Purpose of COTOs? (SOLVED by @spoon - thx to all just the same)

That number also includes the full value of items (and you cannot sell items to NPCs for the full value), which is probably where most of that gold resides.

 

Because real-life money doesn't drop in-game.

 

Someone buying gold directly could really unbalance the economy by buying more and more gold. Then prices go up and no one can afford anything unless they buy gold themselves since they have to remove gold from drops to account for the millions coming in through cash sales.

By adding the CoTa you can essentially buy gold by buying CoTa’s and selling them in game for gold to other players. This does not increase the amount of gold in the game but only moves it between players. So it has less of a direct impact and there are people that would rather spend gold for COTa’s over spending irl cash.

 

Exactly... as I pointed out early in this thread, selling Gold directly would abdicate control of the amount of Gold in the game, and lead to hyperinflation. It would Truly be pay to win.

 

I just want to point out that they are Crowns of the Obsidians or COTOs.

 

This is funs!! everyone talkings!!

 

IGG = represents in-game effort doing stuff, anyone can make it by sitting around and killing stuff or doing quests.

IGG does nothing to help Portalarium exist.

COTO = represents money that has actually been given to Port (or similar consideration, such as when they came as part of bundles) That is why the exploit that generated them from a crafted object was so bad (even though the guy still has zero clue), because it was literally like printing counterfeit money.

COTO is the main model for how Port makes money to keep the game running and the devs devving. They can be sold to players for IGG to trade your time and effort for another player having paid money to Port, so you can buy store things without yourself paying the money.

 

@Spoon thanks for the informative post, but, however, it seems you have missed my point. Will there be a test later to evaluate our understanding of all the material you presented? O_O

I am not questioning whether SoTA should or shouldn't be a Freemium or P2W or have In-app transactions to make money.

I am simply reflecting on what I see is happening in the game, right now. And trying to make sense of it against the explanation that COTOs were introduced as a mechanism to stabilize the economy by primarily inducing and stimulating the flow of gold amongst the player base (i.e. a means to balance the supply/demand pressures of gold in the game by circulating it instead of causing undue creation/destruction of the total gold in the game).

What i'm observing is, that the COTO mechanism does not stop inflation at all. As @Spungwa pointed out, the traditional gold faucets (mob loot, npc merchants, etc.) are always open and they cannot be stopped or else there'd be no game.

Where does the gold to buy COTOs come from? Players need to accumulate it. They kill mobs, sell to npcs, get gold. This is gold creation. It will never stop. As avatars progress and mature, the rate of this gold accumulation only increases. Not every player buys gold from the RMT market, lots of players do it the old-fashioned way. The amount of gold owned by the player base is always increasing -- especially now that lot taxes have been slashed, and the in-game COTO sellers are just other players, not Portalarium.

What do the COTO sellers do with that gold they get from COTO buyers? They certainly don't re-circulate this back into the game by buying other stuffs from other player vendors. I mean maybe at the beginning but at a certain point (which I'm sure have since long passed), how what do Phil and Titania really need to buy in the game? What do they need to spend their gold on?

The only real way for them to re-circulate that gold back into the game is to sell it on the RMT market. Okay. Let's say this is what happens. The altruistic and benevolent COTO sellers lose money because the current COTO price is:


According to my calculations based on:


Price of 10750 COTOs from RMT market: $73.37 USD ((((10750 / 1000 ) * 105000) / 100000 ) * 6.5 )
Price of 10750 COTOs if bought directly from Portalarium: $90 USD



Given the above simple truth, why would anyone buy COTOs from Portalarium?

This is a BIG BIG statement. Not sure how you can be so sure about this. Because it implies that COTO sellers are constantly paying the higher prices for COTOs from the web store, only to be selling at a loss in-game for the benefit of all the players who don't want to spend real money.

Are these saints? Are they so ridonculously wealthy that they derive pleasure from "helping" others by willingly losing money?

Are we all in agreement that farming COTOs in any appreciable quantity for the amount of effort is not practical?

That leaves the only way for your statement to be true is for the COTO sellers to constantly buy from Portalarium and constantly losing money.

Does this seem like a rational thing to do?

 

All I have to say about this is good luck.

[edit] Also, 11500 COTOs were $80 not long ago and each bundle also included a chunk of COTOs, so there may be a bit of a glut of COTOs right now.

 

The various non-gold denominations were silly from the start. They were confusing to players and made 8/9 of the very limited in-game coto drops be useless booby prizes since they could only be used for one specific buff potion. Originally there was a 2:1 swap option for gold cotos, which silently disappeared.
But even more importantly, having so many variations meant that the vendor interface needed a way to return cotos, which eventually led to the exploit that returned cotos for a crafted item. I never understood why the plethora of coto types existed, except as probably one of those things that sounded good at the time. The need for the 100:1 swap was also a mistake, but it was hard to see in foresight.

I missed where the "win" part was. The buff potions are a very poor definition of "win". They seem to me to be more like something to placate the inevitable contingent who can't stand not having the maximum everything related to game mechanics. I've been playing the free mode of LOTRO for the past two months or so, and I can tell you that SotA has nothing on them for P2W, and there exists much worse P2W than LOTRO has.

Then you still don't get it. If they sold IGG directly, the value of each IGG would be less and less due to inflation from the zero-point energy nature of it, being created out of nothing as you killed monsters and did quests. MMO money is not like real world money:

When you get a paycheck from your job, that money came from income to the company going through various accounting processes. Money in = money out + money stored in a bank. When you get a "paycheck" from killing a kobold or selling its sword to a vendor, that money comes from nowhere. This is where IGG inflation comes from, because there is no limit to generate it. It can only be mitigated by gold sinks (buying items from NPCs, paying various fees and taxes and buying crafting materials from NPCs) which correspondingly cause that IGG to vanish. IGG only behaves like real money in player-to-player trade.

COTOs are (in general) only created when buying them on the web store with real money. The conversion may vary due to quantity (bulk deals, rewards program, part of bundles), but the point is they were created in exchange for actual real world money, and they are only destroyed when used to buy a store item or certain in-game services. That's why I refer to them as representing actual money paid to Port. It keeps them from having to deal with a real-money interface inside the game, allowing the store to work in game. And coto drops in game are like cash back when paying off your credit card bill every month.

Note that COTOs are (almost) ONLY created by paying money to Port, and ONLY removed by buying stuff through the in-game store and certain other in-game services. If RMT sells COTOs, they still had to be purchased from Port by somebody. They can be purchased with bulk discounts, but they are still purchased with real money.

tl;dr: IGG is like your score in a video game, COTOs are like video game tokens

There are other subtle issues such as the seigniorage of having tens of thousands of dollars worth of a proxy for real money being held in the game (which Chris has alluded to in his streams these past two weeks), but those aren't the main thing about cotos, just a side effect of their nature.

It's not supposed to. It's a separate currency that floats vs IGG. IGG inflates on its own, but buying COTO with IGG can be a hedge against that inflation, just like buying gold metal in the real world.

 

@Woodchuck you seem to be missing some points.

1) Folks buy COTOs from Port to support the game cause they enjoy it and want it to exist, not because it's the cheapest option.

2) The COTO exchanges are exactly that. They make money by buying COTOs cheap and reselling them. They have been doing it a long time. You could run one yourself if you wanted. It really just takes a bit of gold, some COTOs, a CF vendor, and a good location to get started. Here's how you do it: Go pick up 10,000 COTOs and resell them at let's say 105-110 per. So If you sell them all, that's between 1,050,000 - 1,100,000 IGG. Now reinvest that gold to buy more COTOs, at let's say 100 each. So you'll spend another 1,000,000 IGG to buy another 10,000 COTOs. But you have made 50k -100k IGG profit over the course. Continue to do this, and overtime you can amass wealth. This is what the COTO exchanges effectively do. It seems like a great way to make coin, but it relies heavily on taking risks (COTO price can and do fall) as well as paying attention to market trends and adjusting pricing accordingly. You can pay attention to those using the tools @Titania Xylia built.

I personally think COTO pricing is overvalued right now and going to fall, so I bought a bunch from Port to support the game and sold them. But YMMV.

 

Yeah this was one of the explanations that was given regarding where the seemingly ceaseless magical supply of COTOs came from. I was not aware of SoTA when these COTO packages were available for sale.

 

The best part is the day before the change the actual cost of a Coto in the store was under $.70 which is now $.83/100 soooo LMAO any one with any intelligence and can figure out Market could have and would have bought a lot more. and when you announce that the price of COTO os going up again you are klilling your own market.

 

NO ONE SPENDS 1,000,000 to make 100,000 even thow that math is a "Profit" it has zero to do in thie game. What player see is the fact that Cotos, were able to be obtained ALOT cheaper than what their actual value was. This is a fact by just looking at the history of the Add on Store Prices. There wqhere ways to also get Cotos that cost zero.

Sure there was an exploit, and some pl;ayers prob still have COTOs from it, but the most egregious violator was removed ((Supposbly)) However history will say that this issue left even more in circulation than should be.

I am sorry but Port has created a failing system and when you value your own currency as already starting lower than it should be ?????

As I have said on a few occasions this economy needs time to stabilize and that also requires that no changes be made to achieve balance. There has been zero allowance for any stability to be accomplished from persistence and gold to constant Coto changes.

Speculation in the "Market" is not even needed, just wait until the day they announce the next cost increase and buy 5 times more than you need and the next day you have made a "Profit"

Sorry to burst everyone bubble here but it is simply bad economics and math to see why there are problems.

 

This is not necessarily a true statement as as I've stated before Portalarium can control the amount of Gold in the game...

Gay Deceiver, I say three times:
That's the Key Point.
That's the Key Point.
That's the Key Point.

 

I do understand what you are saying. But what I don't see is any real difference between a world with COTOs or a world without COTOs. To me, the choice to implement COTOs in the game or not is arbitrary.

World with COTOs:
- if there is high IGG inflation, the price of COTOs (sold by the player COTO sellers) increases, the price of crown store items does not change, the price of COTOs from the web store does not change

World without COTOs:
- if there is high IGG inflation, the IGG price of crown store items increases, the per dollar price of IGG from the web store drops (you get more IGG for the same amount you paid prior to inflation)

As you can see, both options have the same net result. The only difference is how the inflation is mitigated. But the net result is same.

So if either method can produce the same net result, then, to me, there really is no need for COTOs. You just need to mitigate inflation a little differently in a world without COTOs.

This is an assertion. Is it irrefutable fact? Why do you find it acceptable to believe that there are players who are constantly buying loads of COTOs at higher prices directly from the store only to sell them for the inflated in game gold. Nevermind that their only chance for recouping some of that money is to sell IGG on the RMT market (which is no guarantee that there will be buyers). If no one buys they are stuck with lots of gold and money that they will never recoup. Even if they sell, they are still not recouping 100% of their money.

Who puts themselves in risky no-win propositions like this?

 

Agree. I have spent considerable time scouring vendors to see if it is viable to start a COTO reselling business.

the answer was an emphatic: NOP!

I was not able to find any consistent low cost COTO seller/supplier.

The theory for this is sound, but the reality isn't.

Which just makes the current situation of the incumbent COTO sellers more astounding and unfathomable and un-understandable!

 

I think peeps are hoarding gold! there's not many gold sinks in the game... and the ones that are there don't actually take that much gold out of the game. The biggest gold sink were the property lot taxes and this has been butchered.

So unless Chris implements a tooth fairy that steals gold from avatars when they are sleeping, i think in general, the total gold of the player base is on an incline slope over time.

 

Um, no, there was a bug where a specific crafted item could be sold to a COTO vendor NPC for 12 (old) COTOs. This was very much NOT intended. Hundreds of them were made with this exploit, all created with a 250 value that indicated they were created in-game (just like dropped COTOs) and not from the web store/claim rewards process.

Hint: you don't buy your stock of COTOs for an exchange off of other people's vendors, unless you get real lucky.

 

@Woodchuck
The test score will off course count towards your final score at the end of the semester.

Thank you, your new post was much more on specifc observations of if they say X then why Y.

Where I will have to caveat some of my responses here, with the Portalarium version vs the Spoon version, this since for some of this stuff I get what they are saying but I don't agree with their implementation.


But a slight problem for me in answering your post you bring up 3 major concerns/concepts along with some minor other comments. In order of appearance:

A)
Premium Currency as an inflation stabilizer. ie the Soft vs Hard currency thingie.
Where you think Crowns are failing on that goal.
B)
The concept of and the pricing of Crown traders in game. Where and how they prosper.
Where you satirically say they must be altruistic, ie that you think they are of course not.
C)
Why would anyone buy COTOs from Portalarium when you can buy them "cheaper" through RMT?


Now my problem lies in that all those three are totally unrelated to each other except that they are all economy questions.

Compounded with none of them having anything to do with your original question:

So first just the small note that why you got all the homework material in the post above was to answer the original question of why create a premium currency of Crowns.
Where since you have abonded that line of questioning I must assume that the answer to that question is now obvious.


So onwards, upwards, riftwards.

Lets start with the simplest question first
B)
Crown ATMs are of course not altruistic just like you alluded.
Instead they work on the same principle of any currency converter ever since the first banka in mesopotamia up to their modern equivalents today. Which is the same as for any commodity trader as well.
You buy for less and sell for more. The profit then comes from volume. If I can sell for X then as long as I buy for <X then I will make profit. Where the risk is sitting missing a fast shift in market where no one longer buys at your X while you still purchase at close to X. Where deflation of stock would hurt your profit or even incur loss.

In your pic you only show the buy tab, but you will note that the sell tab has a long listing as well.
So if the sales of crowns are at 105 gpc then I'd predict that the purchase price in the sell tab is at about 95ish., Where a slow Crown ATM would be closer to 90 and a high traffic Crown ATM would be closer to 100 gpc.

Which like I said is the same as for any other commodity. Take scrolls for instance. Before they were not in loot, back then they would be priced at 120-150. So lots of folks in high traffic areas put up vendors acting as Scroll ATMs. Selling at 130-150 and buying at 100-120.

So that is the basic principle currency and commodity traders work on.

But why does it work? If the price is X then why do some sell at less than X to traders. And why would buyers buy from traders instead from those selling for less.
Simple. Conveniance and traffic.
The player selling for less does not have an interface with the customer. Where the middleman adds conveniance and traffic to both the bulk seller and the end customer.
Take 711 or any such franchise, the head company doesn't necessarily own all the individual restaurants, instead franchise owners own the local stores. The middleman takes the risk and gets a cut, if all goes well both profit, if it tanks the bulk seller remain but the individual middlman goes bust.

So ATMs are just a conveniance, they provide a service for a cut. That is all.
Nothing more, nothing less.

So they could be trading in anything, and thus principly have nothing to do with the creation or use of Crowns specifically.

Lets move on to
A)
Hard Currency vs Soft Currency, with a Premium Currency not adding to inflation.

Here I think that you skipped on your homework since you present your issue as:
"against the explanation that COTOs were introduced as a mechanism to stabilize the economy by primarily inducing and stimulating the flow of gold amongst the player base (i.e. a means to balance the supply/demand pressures of gold in the game by circulating it instead of causing undue creation/destruction of the total gold in the game"
which is not the intention from as stated by the devs, instead from them we get:
"So, why is this awesome for everyone? Player B got exactly what he wanted, effectively trading some of his time for crowns. Player A got exactly what he wanted, in game gold for real $ without having to give $ to someone he doesn’t trust. Here is the most awesome part: It doesn’t change how much gold is in the macro economy and cause inflation because it is really just gold moving from one player to another. (Oh, and the side effect is that it financially supports Portalarium to help us maintain, expand and improve the game!)"

So your version does not come from the devs but rather from players misinterpretations.
We can also compare the dev statement with how similar setup works in other games and we can see that the most successful have the same stated goal as the dev version. While none of them have your version. This confirms that the dev statement isn't a complete fabrication, but instead reflects how it has worked in other games and how they are implementing it here emulates those other games with only minor flavor differences.

Lets look at the difference in statements
1 - you state stabilize the economy, but the devs state It doesn't cause inflation
That is a huge difference in intent right there. The intent is not to stabilize the economy, the intent is to add a Premium Currency that does not ruin the economy through additional inflation
2 - similarly you state "balance the supply/demand pressures of gold", but the devs state no such intent. Just that the addition of the Premium Currency doesn’t change how much gold is in the macro economy.

Now back to the homework, the point of a dual soft hard currency setup like games with in game Currency and Premium Currency is that it doesn't matter wether the soft in game Currency goes through inflation or not. Doesn't matter. Instead what matters is that the Hard Currency keeps its percieved value. Where how you do that is tie it to something - in games in general and in this one as well that is the tie to what you can buy with them - ie the value in the crown store.
This is just like having the Gold Standard to back a Hard Currency back in the history of bank notes. The value of the currency is tied to the value it buys.

This is a tried, tested and true concept both in real world and within the gaming industry.

So for example in EVE online, they have the same setup.
https://secure.eveonline.com/plex/
You can buy Plex with cash (Premium Currency). Then you can trade that Plex for ISK (in game Currency).
To make the Plex hard the value is that Plex buys Double training and Skill extractions and of course Skins and fluff in the Premium Currency store.
Thus it doesn't matter if there is any deflation/inflation of the in game currency ISK, since as long as the percived value and desire to get Plex keeps its cash value.

So what you are looking at is bias. You only see the market with the crowns present. By definition of their existance you cannot see the market without them.
Which means that you need to see any effect as a relative effect - not an absolute effect.
So what was the alternative which we can relatively compare to?

The alternative was done back in the dark ages of gaming - the end of th 90s early 00s.
Some MMOs started selling the in game currency for cash to get revenue. This meant the more cash spent, the more gold generated, with more gold in player-to-player transactions the percieved value was ruined and inflation skyrocket.
Which meant that in many games the players themselves came up with their own hard currency equivalent in the form of commodites with a known vaue. So instead of trading something for in game gold, they would use for instance scrolls. Which meant that the in game currency became worthless, and no on wanted to buy the gold for cash anymore.
Where the company would respond by doubling/tripling the amount of gold you got for cash - leading to a spiral of death.

THAT is what we are comparing this relatively to.

Not causing more inflation, not crashing the economy.

The intent was never to prevent or balance the soft currency inflation, instead just to not make its fluctuations worse.
Just like in all the other games with the same Premium Currency business model. Which is so effective that it is a staple of the industry in almost all major titles.

Which brings us to:
C)
"why would anyone buy COTOs from Portalarium? "
Conveniance, Risk aversion and misplaced loyalty.

While I know and would trust that Andernut would trade fairly with me.
Most players don't know the RMT players, and they don't know if the risk which that presents is worth it.

Where that is compounded with not knowing the exact exchange rate of Cash to Crowns, and then Crowns to Gold, or even where to find those selling them.
So first you run the risk of being scammed by buying the gold RMT player to player, then you run the risk of being scammed trying to buy crowns with the gold, until you finally can buy in the crown store.
Not only is that very time consuming, really inconvenient but also it feels very risky for most players.

So conveniance, risk aversion and misplaced loyalty all dictate that a vast majority if presented with the choice to buy from the company developing the game they do.
Where if the price RMT and in store was the same, then EVERYONE would buy from the store.
So by its very definition the RMT price must be lower than the store to compensate the risk, inconvenince and time.

This is again similar in all other games with that setup. So again lets check out EVE Online. The price of ISK is very favorable to buy directly RMT from players. However the vast majority don't.


So none of the concerns of A) B) or C) has anything to do with SotA and Crowns specifically.
Instead just like you would have seen if you had gone through the homework, this is now everywhere in the business.
It works for its intended purpose.
Where it should be noted that it does not work for purposes it was not intended for like the ones in your statement.

Just like in all of those other games.

Which means that I unfortunately have to flunk you on the test.




Now we finally come to the difference in my view and Portalarium's implementation.
There is a massive lack of things to spend in game gold on. Especially on stuff that feels like luxury. Instead the goldsinks all seems to be in the preventing fun aspects of the game, like having to buy recipes or reagents or fuel etc, all of those triggers my Loss Aversion and I spend as little as possible, which means I have less fun in the game.

What is needed is a huge increase of in-game-gold services where we can spend our wealth. Which feels like a bonus, as in things we want to do or want to show off to others. This so that the percieved value of gold doesn't tank.
To do that you they would need to stop focusing so much on adding value to buy with crowns, and also work a bit more to add value to buy with gold.

This to prevent the accumulation of massive amounts of gold, which means you can start speculating on things. Like buying up all the crowns an all vendors in a concerted effort, then wait a week for the price to rise, then resell part of the stock at the higher price. Like what happened in 2017. Which btw hurt thos ATM crown traders a lot and benefited the speculators a lot. Just like I predicted back in 2014.
https://www.shroudoftheavatar.com/forum/index.php?threads/extreme-rares.14625/page-2#post-244042

It also doesn't help the economy when the affluent find commodities in the wild faster than through buying them from other players. Like the silly decision to add Scrolls and Potions to common loot tables, killing the gold distribution effect. Or with adding the wood to engineers in sieges *facepalm*.

Plus don't get me started on how they undercut the player RMT massively in the crown store and thus not selling at premium, by introducing CFV for 20% of the going price, deeds for 50% and now with this Vault silliness. Its as if they understand the theory of it by seeing others do it, but not realising the compounded effects of the execution. Decentivise the whales isn't a good longevity prospect.




So to make the economy better they don't need to fix their premium currency.
Instead they need to add more services that we can spend the in game currency on. Specifically SERVICES not permanent objects, with services the goldsink continues with time, with objects they are one timers and not as effective.

One obvious thing would be a gold service charge on convniance of fast travel, and the faster and more convenient it is the more it cost.
Like a boat in Kingsport - charging 50g for travel to Brittany, 250 g to Estgard or Ardoris, and 500g for passage to Xenos.
Or if using a Teleport scroll to adjacent region costs 1 scroll, but to a non-adjacent would cost two scrolls.
etc
Let the affluent, spend gold so that they feel rich through luxury service to get them to consume the gold.

Typical other example is the buff from Devotionals.
How much better for the game and for the in game economy, if you had to burn a consumable (incense) to activate the buff at the Devotional. Where you could buy the consumable (incense) for 200g from the caretaker NPC - BUT you could also craft them for maybe 100g in ingredient value. Thus making it profitable for crafters to craft and vend them.
It would also make much better RP flavor of actually doing something visavi the devotional instead of simply splashing in it like a pool.


*EDIT*
I forgot to state the obvious.
If you create more goldsinks that the player sees as adding fun or adding luxury then that of course would also increase sales of Crowns in the store.
This since those with more cash and less time, would want the same fun and luxury, thus trading cash for gold to get it.