Economy

The game's economy refers to a set of standards and rules that ArenaNet has designed to maintain financial balance within the game world. Financial balance does not mean that everyone has the same in-game wealth, but that no one can gain an unfair advantage due to their wealth. The number one function of the game's ecnoomic system is to prevent players from becoming so wealthy that they can exorbitant amounts of gold for trivial items making the price of items in player trade very expensive to the average player.

Maintaining Balance
The following is an examination of some of the key features that the designers use to control the game's economy:

The Trader System
Examine the article about Drop rates. You will notice that everything valuable in the PvE game (rare crafting materials, gold items, green items, and so forth) does not always drop. Instead, such things have a chance of dropping (that chance for the aforementioned examples is usually less than 5%).

When these items do in fact drop, they are not worth a lot intrinsically, but are subject to supply and demand. Crafting materials, dyes and runes have trader NPCs that act as the middleman while gold items, weapon upgrades and green items are usually traded between players directly (in game or using auction sites like those listed below).

This supply and demand scheme guarantees that players cannot simply hack and slash their way to very high amounts of wealth. Let's say that players found a creature that drops black dye consistently and often. Pretty soon, the creature will be mercilessly killed over and over and there will be an influx of black dyes in the market, the supply will be more than the demand and the value (at the trader and among players) will soon drop tremendously. In the interim, a few players might make it big (those who did it first) but the value of money (not black dye) will not drop.

Storage Restrictions
Each character in the game has at most 45 slots in their inventory and can carry at most, 100k gold. In addition, storage only provides 20 more slots (plus one slot per crafting material stack) and room for 1 million gold. This aspect is aimed at limiting players' ability to hoard gold and/or valuable items.

One technique that players use to get around this is to store their wealth in stacks of Ecto which usually value in the relam of several ecto each, making a single stack of Ecto worth more than a million gold. However this has a couple of disadvantages:
 * In the long term, Ectos change value, and the trend has been that they decline in value with time. A most extreme example is that Ectos were 14k gold at one point and 6 months later were at 6k. This means that a stack of 250 ectos depreciated from 3.5 million to 1.5 million without anyone touching it.
 * In the short term, there is the trader penalty. Material traders always sell crafting materials at a higher rate than they buy it. There for, if a player were to convert 100k into Ectos at 6K a piece they would end up with 16 Ectos, but if they wanted to liquidate these Ectos a week later, they would likely sell them at 4.5K a piece, which would make 72K. Thereby, losing 28K just in the exchange rates. Buying and selling to other players is less variable, but means that the player has to stand around a town and spam "WTB" or "WTS" each time they need to store or retrieve some cash.

Another technique players use is the usage of mule characters and/or accounts. This has the cumbersome disadvantage of having to buy extra character slots and at times, a whole new game package (i.e. costs real world money).

E-Bay Money
Some players who maybe lazy or too busy to actually work at gaining their wealth resort to buying in-game money in exchange for real world money. Those are often referred to as e-bayers because the website eBay is often the place they find sellers of in-game gold.

ArenaNet looks very seriously at this issue and will penalize all parties involved if they can find them. The sellers of in-game money usually deploy bots into the game that simultanuously farm easy to farm areas and generate a constant stream of wealth. They then sell this money to others using websites like eBay. The drawback in terms of game economics is that if enough people do it, they will make the value of money in the game less. i.e. if most players can just buy 1 million gold off eBay, then they will pay 100k for something that is worth 50k just to eliminate competition. This makes the value of items increase too rapidly for regular players who are not buying their money from eBay. This will also put pressure on those who are not buying their money to go and buy their money to stay competitive. Gradually, there will be very high inflation and no one will be able to buy anything they like without buying money on-line. Which will mean the ruin of the game (players will soon quit playing the game if they had to spend $5 in real money each time they wanted to buy something valuable in-game).

To counter this, ArenaNet closely monitors bot-like activities (i.e. a character that has been on for X amount of hours doing the exact same thing over and over) and have their own undisclosed ways of detecting such bots. When a bot is detected, the account is banned and perhaps more steps are taken (such as monitoring the IP address that used to play this bot).

Economic Tips
The following tips and advices are designed to help players (especically new players) make good in-game financial decisions:
 * Items that have traders should be sold to the trader or other players but not the merchant. This includes dye, runes and crafting materials. The merchant offers the lowest possible price for all such items.
 * When selling items that are found at the trader to other players or buying it from them, make sure to check the trader price first. The price you ask for (or get) should be between the trader's selling price (high end) and the trader's buying price (low end). It makes no sense for anyone to sell their items to other players at a value less than what the trader already guarantees them, and it also makes no since to buy items from other players at a value higher than what is already available at trader. Note that sometimes traders DO run out of stock and their price becomes no longer a factor.
 * After you identify a salvage item (an armor drop from a monster), do not immediately salvage the rune off of the item until you check the trader price. This can usually give you an extra few hundred gold. For example, a Warden's Armguard of Superior Vigor is a no-brainer. Superior Vigor runes are very expensive. In this case you salvage the rune. But, a Warden's Armguard of Superior Illusion is worth 200-400 gold if sold to the merchant, while the rune of Superior Illusion is worth 25 gold at the best of times. Such an item, you should keep and not salvage and then when you get back to town, you should check the rune trader's price, if the value is indeed low, you should just sell the armor itself to the merchant.
 * Use auction sites to find out the market value of the item you want to buy or sell. For more information, read the article on Price checks.