Eve Economics

So I started playing EVE again (it's an addiction, I know) and realized that there's very little on the internet regarding substantive economic discussion of the EVE world. Which is odd as it's a (nearly) totally player run economy comprised of some 400,000 people. That makes it the most complicated and lively economy in any MMO that I'm familiar with (most other games, like WoW, split their player base across a horde of identical worlds... so 400,000 in one world is huge). EVE used to have a Chief Economist (talk about my dream job!) but he's no longer there and his quarterly economic news letters (which came out more like every 4-5 months) are no longer, sadly.

So getting back into it, one of the first things I did was update my spreadsheet and start looking for things to make. I'm an industrialist at heart and that's what really gets me excited.

And boy how things have changes. There's been a significant shift in value of minerals thanks to the elimination of what is commonly referred to as "drone poo" as well as the meta 0 removal. There was a time when something like two thirds of the Nocxium in the economy was being supplied by drones (and I think a significant percentage of Isogen as well). This distortive affect messed with mineral equilibrium and pricing in some pretty severe market distortions and contortions throughout the years. With the removal of those items, the vast majority of minerals will now be supplied by mining. So naturally, I wanted to figure out what the prices would settle down to. My first clue that something was wrong with the current prices came when I updated my spreadsheet for ore values. At present, the most valuable ore to mine is Arkonor at 108.9% of Veldspar (which is what I use as a baseline). The fact that Veldspar is only 8.9% less valuable than Arkonor was shocking enough. But the really crazy thing was when I noticed that Scordite was number two at 106.6%, Bistot is basically the same as Veldspar (100.6%) and Crokite is at 85%.

I did a little research and three things came up as explanations.

1) The current political climate in the north is significantly calmer than it used to be. The big Technetium mining alliances have settled down and formed OTEC (like OPEC but for Technetium). So the war efforts have been curtailed. This probably hasn't stopped the arms race (I'm sure they're still building dreadnoughts, battleships and other weapons of war at an alarming rate) but it's likely made null-sec mining significantly safer than it used to be.

2) Wormhole life and therefore wormhole mining continue to mature. As people figure out the best techniques for WH compression, getting minerals to market is less of an issue. And in wormhole space, you just mine what you can get by strip mining everything in a location (to force a respawn) and building with it as best you can.The population living in Wormhole space has also increased.

3) Hulkageddon (this time funded by the Goons?) and CCP's continued (renewed? new??) effort to ban botters has worked. As a result, high-sec mining has declined.

So putting it all together we have:
1) Null-sec and unknown space mining has increased
2) High-sec mining has declined
3) Drone poo removal still a bit in flux

So it's not really surprising that the ore yields are currently VERY flat (by way of reference, when I left 8 months ago, Arkonor was about 250% of Veldspar in value). Whether this can be maintained is a totally different guess. But it allows us a somewhat unique opportunity to examine mineral prices from a purely mathematical standpoint. Let's examine the price of Scordite. It's nearly impossible to say, "This is the fair price for Scordite / Pyerite / whatever" in EVE. But with certain things we can fairly comfortably say, "Here's the right price for X in relation to Y." It turns out that this is fairly easy and clean for comparing Pyerite to Tritanium.

The vast majority of Tritanium gets produced from Veldspar and Scordite (76% if you're mining even amounts of every roid). Similarly, over half of the Pyerite comes from Scordite (about 56% with another 31% coming from Plagioclase).

Each 1m3 of Veldspar yields about 30 units of Tritanium (30.03 to be exact).
Each m3 of Scordite yields 16.67 units of Tritanium and 8.33 units of Pyerite.

Since Veldspar and Scordite are the two universal ores and appear everywhere at all times in every system with no regional or security status affects, we can and should assume that their value would be nearly identical in a post drone poo world (allowing for small fluctuations due to the market and due to reprocessed meta loot). If we do this, we can assume that 30.03T = 16.67T + 8.33P. The way I've solved all of these are to assume that Tritanium is the base for everything and solve things as a multiple of Tritanium's value. so in this case, P = 1.603T.

Currently, Pyerite is trading at between 1.85T and 2.0T.

There are only a few possibilities
1) Reprocessing of meta loot is providing significantly more tritanium / less pyerite than is needed
2) The market hasn't settled down yet
3) There is a coming surge of inflation and Pyerite is the leading indicator
4) There is a coming surge of deflation and Tritanium is the leading indicator

I tend to think it's a combination of 2 and 3 with mostly 2 being the cause. And the reason is the ore prices. It's just not sustainable long term in the game for Scordite to be the best (or within a couple percentage points of the best) ore in the game. Every Tom, Dick and Harry miner should be pounding high-sec (.9 and above) space mining 2 of the four most valuable roids in the game. Unless Hulkageddon is still supressing high-sec supply, this affect should occur rapidly.

Now it's possible to construct a set of equilibrium equations based on an ore basket. I did this a bunch of ways (I'm going to put up a detailed post on the forums) but I think I've established the likely trading range (again, as expressed as a multiple of Tritanium) for the major minerals (Morphite is disconnected).

Pyerite: 1.6T - 1.6T (this should settle down in a VERY narrow range)
Mexallon: 9.46T - 10.1T (varies almost entirely based on the viability of Pyrox as a minable ore because otherwise Plagioclase sets this price)
Isogen: 11.8T - 18.1T (If high-sec mining returns such that Kernite is largely supplying Isogen then 18.1T is probably the right range but if null-sec is strip mining things like Hedbergite, Hemorphite and *shudder* Omber then they're going to oversupply Isogen and drive the price down)
Nocxium: 74.1T - 142.6T (Jaspet's inclusion is what drives Nocxium down)
Zydrine: 114T - 212T (If Zydrine is coming from ABCs almost exclusively, it goes way up but those little bits supplied by Hedbergite, Hemorphite and Jaspet add up over time)
Megacyte: 246T - 458T (this is driven by Zydrine primarily. If Zydrine prices are high, so are Megacyte. Megacyte significantly rarer than Zydrine (both in quantity but also in variety)

The algebraic "best guess" equilibrium point is
1.6 / 9.46 / 11.8 / 74.1 / 126.7 / 368.5
vs. today's ratio of
1.84 / 8.6 / 12.7 / 75.2 / 115.9 / 334.1

so that's fairly close agreement. My gut is that Pyerite will take a big hit in value (it should fall something like 15%) but the rest are within a kind of "market fluctuation" range that I think is reasonable. Long term, I'd expect the spread on Zydrine to rise as things heat up in null-sec again (whenever that happens) and/or mining volumes return to high-sec.

I'm going to try to post some sort of economic analysis at least weekly... We'll see how long that resolution lasts ;)

--
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