Guild Wars 2

Has ArenaNet posted any official statement on how the gem exchange rates are calculated?

I can see the obvious correlations between new gem store items being released and big hikes in gold-to-gem prices, but I’m curious how the precise mechanics of it work.

At the most basic level, “supply vs. demand”, yes that is obvious. What’s trickier is that in an ordinary exchange, e.g. the TP or even real-world stock exchange, the current buy/sell prices are set by people who have declared intent to buy/sell at specific prices, and allowing others to fulfill at those rates if they want to buy/sell immediately.

In the gem exchange, there are only those who want to buy/sell immediately, and no mechanism for declaring intent, and therefore no natural way to define the going rates.

So, assuming (and yes this is a big assumption) that market supply is exclusively sourced from players buying gems with cash and selling them in the exchange, and demand is exclusively by volume of gems bought by players for gold, my best guess for how the gem exchange rate is set, is a system with the following components:
1) A large-ish ‘reservoir’ of gems
2) A current ‘exchange rate’ price
3) Some fixed tax applied when converting in either direction
4) An algorithm that slowly adjusts the exchange rate to attempt to balance the # of gems in the reservoir – so if it goes too low, the exchange rate would spike to compensate until the reservoir level went back up, or vice versa

Alternatively if the system allows for ‘printing’ of gems/gold and only tries to approximate a free market, dispose of the reservoir and just have an algorithm that changes the exchange rate until the buy/sell rates are roughly equal over a moving time window.

Or if we’re cynical and we think it’s driven purely by the business/marketing division at ArenaNet, just define an arbitrary exchange rate and hike it when cash gem sales are too low.

Any other theories or ideas on how this might work? (or published info)

John Smith has talked about it around the edges. He’s says the exchange contains two pools, one gem, one gold, both initialized at launch with a very, very large pool of gems. All payouts are taken from these pools, all payins go into these pools and the relationship between the two are used to set the price. Gems are neither created or destroyed by the exchange. He wasn’t that specific on the excess gold from buying gems due to the difference in exchange rates.

The idea behind it is for players with a lot of gold to get gems, causing the rate to rise so it becomes more attractive to players who just want gold to use gems they bought with cash to do so. It provides a legitimate way to buy gold while trying to shaft RMT services.

I tried to illustrate how I would have implemented what JS outline to illustrate the general rise in the rate over time.

https://forum-en.gw2archive.eu/forum/game/bltc/IMO-Gem-Prices-need-to-be-regulated/1914084

Of course a lot of that is guesswork but it does show how prices can rise they way they did.

The way it sounded to me in one of JS’s comments is that the difference in gold between buy and sell prices is effectively destroyed; it takes 15% of the gold in either direction (double taxation).

Interesting. That does sound like a more likely (and realistic) implementation with 2 reservoirs, though if you do away with 1 or both of the reservoirs you could theoretically have the system balance itself much more rapidly. I’ve been looking at the trends on spidy, and there’s definitely a constant trend upwards, even outside of releases of new items. I wonder if this is caused more by inflation, or more by that huge initial reservoir depleting at a slooooooow pace.

I’ve always had a problem with JS’s explanation for gem prices (his explanation includes a limited supply of gems, and gem prices reflecting how many gems are left in that supply).
- first, this would mean that at some point the price of gems is effectively infinite (because there are 0 gems left in the supply). because gem prices do not even begin to approach infinity (yet), I can safely assume we are no where near the gem limit. So even if it were physically limited, it’s limit is so high that it’s effectively unlimited. It’s possible he meant realistically limited, meaning that as more gems are purchased, the price goes up to the point that it’s impossible to buy more.
- the next is in how the price jumps around. If the supply were limited, and less gems in the supply = higher price, and people buying gems with gold would raise the price, then people buying gems with real money would also raise the price. effectively, you could buy a lot of gems to artificially raise the price so you can then sell your gems for more gold. this system just doesn’t seem like something they would do. this would also mean that people spending gems would lower the price, again this doesn’t sound reasonable. In the end, this would mean that gem prices are high only because people are hoarding gems – it wouldn’t have anything to do with gem item popularity, so there would be no reason gem prices would go up when something popular was offered.

basically, such a system would mean that gem prices are increased when you buy gems with gold or money, and decreased when you sell gems for gold or items.

I think it far more likely that the only thing that affects gem prices is buying gems with gold and selling gems for gold. It just doesn’t make sense to factor buying gems with money and spending gems on items into the gold->gem conversion price.

@Mystic: I think you misunderstand how the gem exchange pool works. Gems bought with real money do not enter the pool until someone exchanges them for gold, so buying gems with real money won’t affect the rate until after the transaction has been completed.

In addition, once gems are bought with gold, they leave the exchange pool. Gems held by players (whether bought with gold or real money) aren’t factored into the exchange rate much as gold held in player’s accounts doesn’t affect the rate.

@Mystic: I don’t think the gems bought with cash come out of the pool.
Buy gems with cash = gems created out of nothing
Sell gems for gold => gems go into pool
Buy gems for gold => gems come out of pool
Use gems in gem store => gems disappear into nowhere