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  1. #1
    Old Acronoid's Avatar
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    Land Lot Deeds Breakdown

    Since November the 8th, land lot deeds have been introduced;
    which let to speculation, discussions and a lot of misconceptions.
    Now let us look more closely into these deeds, what they are "worth"
    and how they will/can influence the future of Entropia.

    Besides "voting" rights and the ability to build a "house"; the main interesting
    thing about these deeds is that each of these deeds give 1/60.000 of a
    quarter of the gross revenue.
    Or to say it short: Each deed will give the holder the right to 1/280.000 of the
    Gross revenue of a weeks period; to be payed of at the end of each week.

    One quarter of the gross revenue will be used for development; the other half
    will go to MA.

    Gross Revenue Pie Chart



    Gross Revenue.
    to clear this one out of the way; Gross revenue of planet Calypso is neither
    profit nor turnover. To put it in simple terms:
    - Turnover equals the sum of all RL currency income (deposits minus redraws)
    - Profit is Turnover minus company expenses (wages, operating costs,...)

    Gross Revenue on the other hand is the amount of peds taken out of the
    "system" by each action a participant (player) does within that system.
    Or another way to say it; the Gross revenue is the sum of all peds players
    have lost while participating in game activities like hunting/crafting/mining/
    auction tax/fuel consumtion/...


    Gross Revenue measured
    While we now know the theory behind gross revenue; it is important to know
    how we can correlate it to other figures.
    since it is determined the amount of peds spend in activities; let us first
    define the word peds cycle.

    Peds Cycled is the total (TT value of) peds used in game activities
    (hunting/mining/crafting/coloring/repairing/...); it's the total of all ammo,
    probes, decay, paints & materials, ME, oil, fertilizer, auction fees, toxic shots,
    etcetera, that are used regardless of the return.

    When participants cycle peds; they get "loot" which we call return on
    investment (shortly: RoI). Now one thing any participant that plays the game
    knows is that the RoI (in TT value) in the long run is always lower then what
    they put in.
    The difference between what all participants cycle and their RoI is the gross revenue. so:
    Gross Revenue = Cycled peds - RoI

    Now, as a participant; you want an RoI as high as possible; and a RoI that is
    more then 100% of cycled peds is called profit(on TT value).
    Now, since MA can't risk people redrawing more then they deposited; they
    want to keep the RoI lower then 100%. But they don't want to RoI to be so
    so low that nobody wants to play anymore either.

    The % of Gross Revenue versus cycled peds
    The discussion (and obsession) about RoI is as old as Project Entropia itself.
    Long ago Marco (old MA employee, for the new kids) told that MA took a part
    of all decay out of the system; meaning that the gross revenue would be
    totally based on the decay of items.
    Now, I don't say it might not have been true at one time; but even if this was
    once true; it most likely isn't true anymore.

    Since the start of Entropia people have held records of their RoI while doing
    different activities with different tools. and during the course of time this lead
    to some very interesting results.

    There once was a saying that if you could hunt more economically then most
    of the other participants your RoI would be 100%+ thus getting more then
    spending (cycling). This has been confirmed by numerous tests with very
    economic weapons (IMKII). Economic in this way means trying to achieve the
    highest possible dmg/pec without losing peds in armor/fap decay.

    Now, VU 9 might have been the turning point of this system. Since test done
    by participants after this have shown that "economical" hunting did not yield
    the same high RoI as before. This let to the point that some ultra economic
    IMKII hunters stopped playing altogether.

    What tests concluded afterwards (mostly mining; some hunting) is that the
    ROI after many cycles converges to ~90%.
    Then an official statement came from MA officials that their aim is to that to
    "charge" participants on average 1$ (10PED)/hour for playing.

    Gross Revenue in figures
    Now, since it is one of the tasks of BASE (MA's balancing team) to determine
    what % of cycled peds is going into revenue; since this can change over time
    and is closely guarded secret; we can only assume the %.
    If we assume (as many tests have proven) that the RoI averages around
    ~90%; then the other ~10% of cycled peds go to Gross Revenue.

    so if Gross Revenue is 10% of cycled peds and each deed holds a 1/280.000
    share in it; then each deed holds approximately 1/2.800.000 of cycled ped.

    Or to put it in a formula
    1 deed = total cycled peds /2.800.000 (2.8M)
    for each or any given period; which given the closure is paid on weekly basis.


    So for a deed to generate a single ped; 280k ped need to be taken out of the
    system; which equals to approx 2.8M peds cycled.
    If we take in account a carefull 250ped income (instead of the advertised
    270-300PED) on yearly basis it would yield on average a return of
    4,807692 PED a week. Or a total cycling of 13.461.538.46PED a week
    (a little short of 13.5Million ped cycled weekly).

    If the entropia playerbase would consist out of 10.000 players; it would mean
    that each of them needed to cycle 1350ped on average and losing ~135PED.

    If we take more realistic/pessimistic figures and value the active playerbase
    at about 6000players then each needs to cycle 2243PED weekly and lose
    approx 224ped.
    If we convert this to a month; on average each player must have lost
    ~897PED in case of 6K active player; or 540PED in case of 10k.
    Note that this is given a careful 250PED return on each deed; while 270-300
    ped is advertised!

    Consequences of the deeds
    Now lets look at the reasons why MA would do such move; and what are the
    consequences of it.
    The first problem MindArk has been facing is the problem in selling Calypso as
    a whole. their strategy is to maintain a platform on which companies can host
    a planet; but in doing so they must sell Calypso. Else the other Planet parties
    could claim a conflict of interest.

    Now we all know about the failed selling of Calypso to SEE; and we also know
    that the economy is not very stable and there is not many venture capital
    out there at the moment. So MA had a problem; to which they found the a
    most clever solution.

    If they sell the rights to the Gross revenue to participants minus a part for a
    development team; the part for MA would be the same as if sold. So this
    solves the conflict of interest.

    Another advantage is that by selling it ingame; is that they reduce the overall
    ingame value of items; since many people will TT their low MarkUp items or
    sell them to crafters which will cycle them.
    Since ingame peds have the potential to be redrawn they form a liability. by
    reducing this amount they reduce their liability which means there assets are
    valued up.

    A third advantage is that many people will deposit to buy one or more deeds
    which increases the turnover for MA; which leads to more liquidity to invest.

    Now a fourth advantage; which will come by time is made by the fact that
    many deeds will be bought by regular players which will cycle the
    earnings of the deeds instead of redrawing them. Which means more cycling
    but less deposits initially. Now if calculating in the the human Psychology into
    the equation, the level of deposits will gradually restore to normal in about a
    years time.

    A fifth advantage is a that it bounds participants closer to Entropia. While
    only a few have invested in uber gear and feel "bound"; many more will invest
    in deeds and have an interest in the well being of Entropia.
    This may result into participants dragging in new players; because every
    deed-holder profits from a higher player base.

    A sixth advantage is that it's a nice publicity stunt and a novelty that may
    lure potential participants to the game.

    So, no down sides?
    Well ofcourse there are a few downsides.

    First; if MA doesn't sell all deeds in a acceptable time-frame; people will lose
    confidence in the system; and they might lose their face in publicity.

    Secondly; if the selling drains too much of the current economy; people who
    have invested will cycle less peds in the beginning and wait till the economy
    recovers. But the less is cycled, the less the Gross Revenue is. This will lead
    to decreased appreciation of the deeds and selling below the opening price of
    1k peds. This may lead to a "The sky is falling" response which may be the
    beginning of a viscous circle.

    Thirdly; the value of deeds will become the biggest economical barometer in
    game, which will bring a whole other layer of fragility in terms of balancing
    and general playing mood. If the MU on deeds drop; they will tend to keep
    dropping till they hit a hard floor like RL shares. On the other hand they might
    rise to the roof too if things go good.

    Are they worth it/ Should I buy some?
    Lets first look at the price of the deeds. They are offered at 1000ped and will
    yield (if succeeding) an offset of 200-300ped a year.

    The price of these deeds is determined by MA and is based on what they
    expect to sell them by. It doesn't mean that Calypso would be worth 24M$,
    nor that they have accounted the asset "Planet Calypso" as 24m$.
    It just means that they expect to sell the deed for a total of 60M peds (6M$)

    If a participant keeps the deeds until the "End"; and that end lays more then
    4 years in the future and revenue exceeds 200PED; then it would have been
    worth the investment.
    Or more appropriately:
    If at the time MA goes bust the revenue of the deeds exceeded that of the
    total cost considering dollar inflation during that time; then a participant has
    gained overall profit (either redrawn or spend in playing).

    Now, if the participant is a bit more clever they will want to hold onto the
    deeds for a certain time and then sell them. So actually the appreciation
    value on auction is very important. If sold above 1k PED it means profit above
    any received revenue.

    Now should you buy some?
    Well just like any stock/gambling; the golden rule is: Invest only what you can
    afford to lose.
    You should buy deeds with the mentality of "I lost this money, and any return
    is a nice gift".

    You can of course speculate on other things aswell. Now, for example it is the
    time to buy some items people are selling to buy deeds. While there is no
    reason to believe the prices will rise again; history tells us otherwise.

    And if you resell those items at a greater price and buy depreciated deeds for
    lower then 1k ped you might get the best of both worlds.
    this brings us to the next:

    Will the deeds hold their price
    well, let my get my crystal ball and look
    No really, most important is the time it will take to sell the deeds an who will
    buy them; If common participants buy most or if entrepreneurs will.
    And if their is scarcity of deeds, or if they won't get sold at all.
    If common participants will buy most; the likely hood of selling them later
    under the buying price is more likely. Major players will see it through and
    might only sell when the ship starts to leak.
    If there is more request then offer they will rise or remain stable; but if there
    is an over offer the price will go down to a lower new "natural level".

    In the end the price will react to anything MA will do; and otherwise remain at
    a natural buyer/seller level.

    I do however expect the price to drop before summer holidays; together with
    skill prices and other gear. but if they drop below 1k ped may be another
    question altogether.

    Thank you for reading
    Regards Acronoid

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  3. #2
    Old Alpha
    Joined
    Nov 08 2010
    Posts
    732
    Or to put it in a formula
    1 deed = total cycled peds /2.800.000 (2.8M)
    Your formula does not take "other fees" in to account other than those generated by hunting, mining, or crafting...

    http://www.entropiaplanets.com/forum...izenship.6515/
    Q. How is the Planet Partner Gross Revenue calculated?
    A. Planet Partner Gross Revenue is calculated and paid by MindArk to the Planet Partner, and includes avatar activity on Planet Calypso, along with the activity of Calypso avatars in Space and on other Entropia Universe planets. Avatar activity includes deterioration of items, as well as various other fees and avatar activities.
    What those fees are/could be... fee to enter/exit space, auction fee (somewhere it was said long ago that 50% of auction fees went to MA and 50% to planet partner). There is no longer any estate fees so that's out, at least on Calypso... but there are still taxes on shops at Omegaton/Genesis/Sakura, etc. which don't go to participants, so those are fees too. Then there's the LAs that the estate broker owns which have taxes going somewhere - another fee (although that's really a part of the mining/hunting/crafting, well sort of). Also, I would assume that if new LAs are created such as Medusa Head or Treasure Island, i.e. big huge places that usually get sold yearly, perhaps part of that is considered gross revenue for the planet as well?

  4. #3
    Old Acronoid's Avatar
    Joined
    Feb 08 2011
    Posts
    110
    Quote Originally Posted by mastermesh View Post
    Your formula does not take "other fees" in to account other than those generated by hunting, mining, or crafting...

    ...
    ...
    Peds Cycled is the total (TT value of) peds used in game activities
    (hunting/mining/crafting/coloring/repairing/...); it's the total of all ammo,
    probes, decay, paints & materials, ME, oil, fertilizer, auction fees, toxic shots,
    etcetera, that are used regardless of the return.
    ...

    Well, the "..." and "etcetera" was so I didn't have to think too hard to miss
    any of the (too) many taxes we have. I even added the "regardless of return"
    to these "service fees" But indeed many people forget this,
    which is a shame cause they take up alot of the actual budget for someone
    that loves to travel around.

    Secondly, I have not seen any unowned land that have taxes; but I'm willing
    to learn. Can you give me an example of such LA? (on Calypso that is)

    Thirdly, I'm not really sure about this; but I conclude out of the faq that this
    will not be the case. However since it isn't either excluded either it might go
    both ways: included if GR is too low; excluded if MA needs more.

    http://www.entropiauniverse.com/bull...-Lot-Deeds.xml

    Q. How is the Planet Partner Gross Revenue calculated?
    A. Planet Partner Gross Revenue is calculated and paid by MindArk to the Planet Partner, and includes avatar activity on Planet Calypso, along with the activity of Calypso avatars in Space and on other Entropia Universe planets. Avatar activity includes deterioration of items, as well as various other fees and avatar activities.

 

 

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