Neverwinter basics: Economy

Intro

The aim of this short guide is to give a quick overview on Neverwinters basic economic concepts and currencies: Astral Diamonds, Rough Astral Diamonds, ZEN, The ZEN AD eXchange (ZAX) and its cap, AD sinks, refinement cap, inflation and so on.

This is not a guide on how to make AD or how to get rich.

Basic Currencies: ZEN & AD

Neverwinter has two fundamental currencies as the basis of its economy. The first is the time currency, named Astral Diamonds or AD in short.
AD is used to buy important game resources, trade with other players at the Auction House (AH) and in short, is treated as the base currency in the economy. This is the player`s “salary” for investing time in the game.
In a very simplified way, AD is gained by playing the game.

The second basic currency is ZEN, which represents an investment of real money. ZEN is generated from real money purchases.

ZEN AD eXchange (ZAX)

The ZAX allows players to exchange AD for ZEN and ZEN for AD. The exchange is made among players. If players do not list ZEN that they are willing to exchange for AD, then no player will be able to exchange AD to ZEN.

The mechanism is somewhat similar to auctions or stock exchange listings. A player will list the amount of ZEN they want to buy or sell and the price they are willing to pay or wish to get for it in AD.

There are some limitations:

• The minimal price possible to list is 50AD per 1 ZEN, and maximum is 750AD per 1 ZEN. The 750AD maximum is often called the ZAX cap.
   
• A player can have at most 5 listings at any time. Each listing is limited to a maximum of 5k ZEN.
   
• If there is a higher buy listing and lower sell, the highest will be fulfilled at the higher buy rate. Meaning that if a Player A asked to sell at 50AD per 1 ZEN (50:1) and Players B and C, offered to buy at 500:1 and 750:1 respectively, player A will sell and receive at 750:1 even though they only asked for 50:1.
  
  Important to note: This prevents costly mistakes of players selling their ZEN for very low price, and prevents ZEN transfer even at a loss. One can’t list at some arbitrary price lower than all the requests and another to sell at exactly same price.
  This means that if someone offers to buy something from you for ZEN, with a promise that they will then transfer the ZEN to you after the trade, they either don’t know how it works, or they are trying to scam you.
   
• Listings are fulfilled in order, like a regular queue, first in, first out.

In the game the ZAX is made of 3 panels, one to list an offer to buy ZEN, one to list an offer to sell, and one shows your current and past listings.

The buy tab:

The window is made up of two parts: the top part, in which a player can list their buy offer/request with the amount of ZEN and the price point (per one ZEN).
The bottom part lists the offers to sell. The locations of the sell offers on the buy window allow the buyer to see the current offers and adjust their price easily. Offers to sell are listed from low to high (5 lowest offers).

We can see that the offer list on the PC screenshot is empty. This happens when there is more demand for ZEN than people offering to sell. This means that any offer to sell will be immediately fulfilled and the list remains empty. Many people, erroneously, think this a “broken” ZAX, while this is exactly how it should work. This occurs when there is a backlog of buy offers.

The sell tab:

We can see that the sell tab is constructed in the same way. The offer form on the top and the buy offers at the bottom, which allows a seller to quickly see all the highest selling offers. Offers to buy are listed from high to low (5 highest offers).

As before on the PC screenshot we can see the result of the backlog. There is a huge amount of ZEN requested at the cap price.

The listings tab:

This panel shows the current listing. As seen before, there are a maximum of 5 listings with a maximum trade of 5k ZEN per listing.

The bottom part shows a log and a history of the listings. In the case of a backlog there is a wait time. The simplest way to roughly predict the wait time, is to write down the backlog amount at the time of the listing (18.4mil in the sell screenshot) and then divide the amount by the number of days that it took to fulfill the listing. It is Important to note that we want the amount at the time the listing was made and not at the time that it was fulfilled. So we know “How many were in the queue before us” and then “How much time for that queue to process”. Dividing the first by the last we know how much of the queue is processed per day. At the time of writing, it is about 500k per day, so now if we post when there is a backlog of 18mil it will take about 36 days (rough estimate).

Inflation, Rough AD, The ZAX cap and AD sinks

Looking at the above we can ask how all that backlog was created and why there is even a cap to begin with. To answer this we will need to look into the basic economic concepts of Printing money, Inflation and Hyperinflation.

Printing money, Inflation and Hyperinflation.

The fundamental issue in MMO games economies is that the time based currency, AD in our case, is constantly printed. Players must get a reward for their time: stabbing monsters, completing dungeons and so on. Each such reward is generated by the game from nowhere, essentially printing money to pay players.

The problem in that is that, is that every economic value is bound to supply and demand. The more supply of something we have (or less demand) the more that the economy is flooded with it and the less value that items or currencys have.

In our case, we generate huge amounts of supply so the value of the currency / money drops lower resulting in the prices for the same traded products becoming higher to compensate. Eventually the market is flooded and the currency becomes worthless.

This money printing has several side effects:

Inflation – we print money, the money is worth less, but we want still the same value for our items, so we charge more money for them. The process where prices rise is called inflation. (In the context of MMO games, inflation generally is used in reference to the money printing cause.)

Backlog – As we saw, the supply and availability of AD is so much higher than the supply of ZEN offered in trade for it, that people must to wait in line for a significant amount of time.

To combat this, there are several methods:

Limit supply (the rough AD refine cap)

If we can limit the amount of AD that enters the economy we can slow down the rate of inflation and the devaluation of the currency. One artificial method is the daily refinement method. Players get Rough Astral Diamonds (RAD) as their reward, but can only convert a limited amount to AD.

This refine cap is not whimsical, and as much as players despise it, it is meant as a fundamental flood gate that prevents inflation.

Increase demand / erase from economy (AD sinks)

The second method is to remove the currency from the economy, or to make players spend their currency for something. Some notable and important methods of removing AD from the economy:

• Auction House tax – On each completed transaction there is 10% tax, this is done specifically to remove a huge amount of AD from the economy and is probably the most significant method to do so.
   
• Providing goods – Many of the Wondrous Bazaar (WB) items such as potency marks end up deleting AD from the economy, especially when used to upgrade bound items like artifacts. Other examples are companion upgrade costs, consumables, and so on.
   
• Non active accounts – Any AD that is on non-active accounts, whether it is players who quit, banned, or any other reason is AD not circulated in the economy.

Here is a great video explaining more about inflation and how games deal with it:

The ZAX Cap

We saw earlier that the ZAX has a maximum buy value a player can list. It is currently 750AD per 1 ZEN. The question then is why is there a limit? There is an assumption that If we remove that limit, and allow a “free economy” then the ZEN price will increase until some equilibrium is achieved and the backlog would then fizzle out .

The question then arise, can this equilibrium even be achieved? Even if it does, will the price be sustainable or not?

With all the limits and methods used above, such as AD sinks and refine caps, still there is still a huge amount of AD being produced. So how is AD not being completely devalued? The main method is the ZAX cap. That cap ensures that AD can be traded for some currency (ZEN in our case) which is tied to real money and so is stable in value. This means that AD will always have some value, even if the player needs to sit in a line for a month to convert it.
Removing the cap will remove this minimal value, and allow a free devaluation of AD and Hyperinflation.

Here is a great video that explains this further:

Another fundamental issue is that if at some point, AD is devalued so much that a player can’t purchase ZEN with it, then the game model changes to be in practice, a subscription game.

Free to Play? Pay to Win?

This is probably the most heated topic about the game. Starting with the issue that people can’t even agree on what is pay to win.
So without going into this too much, some points:

Free to Play (which is not mutually exclusive with pay to win) and the opposite of Pay to play – Neverwinter is free to play, anyone can download, create an account and play at any time.

Pay walls? – There is no content behind a paywall. It may take time to farm things, but as many free players have proven time after time, you can do it all, and get everything without spending a dime. For some it will take a lot of time, while others with higher efficiency and familiarity with MMORPG markets and economy will do it fast.
As opposed to freemium games, neverwinter doesn’t block content for free players.

The ZAX ensures that everything can be bought with AD by converting it to ZEN. There is a common argument that since ZEN is bought by players then “someone paid for it”. That is not a counter argument to the fact that a player can play anything they want and gain ZEN without real money. Someone will always pay for the game. We can create a parallel hypothetical system in which a rich company or advertiser buys Cryptic or just that PWE became altruistic non-profit and pushes 500k ZEN per day into the game, disabling the option to buy ZEN with a credit card. For any free player nothing has changed. The question of the pay model is not how the publisher or developer gets their funding, but rather the perspective of a single player.

P2W? – This is the most heated question, and it depends on the definition.

The more puritanical interpretation is, “Can we buy anything that influences game progress for real money”? Then, yes. The ZEN shop allows players to buy things that influence game progress as opposed to other games which may sell only fashion or QoL.

Can a player buy something that a free player can’t get and as such “win” over them or be “stronger”? No. Due to the ability to trade for ZEN through the ZAX, many call it “Pay to Progress faster”. This is because that “stronger” is not permanent. In essence the player who paid didn’t win anything but rather saved time, in the trade of one currency for the other (real money currency exchanged to time currency and vice versa) and free player will achieve the same with time.

Having said that, supporting the game keeps the game going, pays for Devs, servers and so on, and allows the release new of content.There is no shame in supporting the game.

Further reading and more in-depth

• https://www.gamasutra.com/view/feature/134576/virtual_economic_theory_how_mmos_.php
• https://www.gamasutra.com/blogs/SimonLudgate/20090828/2844/Sell_Your_Money.php
• https://www.gamasutra.com/blogs/SimonLudgate/20090825/2826/EVEs_SelfUNcontained_Economy.php
• https://www.gamasutra.com/view/feature/134789/the_fwords_of_mmorpgs_fairness.php
• https://www.gamasutra.com/view/feature/6437/the_fwords_of_mmos_faucets.php
• https://www.gamasutra.com/view/feature/134825/the_fwords_of_mmos_freetoplay.php
• http://faculty.trinity.edu/adelwich/worlds/articles/trinity.sam.kaminski.pdf
• https://gamedev.stackexchange.com/questions/1079/how-do-you-prevent-inflation-in-a-virtual-economy

• Extra Credits – Free-to-Play’s MECHANICS are Great – The Mini-Game Revolution (Youtube)
• Extra Credits – Free to Play Is Currently Broken – How High Costs Drive Players Away from F2P Games (Youtube)

• https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe

Thanks

Thanks to thefiresidecat for proofreading and the console ZAX images.
Thanks to Pitshade for the crapton of English corrections.
Thanks to the Patrons, which help paying for the domain, and hosting, and add incentive to keep it all maintained.