Musings of the Market - An analysis

Musings of the Market - An analysis

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Posted by: Ath.2531

Ath.2531

I am writing this post in hopes of providing some insight on the love-hate relationship between drop-acquired items and the Tradepost. As many of us know, real life markets work with the supply/demand paradigm and several trading techniques which aim in maximizing profit for both sides of the table.

The difference between a game such as guild wars and real life is that resources in this game are unlimited. Thus the magical numbers of drop rate percentages come into the formula to provide a sense of stability into the market.

Now, lets ask some questions:

Does there exist a steady state between the drop rate, the efficiency of its production and its trading value? Also, to which extent does its market manipulation allowed to exceed its production?

Some examples – The Lodestone Market as of now:
Source: http://www.gw2spidy.com/search/lodestone?recipes=0
Name Min Sale Offer Max Buy Offer Sale Avail Offer Avail
Charged 4 g 50 c 3 g 65 s 50 c 161 3690
Corrupted 88 s 90 c 85 s 1850 2466
Crystal 74 s 97 c 70 s 61 c 617 938
Destroyer 1 g 37 s 90 c 1 g 17 s 619 2654
Glacial 42 s 34 s 60 c 1370 1533
Molten 83 s 99 c 82 s 49 c 435 2866
Onyx 2 g 40 s 90 c 2 g 33 s 11 c 1264 2878

Supply-Demand Ratios:
Charged 1: 22.9
Corrupted 1:1.33
Crystal 1:1.52
Destroyer 1:4.29
Glacial 1:1.12
Molten 1:6.59
Onyx 1:2.28

Observation: An outlier can be clearly observed here. It is no wonder why Charged Lodestones are so expensive since they are almost 23 times more demanded than they are supplied. The question is, why are they so under-supplied? The answer is in my belief that this is due to the fact that there is a very low constant drop rate for this item. Since the supply of this item is so limited, price super-inflation is expected.

My proposal is to adjust the drop rate percentage for over-demanded items based on their supply-demand ratio in order to normalize them to reach an “equilibrium”. This equilibrium can be defined by the average demand of all products of the same rarity or type.

In the case of Lodestones: Avg(demand) per 1 point of supply = (22.9+1.33+1.52+4.29+1.12+6.59+2.28)/7 = 5.72
Thus, the desired Supply-Demand Ratio should not exceed 1 :5.72

This means that drop rates have to be increased for Charged, Molten, Onyx Lodestones and decreased for the rest of them to match the 1:5.72 ratio.

This is just an example of how the market can remain self sustainable, affordable and manipulation-resistant and the ratio itself can adjust with the income of new gold into the system.

All comments on this mere idea are welcome

Read Critically and judge constructively

Commander Athrael ThunderBorn
GM of Crew of Misfits (CoM)
Piken Square, EU

(edited by Ath.2531)

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Posted by: Bloodstealer.5978

Bloodstealer.5978

Sorry to say it but.. I think your taking a collection of pixels on your screen way to serious… if your having to place so much importance on a material drop rate for what is nothing more than a game, then maybe open the curtains, open the window and smell some fresh air and look upon the new day once in a while.

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Posted by: Ath.2531

Ath.2531

Sorry to say it but.. I think your taking a collection of pixels on your screen way to serious… if your having to place so much importance on a material drop rate for what is nothing more than a game, then maybe open the curtains, open the window and smell some fresh air and look upon the new day once in a while.

Oh! But i wrote this at work dear sir. I can assure you that the air is quite fresh out here!

And by the way, Judging from your posting history maybe you should consider taking your own advice.

Specifically you recently wrote: https://forum-en.gw2archive.eu/members/Bloodstealer-5978/showposts

“I would be more inclined to think its actually AN that has the Bots farming the mats and selling the items – nothing better than to be able to manipulate the price points in game so that players at both end of the spectrum can be herded in to buying Gems / Gold for real money from the TP.”

That doesn’t look very good on your resume.

You were saying?

Thats right. Now go in peace and let whoever likes to discuss this in a mature manner do so.

Commander Athrael ThunderBorn
GM of Crew of Misfits (CoM)
Piken Square, EU

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Posted by: lisamee.2408

lisamee.2408

Can you sum this up in one sentence?

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Posted by: Surbrus.6942

Surbrus.6942

Yes, the price of Charged Lodestones are greatly out of the ordinary when compared to other Lodestones. However is there really a problem here?

Yes this lodestone has a much higher demand than the supply. But is that really an issue? People looking for Charged Lodestone derived products can choose to go for that expensive resource, or they can change their goals and choose a substitute in products that use different, more affordable Lodestones.

The resources in this game may be “unlimited”, but that does not mean that there is no scarcity. Scarcity is a very basic economic concept, and it is well and alive in this game and in the drop rates.

Lets make a real world comparison to diamonds. Diamonds are both useful in industrial processes as well as for vanity. DeBeers holds a lot of control over the diamond market, and their artificial restrictions on diamonds, in addition to Diamonds being heavily demanded for both fashion and industry, means that they are largely unfeasible to use for industrial purposes. Gold is in a similar situation, as it has great industrial uses, but the inflated price means that those in industry must use substitutes.

Shifting the demand to substitutes both reduces the demand for the more scarce resource, as well as utilizing more of the less scarce resource.

Since we area talking fashion, as that is the only reason why we use Lodestones, scarcity is part of the prestige. People don’t wear gold and diamond jewellery for the looks, they wear it for the prestige. If they were only interested in the looks they would just use a cheaper lookalike. Intervening in the market to normalize prices of Lodestones would greatly impact the prestige value of those items that use Charged Lodestones.

Can you provide arguments that explain why the prices should be normalized?

stop liking what I don’t like [paraphrased]

No one is forcing you to post in this thread. Just because you don’t like math and economic discussion doesn’t mean that it isn’t good discussion.

(edited by Surbrus.6942)

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Posted by: Surbrus.6942

Surbrus.6942

Can you sum this up in one sentence?

The OP wants drop rates to be changed so that the price of Lodestones are more similar. My argument is that this is unnecessary.

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Posted by: Ath.2531

Ath.2531

Can you sum this up in one sentence?

In one sentence i am suggesting a formula to normalize the drop rate of each type of lodestone(or other category of products) based on the average ratios of supply and demand of all lodestones

Commander Athrael ThunderBorn
GM of Crew of Misfits (CoM)
Piken Square, EU

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Posted by: Sky.7610

Sky.7610

So if i put up a artificial “demand” of 500,000 Lodestone at 1c each, the drop rate should increase?

Musings of the Market - An analysis

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Posted by: Ath.2531

Ath.2531

Yes, the price of Charged Lodestones are greatly out of the ordinary when compared to other Lodestones. However is there really a problem here?

Yes this lodestone has a much higher demand than the supply. But is that really an issue? People looking for Charged Lodestone derived products can choose to go for that expensive resource, or they can change their goals and choose a substitute in products that use different, more affordable Lodestones.

The resources in this game may be “unlimited”, but that does not mean that there is no scarcity. Scarcity is a very basic economic concept, and it is well and alive in this game and in the drop rates.

Lets make a real world comparison to diamonds. Diamonds are both useful in industrial processes as well as for vanity. DeBeers holds a lot of control over the diamond market, and their artificial restrictions on diamonds, in addition to Diamonds being heavily demanded for both fashion and industry, means that they are largely unfeasible to use for industrial purposes. Gold is in a similar situation, as it has great industrial uses, but the inflated price means that those in industry must use substitutes.

Shifting the demand to substitutes both reduces the demand for the more scarce resource, as well as utilizing more of the less scarce resource.

Since we area talking fashion, as that is the only reason why we use Lodestones, scarcity is part of the prestige. People don’t wear gold and diamond jewellery for the looks, they wear it for the prestige. If they were only interested in the looks they would just use a cheaper lookalike. Intervening in the market to normalize prices of Lodestones would greatly impact the prestige value of those items that use Charged Lodestones.

Can you provide arguments that explain why the prices should be normalized?

stop liking what I don’t like [paraphrased]

No one is forcing you to post in this thread. Just because you don’t like math and economic discussion doesn’t mean that it isn’t good discussion.

I will agree to a certain extent but let me ask you this:

Has the production of diamonds been a constant throughout the beginning of time?

Also, do consider that by observing the full lifespan of the supply of lodestones in particular our current supply for a certain type has decreased dramatically. This seems as an artificial scarcity to me, one that i would like to be minimalized during the course of time

Commander Athrael ThunderBorn
GM of Crew of Misfits (CoM)
Piken Square, EU

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Posted by: tigirius.9014

tigirius.9014

Kool like this idea only tho if they balance it open world rather then the dungeons (because right now I’m being told by everyone the only way to consistantly get these is running dungeons which I’ve had my fill of which is why this game initially interested me for the open world jump-in fun). I’ve been farming the bags lately and I believe them now about the lack of consistancy with these mats.

Bravo I hope you make a change with this post and that it isn’t merged.

Balance Team: Please Fix Mine Toolbelt Positioning!

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Posted by: Ath.2531

Ath.2531

So if i put up a artificial “demand” of 500,000 Lodestone at 1c each, the drop rate should increase?

Without any precautionary measures, yes. That, off-course is another issue which is already in place.

Commander Athrael ThunderBorn
GM of Crew of Misfits (CoM)
Piken Square, EU

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Posted by: ShinraGuardian.8053

ShinraGuardian.8053

I think we should look at what they are used for rahter than their drop rates.

Items that create items that are highly desired obviously cost more than those that do not/

Dragonbrand
Elementalist
The Dragonfly Effect [Phi]

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Posted by: Sky.7610

Sky.7610

So if i put up a artificial “demand” of 500,000 Lodestone at 1c each, the drop rate should increase?

Without any precautionary measures, yes. That, off-course is another issue which is already in place.

What kind of precautionary measure could one exactly impose on this, without causing a greater harm to another part of the economy?

Also, working under the assumption such a measure is possible,this would create dramatic harm to the economy because all item will have similar cost, regardless of demand or supply due to the 1:5 ratio imposed on it. This would eliminate the fundamental principle of a free-market where price is determine by supply and demand.

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Posted by: Wanko.8103

Wanko.8103

Yes, the price of Charged Lodestones are greatly out of the ordinary when compared to other Lodestones. However is there really a problem here?

Yes this lodestone has a much higher demand than the supply. But is that really an issue? People looking for Charged Lodestone derived products can choose to go for that expensive resource, or they can change their goals and choose a substitute in products that use different, more affordable Lodestones.

This is clearly an issue. Players are being punished for a certain taste in skins. For choosing Exotic N over Exotic D or Legendary S instead of Legendary B.

Imagine if all Ascended rings would cost 10 tokens except for pov/crit/vit, which would cost 100 tokens. Would it be fair?

Now, such disparity already exists, since different mats, precursors, etc have different costs and some players will be forced to pay more money.
But situation with Charged Lodestones is extraordinary, their price goes that far, that some exotics already cost more than bloody Sunrise. I have a hard time to believe that this was intended.

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Posted by: Ursan.7846

Ursan.7846

This is clearly an issue. Players are being punished for a certain taste in skins. For choosing Exotic N over Exotic D or Legendary S instead of Legendary B.

Imagine if all Ascended rings would cost 10 tokens except for pov/crit/vit, which would cost 100 tokens. Would it be fair?

Analogy doesn’t work, because people obviously are not going for those exotics for the “stats.”

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Posted by: Ath.2531

Ath.2531

So if i put up a artificial “demand” of 500,000 Lodestone at 1c each, the drop rate should increase?

Without any precautionary measures, yes. That, off-course is another issue which is already in place.

What kind of precautionary measure could one exactly impose on this, without causing a greater harm to another part of the economy?

Also, working under the assumption such a measure is possible,this would create dramatic harm to the economy because all item will have similar cost, regardless of demand or supply due to the 1:5 ratio imposed on it. This would eliminate the fundamental principle of a free-market where price is determine by supply and demand.

Precautionary measure: Each item entered in the TP comes with a standard predefined value which serves as a cut off point to separate “true” demand from dummy orders. For example: ordering a precursor for 1c would not count as demand at all. As this is just an example i cannot define what that predefined value will be. One may say: adjust that value similarly tho how dungeon token rewards are measured. A standard cost regardless of efficiency of acquisition. As “true” demand grows, so can the cut off value – to deal with gold inflation.

Just my point of view: The concept of “free-market” is what allowed every single recession to take place. Do we need to follow it?

Commander Athrael ThunderBorn
GM of Crew of Misfits (CoM)
Piken Square, EU

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Posted by: Surbrus.6942

Surbrus.6942

I will agree to a certain extent but let me ask you this:

Has the production of diamonds been a constant throughout the beginning of time?

Also, do consider that by observing the full lifespan of the supply of lodestones in particular our current supply for a certain type has decreased dramatically. This seems as an artificial scarcity to me, one that i would like to be minimalized during the course of time

The production of diamonds has not been constant throughout time, however the same could be said of Charged Lodestones. Charged Lodestones are difficult to obtain, they depend on farming the CoE dungeon as well as farming Sparks in Cursed Shore. In the case of farming the Sparks, certain event chain requirements must be met in Malchors Leap.

The higher the price of Charged Lodestones, the more people will pursue these specific series of events in order to summon the Sparks, or farm the specific dungeon. This is providing incentives for doing content other than Fractals, which IMO is a good thing as it creates “more things to do”.

If the supply of Charged Lodestones is adjusted to solve this problem with scarcity, then there will be fewer economic incentives to participate in a larger variety of game play. This also punishes those that would have the initiative to lead the market in addressing the issue of scarcity by going out and hunting for these profitable aspects of the game.

I am not objecting to the changing of drop rates, however what I am objecting to is changing drop rates specifically to try to equalize the prices of different resources. Due to the high price of diamonds, there is great incentive for individuals to pursue mining and geology related careers to look for such resources. Finding new sources of diamonds may increase the supply, but we in the real world cannot rely on some omnipotent power to solve scarcity issues for us.

Going back to the fashion/prestige argument. Since Lodestones are only used for aesthetic purposes, there is no sense of the prices being “unfair”. That would be like saying that it is “unfair” that gold jewellery incorporating diamonds is more expensive than tin jewellery incorporating glass. Without scarcity, there is no prestige, and without prestige, the fashion industry is greatly injured. Since GW2’s endgame progression depends greatly on aesthetics, removing prestige from certain aesthetics will reduce the reward of pursuing such goals.

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Posted by: Ursan.7846

Ursan.7846

Just my point of view: The concept of “free-market” is what allowed every single recession to take place. Do we need to follow it?

What would a “recession” in a game economy mean?

A recession in the real-world means a slow-down of economic activity. Less people purchasing things, and since our economy is a consumer-driven economy, this leads to companies downsizing, laying people off, and those laid off workers not spending on leisure spending, etc. etc…

You won’t have that in game, because GW2’s economy isn’t a consumer-driven economy. A majority of your wages for many players are completely independent of the market. Also, you don’t have any bills to pay. Most of the gold sinks in this game are optional (TP, WP) while others are very negligible (death -> WP). And besides, doing normal activities (questing, dungeoning) will easily cover most expenses.

So no, a “recession” will never happen to the GW2 economy. To argue against the free market in GW2 because of it is silly.

EDIT: Surbrus’s posts are full of wonderful insight and knowledge. Please read them.

(edited by Ursan.7846)

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Posted by: Surbrus.6942

Surbrus.6942

Just my point of view: The concept of “free-market” is what allowed every single recession to take place. Do we need to follow it?

And the concept of government intervention is what worsened every recession that has taken place. Recessions are self corrections in the market. Intervention only makes those recessions more painful as resisting corrective behaviours of the market only delays that correction.

This particular tangent might be moving slightly off topic, but since we are discussing intervention into a market versus non-intervention into a market, this background is an important topic of discussion for determining the reasoning behind arguments for intervention or non-intervention into artificial game economies such as this.

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Posted by: Sky.7610

Sky.7610

So if i put up a artificial “demand” of 500,000 Lodestone at 1c each, the drop rate should increase?

Without any precautionary measures, yes. That, off-course is another issue which is already in place.

What kind of precautionary measure could one exactly impose on this, without causing a greater harm to another part of the economy?

Also, working under the assumption such a measure is possible,this would create dramatic harm to the economy because all item will have similar cost, regardless of demand or supply due to the 1:5 ratio imposed on it. This would eliminate the fundamental principle of a free-market where price is determine by supply and demand.

Precautionary measure: Each item entered in the TP comes with a standard predefined value which serves as a cut off point to separate “true” demand from dummy orders. For example: ordering a precursor for 1c would not count as demand at all. As this is just an example i cannot define what that predefined value will be. One may say: adjust that value similarly tho how dungeon token rewards are measured. A standard cost regardless of efficiency of acquisition. As “true” demand grows, so can the cut off value – to deal with gold inflation.

Just my point of view: The concept of “free-market” is what allowed every single recession to take place. Do we need to follow it?

What your saying is self contradiction. You want to eliminate supply and demand and yet want to determine “true” demand from supply and demand.

How does this work? A lodgestone and a random green piece of gear would cost the exact same because the supply and demand would be the same (1:5), so how can a cutoff be imposed? Whos to say a precursor isnt worth 1c?

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Posted by: Ath.2531

Ath.2531

So if i put up a artificial “demand” of 500,000 Lodestone at 1c each, the drop rate should increase?

Without any precautionary measures, yes. That, off-course is another issue which is already in place.

What kind of precautionary measure could one exactly impose on this, without causing a greater harm to another part of the economy?

Also, working under the assumption such a measure is possible,this would create dramatic harm to the economy because all item will have similar cost, regardless of demand or supply due to the 1:5 ratio imposed on it. This would eliminate the fundamental principle of a free-market where price is determine by supply and demand.

Precautionary measure: Each item entered in the TP comes with a standard predefined value which serves as a cut off point to separate “true” demand from dummy orders. For example: ordering a precursor for 1c would not count as demand at all. As this is just an example i cannot define what that predefined value will be. One may say: adjust that value similarly tho how dungeon token rewards are measured. A standard cost regardless of efficiency of acquisition. As “true” demand grows, so can the cut off value – to deal with gold inflation.

Just my point of view: The concept of “free-market” is what allowed every single recession to take place. Do we need to follow it?

What your saying is self contradiction. You want to eliminate supply and demand and yet want to determine “true” demand from supply and demand.

How does this work? A lodgestone and a random green piece of gear would cost the exact same because the supply and demand would be the same (1:5), so how can a cutoff be imposed? Whos to say a precursor isnt worth 1c?

Firstly, the 1:5 is used as an example
Secondly, each type of material would fall under a different category. Excuse me for the confusion but i most certainly did not put lodestones and green quality gear in the same category.
Also, would you care to explain how i eliminated supply and demand? I referred to normalization of supply which has nothing to do with demand.(not directly at least)

Commander Athrael ThunderBorn
GM of Crew of Misfits (CoM)
Piken Square, EU

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Posted by: Raine.1394

Raine.1394

Just my point of view: The concept of “free-market” is what allowed every single recession to take place. Do we need to follow it?

We have not had a free market to observe, so we wouldn’t know whether or not it would cause or be related to a recession. The current system involves governments working directly in the economy to influence it for whatever ends it desires. In the US, we have anything but a free market. There are free market forces at work, so supply and demand do tend to describe price fluctuation.

However, in the game, we are another step away from a free market in that developers determine the limit of resources as well as their necessity (recipes). In the game, supply and demand play a role, but it is the developers that determine what is valued and it’s potential supply. This is where drop rates come into play and you are correct that the developers have this dial to play with to influence the game economy. It’s quite complex actually, especially when you mix in multiple currencies. I haven’t seen a good balance occur under current monetization schemes in recent games. BTW, I would describe as good a game economy where the players feel rewarded for playing the game.

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Posted by: Sky.7610

Sky.7610

So if i put up a artificial “demand” of 500,000 Lodestone at 1c each, the drop rate should increase?

Without any precautionary measures, yes. That, off-course is another issue which is already in place.

What kind of precautionary measure could one exactly impose on this, without causing a greater harm to another part of the economy?

Also, working under the assumption such a measure is possible,this would create dramatic harm to the economy because all item will have similar cost, regardless of demand or supply due to the 1:5 ratio imposed on it. This would eliminate the fundamental principle of a free-market where price is determine by supply and demand.

Precautionary measure: Each item entered in the TP comes with a standard predefined value which serves as a cut off point to separate “true” demand from dummy orders. For example: ordering a precursor for 1c would not count as demand at all. As this is just an example i cannot define what that predefined value will be. One may say: adjust that value similarly tho how dungeon token rewards are measured. A standard cost regardless of efficiency of acquisition. As “true” demand grows, so can the cut off value – to deal with gold inflation.

Just my point of view: The concept of “free-market” is what allowed every single recession to take place. Do we need to follow it?

What your saying is self contradiction. You want to eliminate supply and demand and yet want to determine “true” demand from supply and demand.

How does this work? A lodgestone and a random green piece of gear would cost the exact same because the supply and demand would be the same (1:5), so how can a cutoff be imposed? Whos to say a precursor isnt worth 1c?

Firstly, the 1:5 is used as an example
Secondly, each type of material would fall under a different category. Excuse me for the confusion but i most certainly did not put lodestones and green quality gear in the same category.
Also, would you care to explain how i eliminated supply and demand? I referred to normalization of supply which has nothing to do with demand.(not directly at least)

I honestly don’t see how putting them in different category would be of any use. You eliminated supply and demand because its relevancy in determining price has been deprived using your suggestion. If supply will simply adapt to the demand(higher priced items are highest in demand), how exactly would a lodestone end up not costing the same as a green piece of gear?

Let us not confuse “total quantity demanded” and “demand”, Demand is the desire, whereas quantity demanded is people actually willing to pay at X price. Where sweet candy have the highest “total quantity demanded” but a legendary(eg; twilight) would have a higher demand than sweet candy but lower quantity demanded.

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Posted by: Lunar Sunset.8742

Lunar Sunset.8742

I think it has to do with more of the dungeon problems and less to do with the drops of lodestones. Take CoF and molten lodestones: everyone runs CoF…most people farm CoF hence, lots of molten lodestones on the market. CoE…no one runs it, no one even remotely farms it so no charged lodestones on the market. Change dungeons, change the availability of lodestones.

This is a small problem, the biggest problem is manipulating the precursor price by those people who exploited cultural weapons and have multiple precursors of each. I hope they implement that scavenger hunt to get precursors they talked about, what a slap in the face to these exploiters..a good slap in the face.

Sunset
50/50 GWAMM x3
I quit how I want

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Posted by: Ireniicus.2167

Ireniicus.2167

There is a lot of reading here but can I ask have you thought/answered the question as to why Corrupted Lodestones are in such demand?

I believe its because they are needed for the most sort after items in the game. Now if prices fall due to a shift in drop patterns,for the most sort after items, more people will acquire them and everyone will be running around and looking the same.