So here's a point I hadn't thought about. Why is this an MMO? If the MMO experience involves mostly people interacting in small groups, maybe group v. group, plus an auction house, why not do it this way:
Austere lobby, pick a dungeon or check out the auction house.
Dungeon: there are multiple instances of each open, a timer shows how long they've been open, whether they're still accepting new players.
Player client connects to other player clients. Maybe distributed processing among them, or maybe one is the host. The dungeon is probably one that was player-made, but is vetted by the game company. You can also play non-vetted dungeons that can be anything.
You play, complete the dungeon, say thanks guys, leave. Join another dungeon.
Don't see anyone playing the dungeon you want to run? Start a new group and it shows up in the lobby.
You can restrict people from displaying if they're in your blocklist. If you are on the blocklist of anyone in a dungeon you can't join that dungeon. You can also have a friendlist, join a guild, etc. For example your guild could create an instanced dungeon that is their guild house, and label it a guildhouse, in so doing making the instance persistent. This allows for crafting stations, guild storage, meetings, dance parties, drunken revels, etc. Guild level determines the size of the guild hall they can maintain.
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Auction house has stuff put up by players. Each account gets a limited amount of concurrent auctions. Auction house takes a cut.
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How do you combat cheating? By letting people cheat, but labeling them. Someone who has contact with non-vetted content, whether entering a non-vetted dungeon, or entering any dungeon with a non-vetted character, or buying or selling to a non-vetted character on the auction house, immediately makes you labeled non-vetted. You're poisoned.
You can set your character to only display vetted characters and dungeons and auctions - which is what most people will want to do because otherwise you might click the wrong thing by accident and get un-vetted.
Only vetted characters appear on the leaderboards. That's the big penalty for using the "cheat code" of playing in non-vetted environments.
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What does the game company do to maintain the game? Vet the dungeons people create, steadily increasing the content available to "honest" players. It also needs to maintain a lobby server with leaderboards and auction house, and a character server, which saves your character to make sure you didn't hack it and add goodies offline.
You could totally just play the game with a LAN option, or a "connect directly to my mini lobby server" like Minecraft, although these characters would be automatically non-vetted if uploaded to the official lobby server.
Because the development and maintenance is almost nothing, they could get away with not charging a monthly subscription.
If you can have a crummy server handle a 64-man BF1942 match, I'm pretty sure it can handle the couple dozen players who would want to band together.