Game Economies
Most massively multiplayer video games do feature some form of trade and an ingame market to facilitate it. This is typically called a “virtual economy”, although I hope we all can agree that there is a huge, fundamental difference in the economies of EvE Online and World of Warcraft. These two economies are not of the same kind.
And that difference comes down to one being a “scripted economy” and the other being an “emergent economy”.
Scripted Economy
In a scripted economy, the developers define item sources, sinks and often even prices. There’s NPC vendors that buy and sell stuff at fixed prices; Items spawn from loot tables, there is little player agency involved in value creation; There’s also no real resource consumption happening, as items last indefinitely, and sources just respawn infinitely, and so on. Prices and scarcity are determined by the game’s code - not by player interaction.
This is not a real economy - but a simulated approximation of typical market behavior. That also means, that the behavior can be simulated for a much larger market (the entire ingame story world) rather than just the players who participate. The code assumes more stuff is going on behind the scenes, beyond what the players are doing in the game.
This can also be called a token economy, or a simulated economy or a designed economy. For further clarification, the word “token” here does NOT refer to any form of digital tokens (cryptographic or not) - but is used in the meaning of “symbolic”. It’s a symbolic (not a real) economy. A facsimile, if you will.
The other thing here is, that players can create money. Creatures just respawn, and players can kill them and loot them and sell the loot as much as they want. Thus, players are basically in control of these faucets - they do turn the wheel that controls the flow. The only limit is play-time. The same is more or less true of missions in SWG: they are infinite, and players can take on as many as they want, and thus they are in control of printing money. This can lead to serious issues, if it’s not counterbalanced by strong sinks. In fact, even with strong sinks in place, this will lead to inflation - the only question being, if that inflation is manageable/controlable or not.
Emergent Economy
In an emergent economy, players produce, trade and consume resources. There’s scarcity, arbitrage, interdependency and naturally arising market fluctuations. Prices are defined by supply versus demand, and can differ regionally. Items are created by players, and have a limited lifetime (i.e. they degrade and break over time). The materials used to make them are mined and refined by players. The market and pricing are dynamic and emergent.
This can also be called a market economy.
In this economy, all the prices and scarcity and market behavior are driven by players, and their actions in the game. There’s actual production and consumption of virtual resources, and that’s not just a simulated approximation. Which makes this an actual, truly working economy, based on virtual goods in a virtual world.
Money creation/printing is typically strictly limited. In EvE, there are missions which are technically infinite and pay out ISK - but the developers do control and dynamically adjust the mission respawn timers, the bounty multipliers and the payouts. Thus the total inflow of new currency is tightly bounded and scales sub-linearly with effort. In other words: there is diminishing returns. The more missions you run in a region, the less and less rewards they will pay out. The game will constantly monitor the rate at which new ISK enter circulation, and also the rates at which ISK are destroyed by sinks - and the taxes/fees/other costs that act as money sinks can be dynamically adjusted as well, to keep the economy in balance. (They literally treat this like M1 money supply and velocity of money as in real-world macroeconomics.)
Economic Stability
In the real world, the amount of currency in circulation is pretty stable. Of course the feds can print new money, or destroy existing money - but this is mostly done just to tweak inflation and interest rates. The economy itself revolves around circulating the same money over and over and over again. That’s only possible though, becase in the real world population numbers are fairly stable as well. In games, that’s just not possible to achieve - you have to deal with new players showing up, existing players going inactive (possibly with large amounts of money stored in their inactive accounts), etc. - thus the use of faucets and sinks is inevitable.
In scripted economies all the faucets have to be counterbalanced by even more money sinks: fees, taxes and other regular costs, that players have to pay as they keep playing. These sinks typically have to be larger and more effective than the faucets are. If the faucets bring in more money than the sinks remove - you end up with potentially too much inflation to keep the economy stable. This system has a downside though: because the sinks per default destroy more money than the faucets typically bring in, the average player is forced to grind for money in order to be able to pay all their fees, taxes and costs. But that’s the only way, to keep the economy stable. Or at least stable-ish to a degree.
For an emergent economy though, it’s centrally important to put all the focus on money circulation, and de-emphasize faucets and sinks as much as possible. Otherwise you don’t get an emerging economy in the first place, because nothing will emerge. Even if it’s not possible to actually get to the same level of stable circulation as in the real world - the goal still is to get as close as possible. That means, player-to-player money circulation has to make up for the vast majority of all economic activity. At the same time money-creation through faucets and money-destruction through sinks ideally needs to be as small as possible.
The player-to-player circulation is the emergent part of the economy - and the faucet-to-sink flow of money directly competes with that. The more money a player earns from a faucet - the less money they have to earn player-to-player. The more money a player pays into sinks, the less money they have to spend player-to-player. The more money that flows faucet-to-sink, the less money circulates. Thus faucets and sinks do stifle your player-to-player economy and that’s why you absolutely want to keep them as low as possible.
To get an emergent economy as stable as possible - it also needs to be as big as possible. Smaller (and more centralized) markets are generally more volatile and also way more prone to price manipulation. For best stability, you ideally want to create the largest market you can - single-shard or cross-server, as big and stable as possible, with most of the currency supply being circulated - and comparatively little money being brought in by faucets or removed by sinks.
The more effect these faucets and sinks can have on your money supply, the more volatile things become. Especially, if the faucets are player-controlled (like in SWG) rather than dev-controlled (like in EvE). In order to keep the money supply as stable as possible - you don’t want players to be able to quickly add to, or remove from that supply. You want to keep currency supply fluctuations low.
Conclusion
If you want to create an emergent economy, then players should mostly earn their money from other players - and mostly spend their money on offerings by other players. Because that money circulation, that’s the emergent part of the economy.
The more players have to grind money-printing missions just to feed into money-destroying sinks (the static part of the economy), the more you are stifling your emergent economy. Less money in circulation, less player-to-player trade, less market size, less economic activities that are actually viable, less stability. In order to get a good, working, emergent economy, you really have to double down on the player-to-player money circulation.
The other issue with faucets and sinks is, that they define a fixed hourly income rate. And all other prices in the game, can then basically be derived from that. If you want actually dynamic pricing based on supply and demand (which is a necessity for a working emergent economy), you must make sure that these fixed pricing influences are kept to a minimum. If players can earn X money/hour with missions, then you also must have sinks that remove more than that. If any other economic activity in the game earns less than that - then it will require additional money grinding just to keep up with the sinks. So, what you want is for these other economic activities to earn more than the sinks cost - so that money is not a limiting factor for circulation and player-to-player activity, and the faucets are only the emergency backstop. And the easiest and best way to achieve that, is by keeping both faucets and sinks as small as possible in the first place. The player-to-player circulation should and has to be the strongest part of the economy.