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Downtime is the period where Tranquility is shut down for basic maintenance on the server. Downtime happens at 12:00 hours ET (GMT).

The best example of what happens during downtime was explained by CCP John Proctor, in this topic on the eve online forums:

Orginally by CCP John Proctor (2007.08.16):

I think I can answer this question as I am usually the one doing the down times

EVE is a rather large game running on a large server cluster comprising of 2 "farms". You have your proxy servers that you directly connect to, then you have your sol servers where your session is directed to, and where all your interactions are carried out at (flying around in space etc...)

We have server processes that run as services on these boxes and are constantly generating logs and consuming resources on the box, and restarting these services clears their memory and allows us to save their generated logs.

Normally our downtimes in the past were 20 minutes with Tuesdays and Thursdays reserved for maintenance. But with a larger customer base the needs for maintenance has grown and we have 1 hour downtimes now Monday through Friday and stay with the normal 20 minute downtimes during the weekend.

Now why does maintenance need 1 hour you ask? For 20 minutes of every downtime we have downtime jobs that run. These jobs do everything from reseeding asteroids (there are millions of them) to cleaning up space by deleting corpses (I shed a tear every time a corpse gets deleted), to clearing out old logs, deploying outposts, and conducting statistical gathering...

While the server crunches the numbers we do not conduct any normal maintenance as we don't want to lock tables and interfere with the normal downtime jobs so our maintenance must occur outside of this 20 minute window.

Maintenance that needs to be done includes defragmenting the indexes that we have on our database... (with over 150 million transactions per day that leads to quite a bit of logical fragmentation). We also delete junkyards on a constant basis... We have designed EVE so that when you get your ship blown up or you refine your ore or you delete an item in your hangar those items are not deleted but instead moved to a junkyard, in this way it allows our Customer Support staff to easily give your items back or allows us to see if something abnormal is happening.

But we need to manually delete junkyards that are more than a month old, with over 30 thousand people constantly logged in every day, with over 100 thousand unique users logged in every day those are a lot of items that are created and deleted every day that accumulate over time.

This is only a tip of the ice berg of what we do during these downtimes but we are trying to create ways to eliminate these and have maintenance done dynamically as needed automaticaly by the system.

In the words of our Chief Operating Officer here at CCP "I want no downtimes... make it happen!"

Downtime on Sinqularity and Multiplicity test servers happens at 14:00.

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