Q: A Discounted Gem Exchange Rate
I’m curious, assuming the argument that a 20% discount should apply to the gem exchange rate (I think people here have done a good job of explaining why the sale isn’t a sale on the exchange, so lets leave that be). What system do you use to create a moving 20% discount on exchange, keeping in mind that the supply of gems is not unlimited, and that the exchange does not fabricate gems?
Heck of a question, John… If I understand it correctly, you’re asking how to apply a fixed devaluation (discount rate) to a floating exchange rate (the gold to gems rate) correct? I’m assuming we’re can pass on discussing the devaluation of gems vs cash, as it’s a classic currency peg, and there’s a substantial research available now on the subject. So, that leaves us with how to impose a moving, fixed, discount on an exchange rate for a limited duration.
Anyway, after a little think, I believe implementing a method to account for gems received as a result of the discount separate from gems received as a result of the true exchange rate, one could simulate a moving discount on a floating rate. The accounting can be handled through the use of a temporary, synthetic product that represents the gems received as a result of the discount. Explanation follows:
Let’s start with the following assumptions:
1- At any give time (t) there is a “True Rate” (Rt) that is representative of, and who’s behavior under market conditions is the same as, the existing rate.
2- At any give time (t) there is a “Discount Rate” (Rd) that is representative, of Rt with respect to the fixed discount rate
3- There fore the spread between Rt and Rd will always be the discount (D)
4- The discount will only be offered for non-infinite amount of time, ie, it has a near term expiration date
5- There is no mandatory requirement that Gems be spent in a set amount of time, ie, gems may be held indefinitely regardless of the current rate, or if the discount rate is in effect.
Some definitions:
• The exchange rate of Gold to Gems can be expressed as “G/M”
• The exchange rate of Gems to Gold can be expressed as “M/G”
• The is fixed spread between G/M and M/G such that an arbitrage condition doesn’t occur in any immediate time
The main consideration is that during the period of time that the discount is in effect, gems may be accumulated at a discounted rate and upon expiration of the discount period, realize an immediate appreciation in value at the current rate. In the current state of the game, there is no way to differentiate gems acquired via the true exchange rate vs gems acquired at the discount rate. Therefore it is imperative to be able to remove any gains realized from discounted gems after the discount period has expired.
In order to be able to account for gems received as a result of the exchange at the discounted rate, let’s create a new category of Gems called “Bonus Gems” (Mb). Bonus Gems will exist only during the time period the discount rate is in effect. Bonus Gems are consumed pari passu when regular gems are used, with any deficiency in Mb compensated for in M.
cont’d
cont’d:
Let’s look at a very simple example of how this would work:
Ex 1: Player with an initial balance of zero gems, and a balance of 3G
A Discount of 20% is being offered.
True Rate of G/M = 1:100
Discount Rate of G/M = 1:120
- Player exchanges 1G at current rate for 100M and 20Mb
Balance = 2G, 100M, 20Mb
- Rates move, and gems are depreciated:
True Rate of G/M = 1:80
Discount Rate of G/M = 1:96
- Player exchanges 1G at current rate for 80M and 16Mb
Balance = 1G, 180M, 36Mb
- Player buys an item in the Gem store for 100 gems. This will cost the player 80M, and 20Mb
Balance = 1G, 100M, 16Mb
- Rates move, and gems are further depreciated:
True Rate of G/M = 1:60
Discount Rate of G/M = 1:72
- Player exchanges 1G at current rate for 60M and 12Mb
Balance = 0G, 160M, 28Mb
- Player buys an item in the Gem store for 100 gems. This will cost the player 80M, and 20Mb
Balance = 0G, 80M, 8Mb
At the end of the discount period, player forfeits any remaining bonus gems (Mb). Think of it as a use it or lose it proposition.
In summary it looks like this:
Total Gold converted : 3G
Gems received for Gold exchanged @ true rate = 240M
Bonus Gems received for Gold exchanged @ true rate = 48Mb
Total Gems received = 288 (combined gems)
Total gems spent = 200M
Balance at the end = 80M
This equates to a player exchanging gems at the true rate, receiving no bonus gems, but rather receiving a discount on the items bought:
Total Gold converted : 3G
Gems received for Gold exchanged @ true rate = 240M
2 Items @ 100M each = 200M
20% discount on items = 160M
Total gems spent = 160M
Balance at the end = 80M
I haven’t really looked into proving this methodology for all scenarios. Just throwing it out there for discussion and to answer John’s question. I’m not claiming it’s bullet-proof as it stands, just an initial collection of thoughts.
Also, I haven’t really addressed how this would impact the Gem -> Cash exchange. I believe the same pari passu methodology would hold, but didn’t work it out.
TLDR: The concept of “Bonus Gems” is just a generic term, something else could be used to better represent it in game – “BLTC Bucks”! The promotion would then be something along the lines of “Receive 20 BLTC Bucks for every 100Gems you buy with gold! BLTC bucks can be used like gems for a limited time! Hurry now! Offer and Bucks expire soon!”
Thoughts?
(edited by Mourningcry.9428)
In the abstract, any discount on buying gems with gold will encourage more people to buy gems with gold. Result? Price of gems is pushed up, taking away any discount the next guy or gal would have received.
The gold -> gem rate before and after the bag/bank slot sale is a perfect example of why this can’t be done, no matter how fancy the formula or idea behind it. I think that’s what John was getting at.
The only other idea would be to reduce taxes. I think most here know why that’s a bad idea.
In the abstract, any discount on buying gems with gold will encourage more people to buy gems with gold. Result? Price of gems is pushed up, taking away any discount the next guy or gal would have received.
The gold -> gem rate before and after the bag/bank slot sale is a perfect example of why this can’t be done, no matter how fancy the formula or idea behind it. I think that’s what John was getting at.
/snip
Actually, unless I’m misunderstanding the question, the solution John is asking about is targeted to ensure that any player, at anytime receives the a 20% discount on their exchange, regardless of the current rate.
So, regardless if rates rise or fall, the same discount is received.
The pitfall with this is two fold. First, as rates change the actual amount of the discounted item changes, some get more, some get less, but still an equal % relative to their transaction.
Second, once the discount period expires any gems attained via the discount would actually appreciate to the current rate if left in the economy unaccounted for.
Make sense?
/snip
The only other idea would be to reduce taxes. I think most here know why that’s a bad idea.
Actually there are no outright taxes on any of the three currency exchanges in the game as far as I am aware. Claiming there are inherent taxes baked into the exchange rates is a reach. So, no, it’s not the only other idea. In fact it’s not even a viable one. Please try not to be so dismissive.
(edited by Mourningcry.9428)