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The F-Words Of MMOs: Faucets

July 21, 2011 Article Start Page 1 of 4 Next

[In this, the second part of a three-part series, MMO economy expert Simon Ludgate examines the concept of faucets -- how money comes into the game and goes back out again, making some surprising revelations about what's truly crucial to a healthy game economy. You can read Part 1: Fairness here.]

In part one of this three part series, I addressed the issue of fairness in MMORPG economies -- specifically in regards to buying and selling equipment on the in-game market (versus locking equipment to bind on pickup). In part two, I want to address another MMORPG F-word: faucets.

Back in part one, Ultima Online creator Richard Garriott was talking about how economies are controlled in single-player games because the developer sets the rate at which players get money.

In multiplayer games, this constraint is still mostly maintained, because players choose the other players with whom they play. However, in MMOs, all that goes out the window, because you're playing with everyone else whether you want to or not. The basic economic structures look something like this:

These depict a game's MIMO model: money-in, money-out, the faucets and drains. This flow of money, while fairly simple to govern in single player games, remains a serious and poorly understood issue in MMORPGs. Many developers focus on trying to balance the creation and destruction of currency in their games lest their economies suffer destructive inflation.

"The faucet is the continued injection of 'currency', such as gold being acquired killing monsters or completing quests," explains Lance Stites, when discussing the economy of NCsoft's Aion. "That influx continues and fills the tub, so without the drain, the inflation would be extreme -- creating a world difficult for new players to ever break in to."

The problem with inflation is that "inflation" is a poorly understood term. Trust good ol' Wikipedia to clear it up: "The term 'inflation' originally referred to increases in the amount of money in circulation, and some economists still use the word in this way. However, most economists today use the term 'inflation' to refer to a rise in the price level."

Thus, we need to use two distinct terms:

Increase in price means that the prices of goods have gone up. This means that, if an NPC vendor changes his prices from 300G for a horse to 400G for a horse, or average prices for a stack of potions on the auction house go from 10G to 15G, price inflation has occurred.

Increase in money supply means the amount of money in circulation. If the total amount of gold on your game server was 1000G yesterday and is 1100G today, money supply inflation has occurred.

In the real world, these tend (with a big scary disclaimer on "tend") to go hand-in-hand. When your government stops printing one dollar bills and starts printing one trillion dollar bills to pay for everything it wants, you know your $50k a year salary isn't going to cut it anymore.

That's because in a society with a fixed amount of goods and services, the price of anything is a fixed percentage of the total wealth in that society. If the whole society has 100 loaves of bread, and prints 100 dollars (and you make the rather absurd assumption that loaves of bread are the only good or service) each loaf is worth one dollar. As soon as you print 100 more dollars, each loaf becomes worth 2 dollars, so it's a good deal for the person printing money (he gets 50 loaves now) but it's a bad deal for everyone else, whose one dollar is now worth half a loaf.

However, this isn't true in games, for one big reason:

The "society" in a video game has no fixed amount of goods or services. In the real world, there's only so much land to farm, so much oil to be drilled, so much iron to be mined. Plus, you have property ownership that prevents any random person from acquiring those resources. But in the game world, that doesn't hold true. There's an infinite amount of resources: they just keep respawning as players gather them. So, in a game, whenever you want something, you don't have to buy it... you can go get it yourself instead.

Inflation is a problem in the real world because most people cannot obtain loaves of bread without paying money anywhere (assuming they don't steal). They can't just farm their wheat and craft their tools and, voila, loaves. Because there are limited means of production in the real world, real people have to buy loaves.

In the real world, loaves don't grow on trees or drop from goblins. But in video games, they do. Although I'm stretching this analogy rather thin here, there's an infinite number of "loaves" in a video game and every player has the right to gather them, provided they play the game correctly.

In addition to the infinite resources to gather and craft, video game NPC vendors have infinite supplies of the goods they sell, too. No matter how many times you right-click on the loaf icon to buy it, there'll always be another loaf. And, even better, the prices never change. No matter how many loaves you buy, the prices never go up.

This means that, for every good available in a store, there is a fixed ceiling price for that good. "Ceiling price" is a fancy economics term for saying "the price will never go higher than this." So, no matter what happens in the game's economy, players will always be able to buy that good for at least that price.

Likewise, NPC vendors have an infinite amount of money at their disposal with which to buy junk from players. No matter what it is, as long as the devs flag a set sale price on it, the NPC vendor will buy any number of them. If you have a billion toad leather thongs for sale, the NPC has the cash for them (though I daren't imagine what he does with all of them). This means that, for every good that can be sold to an NPC vendor, there is a fixed floor price for that good. Did you guess that this was a fancy economics term for saying "the price will never go lower than this?" Good on you if you did!

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Alex Leighton
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Great article, I'm really looking forward to the next one!

raigan burns
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Seriously, this series has been amazingly interesting and insightful! Woo, learning!

Kevin Fishburne
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Good article, but the best thing about it is how it exposes the weaknesses of most MMOG designs. The idea of items and being created out of thin air via "drops" is ridiculous. NPC's accepting infinite numbers of items and giving infinite amounts of gold with no relationship to the player enonomy, shelf space, etc. is just sad. This isn't the 80's anymore, for God's sake.

The obvious solution would be to imitate the real world as much as possible. Limited resources in the earth that can be mined. "Monsters" have to obtain belongings from somewhere (players they kill, stealing, crafting) before you can kill them and take them. Take that recipe to the extreme. The idea of shit randomly spawning and random item drops is so primitive I can hardly believe it's being done in modern games.

Looking forward to the next article, as the F2P model is mostly being implemented so distastefully I'd call it vampiric. I'm working on a hybrid subscription/F2P model of my own and will soak up whatever insights Simon may have.

EnDian Neo
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Interesting perspective on limited resources, though execution in a massive multiplayer environment will probably be inconvenient for players and a nightmare to balance for developers.

And a parting shot: there are many things patently ridiculous about games - Mario capable of jumping 3x his height comes quickly to mind.

Kevin Fishburne
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I think anything can be implemented if the game is designed from the ground up to accommodate it, providing the devs have sufficient skill and imagination of course. ;)

I agree about ridiculous things in games being fun, but when they compromise an integral part of the game they become a problem. An MMOG is a unique breed because it often simulates some degree of societal interaction with real people. Castlevania or Mario are ridiculous, but because they are limited in scope they can pretty much get away with anything. Once a multiplayer game starts developing a player economy, clans/factions, hierarchies of governance, etc., you seriously have to start paying attention to the implementation of single-player concepts you previously took for granted as being just fine.

"For every action there is an equal and opposite reaction" and "Energy can neither be created nor destroyed" are probably two good principles to apply to MMOGs that are closer to real life than a fantasy shooter. Reconciling single player loot mechanics in a multiplayer sandbox is flirting with disaster, no matter how many bandaids you put on it. I think as MMOGs mature some kind of harmony will be found.

Simon Ludgate
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Just because something is ridiculous doesn't mean it's a bad thing. The goal of a game is to be fun, and ridiculous things are often very fun! The thrust of my argument wasn't that loot drops are inherently problematic; rather, the combination of loot drops and equipment permanence and bind on pickup were incompatible with a good in-game economy. An MMORPG designer has to make the choice between which would be more fun for their game: the aforementioned trio of perma-bind-lootrain or a strong in-game economy.

One isn't necessarily better (WoW's loot system arguably works better for WoW than an economic system would) but developers need to be aware of the differences and conflicts in order to make informed decisions about their games. That is to say: if developers weren't aware of the conflict, they might think they can make a game with perma-bind-lootrain AND a strong economy, but they'd be wrong, and they might end up making a game that is less fun because it relies on two incompatible things.

Kevin Fishburne
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Agreed on your points about ridiculousness and fun. For simpler games loot drops are fine, but many MMOGs aren't simple because the players push them past the limits of their intended complexity through every emergent behavior they can hack out of them. I don't have a problem with simple MMOGs, but when they start to get more complex the fixes implemented to balance the unrealistic with the realistic start to take on the air of invisible walls.

Your article is extremely informative, one of the best I've read on the subject. It's just kind of painful for me to read about problems like these. I guess MMOGs are still in adolescence (or maybe their early 20's), even if Garriott says the third age of gaming is already here. I think there's a hell of a lot of room for improvement.

Good luck on the next article, I'm looking forward to it.

Lance Burkett
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Not all games need or have to be fun in order to be good. No wonder non-gamers think games are just pointless entertainment.

Misha Icaev
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If we combine notion of "fairness" with notion of "real world", then there are many things to be discarded from entire economic and game's conception, for example money (being virtual value). It may be just my narrow thinking, but such game would be literally ants-like.

Mark Steelman
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The fixed resource model doesn't work. UO started that way and they had to change it to an unlimited model. It is ironic that the oldest running MMO started with the idea that you put forward as inovative.

You can find info about that old system on the web. but the bottom line is, you need your game to be just as fun if there is one person playing or 1000. You never want to empower 1 customer to make the game more fun for them by making it less fun for 100 other customers.

Imagine there is a fixed amount of leather in the game. Say you can only get leather from killing cows. Say all cows drop leather. If there is a fixed amount of leather in the game then cows have to stop spawning until enough of the the leather that has been harvested decays. In that environment, there is no reason not to hoard leather and wait for it to go up in price. That's what happened in UO (not just with leather) and it got to the point where there were several commodities that you just couldn't get. Even if they had been turned into goods, they weren't decaying fast enough so you just couldn't get armor. Early on, that system was ripped out and creatures that produce resources just spawned at a fixed rate... thus creating an infinite supply of leather.

Misha Icaev
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Economy is flow (circulation of resources).

Problem that you described is stagnation (of leather market). As you pointed-out source of the problem was slow decaying. If gathering of resource over 25% would have significantly increased decay rate (2 times for each 5%) - then hoarding-it-up would have became useless/ineffective/uninteresting/waste. Under such conditions flow wouldn't have stopped in fact it would have got [much] faster. Lather market would have "flowrished" - not stagnate. At least that's how it looks for me.

Kevin Fishburne
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I didn't say it was innovative. I said not doing it was weak and primitive. UO tried to introduce realism in a half-assed way, and consequently it didn't work. Either you make an imitation of an economy and patch every possible exploit or you go all the way with an economic simulation and let it take care of itself. The former is a lot easier than the latter.

That's a horrible example. First of all cows and leather are renewable resources. I'm talking about iron, gold, silver, precious gems, etc. Grass grows back, cows eat grass, people eat cows and create leather from them, and leather deteriorates through wear. 90% or more of resources are renewable, and nothing lasts forever (except maybe gold and diamonds).

The unlimited resources model exists due to short sightedness, apathy, ineptitude, laziness or inadequate gameplay to support a limited resources model.

If you don't think a limited resources model is possible, I give you the example of humans on planet Earth. Would make one hell of an MMO if you ask me.

Jamie Mann
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This was an interesting and well written article, though I'd quibble one point. To me, gold buyers are an issue (above and beyond and discussions about economic unbalancing and unfair competition), because they haven't invested the time and effort needed to learn the game's mechanics and rules. And their lack of experience can break the game-experience for other players because they don't know what to do. Further, they may also treat their in-game assets as having relatively little worth - after all, they can just purchase more - which can lead to them playing carelessly or expending traditionally high-value resources in ways that a normal player would be hesitant to do so, further unbalancing the game.

Unfortunately, there isn't any good way to avoid this: there's always going to be people willing to trade "real" goods (and/or money) for virtual goods, regardless of whether this sort of activity is discouraged or encouraged. The only solutions which immediately spring to mind are:

1) resource-retention caps - i.e. you can only store 10,000 gold pieces

2) resource expiry times - i.e. your 100,000 pieces of gold are only valid for 24 hours

However, both of these are likely to be received negatively by players...

Simon Ludgate
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The two issues you point out aren't necessarily linked to gold buying. In regards to not learning the game's mechanics and rules, that's technically possible even for a player who accumulates wealth on their own by playing the game. And it's also possible that a gold buyer does learn the mechanics and rules and just chooses to invest their time more efficiently by spending 1 hour to earn money to pay someone else to do work that would take them 100 hours to do.

Likewise, a gold-buyer does not necessarily value their in-game assets any less than a player who earns those assets in-game. A player who has simply played the game a lot might earn vast incidental wealth and be willing to spend it willy-nilly because they're going to keep tripping over gold as they play. Conversely a player who has spent real money on wealth might value that wealth as "real" rather than some worthless game money.

Consider EVE Online: does the player who buys PLEX with real money and uses it to get in-game money not know the game's mechanics or rules? Do they spend their ISK more carelessly than a player who already has gobs of cash?

It seems to me that not learning rules and spending in-game currency carelessly are personality traits that are not necessarily linked to gold-buying.

Brian Roberts
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Great article, heres a typo i found:

"Then you have to grind the wheat grains into flour, and also find all the other ingredients, and very quickly you realize you might many weeks to a year to make just one loaf of bread."

I agree with almost all of the article, and i was just wondering what you would think of the following idea and how it would effect "Junk" loot.

What about an option to "focus" on a type of loot? It would be an option that you could toggle to: Random, Gold, Armor, Melee-weapons, ranged-weapons, resource A, resource B, etc.

Obviously these options would be game specific, but the general idea is to make your time invested a more direct result of utility gained.

Even if you selected to focus on armor, you may not get it. But it would increase your chances to get armor (relevant to you)


you could have a system where whatever you WOULD have looted is converted (roughly equally) to whatever option you selected. (Random would have a 10% edge b/c it isnt converted)

for example:

I Loot a corpse. the game rolls the dice. It determines what i will get (in this case a helmet worth 100g), but before I see my loot it converts it into either:


a sword of comparable quality (worth 100g)

10 of resource A (worth 100g)

5 of resource B (worth 100g)


the purpose of this would be to allow players to get results for their time invested.

(obviously the system could be more complex, since you loot multiple items...and it is tough to arbitrarily decide the value of an item)

would you say that would be "good" or "bad" for an MMOs economy?

Also, I played a LOT of SWG back in the day, and they had a very robust crafting/resource gathering/looting system which was a lot of fun. But inflation still bit them in the butt. There was also a ton of junk always around.

It almost seems to me as though max level characters shouldnt even be able to loot lower level weapons...besides when you are a low level, it is a lot more fun to find your weapons on your own. (not as viable in most end-game content since they are always "legendary" standardized lol)


how does variable weapon stats play into this (like early SWG)? They can make items NOT homogeneous boring grinds. but they can also break games.

(I wont even touch on item degradation)

Chris Zehr
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I've read most of your articles here on Gamasutra, and I'm really interested in Virtual Economies in general. I'm really surprised that you haven't mentioned Runescape in any of your articles. It has a large player base and provides many good examples for the points you're trying to make. The developers have made a lot of unique decisions regarding the game economy that run contrary to what most of the other companies are doing, and I think that they're better off because of it.

For example, there is no "Bind on Equip" gear, most (almost all) gear is tradeable, their market place can accept buy AND sell offers, and their crafting system is incredibly robust while allowing everyone to work in any skill as they choose. They've tried removing unbalanced trade to combat RMT, they have a group of items with 0 supply, and a spell that converts items into gold.

Granted, they do have their own fair share of economic problems (mainly due to RMT since the removal of trade restrictions), but the game makes an excellent case study for Virtual Economies, and, in my opinion, Runescape probably deserves it's own article to cover it's economic principles. The game is based on the idea that Time = Money, and the 'skill' comes from the economic decisions that player's have to make (until you get into the PvP side of the game).

Anyways, it's always a pleasure to read your articles, and I hope I can get your thoughts on Runescape.

Peter Thompson
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I'd love to hear a bit of follow-up information on this as well. As a neophyte in the area of MMOGs, my only real experience was with Runescape earlier in life. It's not a kind of game that I've had the time to play in years, but what a fascinating study in sociology! That game laid the groundwork for an appreciation of the intricacies of the evolution of player-driven economies, and like the above poster I would love to see how it compares if for no other reason than to get some perspective.

Mike Engle
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Some good points.

But honestly, it feels like the article wants to sacrifice gameplay to create a better economy. Uh, that's great -- and tell me, how has that worked out for EVE vs. WOW?

Has WOW's imperfect economy crippled it?

Has EVEs better* economy caused it to do well?

And when do we get to the severe gameplay shortcomings that a universal crafting material creates?

Because my impression of EVE harvest progression is:

1. AFK in front of this asteroid.

While WOW harvest progression is:

1. Harvest here.

2. Now harvest there.

3. Now harvest that other place.

4. Now run a dungeon.

5. Now run a raid.

It's good for games to encourage players to engage in a variety of activities. Otherwise they won't; then they'll get bored (unless your harvest activity is really fun; AFKing isn't.)

The better solution is to have players harvest important things by engaging with the more interesting game systems. This is why some crafting materials are found off bosses -- combat is an interesting game system, and that's how you beat the boss.

Again, some good points and interesting information but many of the conclusions feel very flawed or poorly justified.

Michael Joseph
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"So here's your checklist to making a successful MMORPG in-game economy"

Well i guess that depends on what your view of successful is. I'm not sure a milk toast economy that appeases everyone is really an economy at all let alone a successful one. What if successful to me means a cut throat supply/demand system that reflects reality more and where new players must unionize if they want to have a chance at raising their virtual status/wealth.

Fixing an economy here could actually mean empowering players with other means and methods to deal with power embalances between old players and new. Fixing the imbalance could also mean providing incentives for old players to ignore attacking low level players and focus on the high level players instead so that high level players are spending a lot of money to maintain their own protection and position.

A lot of the economic issues in mmo's seem to stem from trying to keep everyone happy and grinding.

Misha Icaev
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"A lot of the economic issues in mmo's seem to stem from trying to keep everyone happy and grinding."

Grinding is just a path to happiness, just like in reality - you have to grind your skills to become successful.

"providing incentives for old players to ignore attacking low level players and focus on the high level players instead"

I played such game it's quite boring. Once dominating group appears game goes down-hill from that point.

"Fixing an economy ... Fixing the imbalance could also mean

If you need to "fix" then something is wrong with "cut throat" model.

"... cut throat supply/demand system that reflects reality more and where new players must unionize if they want to have a chance ..."

Do you expect cooperation in cut-throat system? Maybe you can find players with correct mentality somewhere (in North Korea probably).

"I'm not sure a milk toast economy that appeases everyone is really an economy at all let alone a successful one."

It's not milk-toast economy, main idea is that "spice should flow".

Imagine game without faucet at all. Each new character starting with 1000 coins and it can rise-up to 3000 if you gather all money one account can have at the start. On other hand NPCs don't create money - you must buy something 1st for them to have it. You can still get stuff for respect (character-limited) and service (fraction-limited) points, by barter (even NPCs have needs), by crafting or by drop. And when NPC have money he/she can spent them giving quests or buying stuff. And by crafting staff (for sale) NPC gains experience -> more service = higher level = better crafting + more quests. Such economy would make coins flow endlessly, but if someone would get them all (he can still be robbed) game would continue with service and respects points. You can even have floating value of coins in such game. When coins have value - just gathering, keeping and spending them (big) can be entertainment in itself (won't it be nice to have 1/5 of all server's currency?). Or you can just play without coins at all having certain fraction as a customer for your service, building it-up and growing with it this way service points would work like money for you.

Matt Cramp
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Probably the most advanced economic system in MMOs exists in, of all things, Puzzle Pirates. 'Crafting' is handled by shoppes that are owned by players and can set buy and sell prices, and buys units of crafting work from players (in-game, represented by player going to the shoppe and playing a puzzle; their performance determines the quality of the work they did and thus how much they get paid). By making the crafter a persistent building, it establishes a way for both resources and finished goods to be traded at the other party's convenience, and smoothly allows for crafter collaboration. Resources enter the game through a 'trader's market', where traders set buy orders; it sometimes also comes from players 'foraging' while on an island, with the goods received depending on the island's natural resources. There was a problem with players tediously grinding away on islands, allowing the players who farmed the islands to set item prices for everyone else.

I'm going to break here for a second and point out that, due to some rejiggering of EVE's economy, most new players are directed towards NPC missions to raise money, not mining. The new player missions also push players towards using the market to source resources they probably can't get on their own.

As the game is driven by puzzle games, and thus mostly skill-based, equipment serves an entirely cosmetic purpose. It breaks down and crumbles into dust after a few months of game time, which is unfortunately the big problem with this economic system: the equipment upgrade mindset from more typical MMORPGs conveniently allows for the economy to junk vast amounts of resources and stimulate demand. Without the demand of decaying equipment, people don't really have any incentive to buy goods.

It shocks me sometimes how forward-thinking Puzzle Pirates has proven itself, and how little its design innovations have been picked up on.

Erin Hoffman
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Simon Ludgate
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@Chris, Peter: I haven't played Runescape myself but your description sounds a lot like EVE Online, in so far as non-bound gear, buy/sell markets, player crafting, and item decomposition. Would you say that comparison is fair or are there enough unique differences that Runescape deserves a thorough investigation? I haven't had the time to play all the MMOs people ask me about and some developers are less than eager to have their products put under the microsocope...

@Andrew: I'd point out that most MMORPGs do have limited inventory: in WoW, you only have 20 backpack slots when you start and you can only expand that to, well, whatever bag size they now have. EVE Online limits ship cargo bay capacity. Slot-based or weight-based inventory limits exist in every MMO I can think of. However, the other side of this, having stores run out of money, would be catastrophic from the perspective of Fairness (see article 1). You do not want to develop an MMORPG where one player can ruin the experience for other players by camping a merchant and selling it junk and leaving it with no money for any other player to sell their junk.

Chris Zehr
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Yeah, I would say it's a fair comparison, though I haven't played EVE. Most of what I know about EVE I learned from your articles; however, I still think there are enough differences to make Runescape worth looking into though.

The biggest would probably be their efforts to stop RMT by only allowing balanced trades. They've removed those restrictions now, but they're the only company I've heard of that has done something that drastic to combat RMT.

Regarding faucets and drains, Runescape is very dependent on large amounts of consumables rather then regenerating resources like Mana or some other system. I don't know if EVE has a large amount of consumables, but I think the loss of ships is one of the game's large drains.

Another big difference is that their servers aren't separate from each other. Player's choose a "World" they want to play on every time they log on, and the marketplace (Grand Exchange) is linked across all the servers. I also believe Runescape has a much larger player base than EVE does.

While the games are similar, I feel that Runescape could still benefit the discussion as much as EVE has, and offer another example for a game that has a (somewhat) functional economy. I get the feeling that a lot of people ignore EVE because it's a niche game. Runescape shows that it can work for a larger game in a fantasy setting.

Yeah, Runescape is a very time consuming game, and it's understandable that you haven't had the time to play it. It just seems worth mentioning because it's a big game and it's been around forever.

I'm not sure how Jagex would respond to an examination of Runescape's economic structure. I do know that they don't do a lot of advertisement for their game, so they might be more in favor of more honest publicity like an economic review. They do like to talk about things they do differently like their server set up, supporting a free version, and their choice to produce a browser based MMO. I can't speak for Jagex, but I think they would like to have their game "put under the microscope".

Joe McGinn
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Another great article, thanks a million Simon.

David Lindsay
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This was just a truly awesome read. Thank you Simon.