIO. )

Fixes need to progress in tech tree - better rewards from exploration also.
Fixes grief - all players have equal sustainability levels, no hard dependencies from starting planets.
Fixes - overproduction… goods will be manufactured on orders or if they are needed.
Removes the : “my gas giant generates 100k a week because of insignificant MM buy order and/or players funds to buy his products.”

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