Source of the price drop found?

A few days ago, I mentioned that the price of a few of my items dropped significantly. I didn't quite know what to make of it. It had little impact on my trading activities, but I figured I'd keep an eye out for something that could explain the price drop while I did my usual blog/forum reading. Today, I may have found the cause.


GoonSwarm. F**king. Federation.

Despite their love for mayhem and seemingly complete lack of organization, GSF has some serious brainpower where it counts. In this case, in their economics and finance group. A few enterprising Goons pay very close attention to any changes in the game itself, looking for ways to exploit some of the mechanics for corporate gain. And in Inferno, they found it: the revamped Faction Warfare system, specifically, the Loyalty Point rewards.

For non or new players, Loyalty Points (LPs) are a means of rewarding players used by NPCs. As you accomplish missions, NPCs will give you some ISK as well as LPs. LPs can then be used to purchase higher-quality goods from NPC faction stores, which are not available anywhere else. This is an excellent means of supplementing income (in fact, one that I've been using for Tori as I mission).

Goons took a *very* close look at the changes in the Faction Warfare (FW) system to figure out if there was a way to exploit it. And they found one.

One of the changes CCP applied to FW was to add more rewards to entice players to join in the battles. Prior to this patch, the only real reward was a title, which is nice, but doesn't pay the bills. Now, FW provides many ways for players to obtain LPs. One of those ways is by destroying enemy ships, and the number of LPs obtained for each ship kill is dependent on the type of ship, and the contents of the ship.

Think about that last part I highlighted. The contents of the ship. In other words, the more stuff in the ship, the more LPs you get. What ships carry a lot of stuff? Cargo ships. But who in their right mind would fly a cargo ship as part of a Faction Warfare unit? Who indeed?

How about a Goon alt?

Since these were the financial master minds of the organization, and they had access to the Alliance wallets, so they had plenty of money to buy dozens if not hundreds of industrial ships and freighters, fill them with goods, blow the ships up and rake in the LPs. So they created a bunch of alts, put them on one side of the Faction Warfare, then put a bunch of other alts in the other. That way, they didn't need to hunt war targets. They placed them wherever it was convenient to blow them up and loot their wrecks.

It doesn't end there


When a ship gets blown up, its cargo drops for the attacker to salvage. That means the cargo can effectively be re-used in another freighter, to generate more LPs. This can be repeated over and over again, until nothing drops from the cargo of the destroyed ship. The same item can be used to generate LP multiple times, so it's a very cost-effective way to generate LPs.

But wait, there's more!

Remember earlier, when I said LPs can be used to purchase goods? This wasn't lost on the Goons. They spent some time figuring out which of the items in the LP store would net the most LPs if destroyed and dropped in an FW attack. Their research showed that some items would generate enough LP to purchase more items to be destroyed without having to use up all LPs obtained from a ship kill. That means that once properly seeded, this system of generating LPs would feed itself, generating unlimited LPs.

And that's what they did. Ship costs were negligible. They picked a cheap industrial ship, and bought tons of them with ISK from their war chest, and went to work. This system worked so well that the Goons economists had to start worrying about things like variable overflow: could the number of LPs actually get so big that they would overflow the computer variable tracking that number, and resetting them to 0? Since they had no idea if the variable holding the LP value was 32 or 64 bit, they decided to be conservative, and limit LP gained by a Goons character to less than 2B LPs, just so they wouldn't roll over.

The Shenanigans Continue!

Once they had raked in all the LPs they could handle, they decided to cash out. They would trade in their billions upon billions of LPs for goods from the LP store, and sell those items on the market. But in true Goons form, the shenanigans didn't end with the LP generation.

In Faction Warfare, the side that does well and pleases the Faction overlords can move up in ranks (Tiers, as they're called). By doing so, the NPCs in the LP store sell their wares for less LPs. And one of the ways to move up in rank is to trade in LPs. Goons, having billions of LPs, used part of them to boost their standings, just enough to reach the top Tier and make items as cheap as possible.

The cost of goods in the LP store is evaluated by CCP as ISK per LP, and CCP tries to keep prices at around 1,200 ISK per LP. By that measure, if something is worth 1,200,000 ISK on the open market, players should be able to buy it for about 1,000 LPs in the store. Thanks to Goons' work, they cashed items out at around 80 ISK per LP. In other words, that 1,200,000 ISK item could be purchased by Goons for 80,000 ISK, then resold for 1,200,000 ISK, or 1,386% markup.

Goons estimate their take to be 5,000,000,000,000 ISK. That's 5 Trillion ISK. To put that in perspective, this is worth approximately $156,250.00 in real world money (based on PLEX conversion rate of 15$ for 480,000,000 ISK).

How does this affect me?

I have no idea at this point. This story broke today, and I haven't been in the game much to see what things look like. I did a quick review of my sales, and things didn't seem out of whack yet. Some items, notably the Minmatar UUB chip which I bought with LPs from missioning, are still selling at the same price as they have in the past week, however, there are far more sell orders on the market, so I expect those to drop. I've also traded in faction items in the past, so those may not be profitable any more. Fortunately, I have very few of those left in my orders, so I won't likely lose any money.

But I don't know what it means for the rest of the market. One the one hand it could be very good. If enough of these cheap goods are sold, players may have more money left over, and they may buy goods they wouldn't have bought. On the other hand, if players were relying on these goods to generate ISK for themselves, they may no longer have ISK for non-LP goods.

It's a bit early to say what's going to happen. Fortunately for me, I'm heading on vacation next week, so I wasn't going to be in the market anyway. It's going to be very interesting to see where things stand in a week from now.