SL Economy Tanking? What's up LL?

[Medhue Simoni]

I've been watching this for the past couple of weeks. Out of nowhere, my sales have dropped to less than half of what I was selling, and the Lindex price for lindens has been rising. This tells me that something major is going on. I can only speculate, but I remember seeing a few posts on the forums from people who could not buy lindens anymore. If this was a wide scale problem, then this would perfectly explain what I'm seeing. See, the Lindex cashout price for lindens always hovered around 247, with something close to around 150 million lindens available for redemption at that price. Of course, I always cashed out at 248, as I didn't want to wait. Today, there are 307 million lindens available at 247, and 70 million available at the price of 248. Last friday, when I cashed out, there were only 25 million lindens available at the 248 price. So, it is still growing and at a massive pace. I've waited until now to bring it up, cause I figured that LL would be right on this, as they do make quite a bit off the lindens. If LL doesn't act soon, SL will fall, as this all starts an avalanche. If I get less, that means I won't have enough to pay for my sim, hence giving up the sim. Today, I make most of my money from outside of SL, but there is no way I'm taking money out of my pocket to pay for a sim that produces no wealth, or at least not enoug to pay for itself. Granted, I'll still likely make enough to pay for my sim, but once I'm not, that sim is gone.

 

So, WTF is up, LL? This is serious! If you don't understand this, then you deserve to fail. I'm not someone that goes around yelling about the sky falling, and have laughed at every post insinuating this. Now, tho, is different. Again, this is serious! LL should, at the very least, tell us about the problem.

[Pamela Galli]

I filed a ticket last week because my 248 limit order was not filled after 10 hours,,whereas until then it was filled in less than an hour. I wanted to know why the change. LL helpfully explained to me how a limit order worked. :matte-motes-bored:

My sales are pretty typical for summer, which is the lowest sales season, as I think it is in RL. 

[Medhue Simoni]

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Pamela Galli wrote:

I filed a ticket last week because my 248 limit order was not filled after 10 hours,,whereas until then it was filled in less than an hour. I wanted to know why the change. LL helpfully explained to me how a limit order worked. :matte-motes-bored:

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Yeah, LL processes around 70 million to 100 million lindens a day. So, if you aren't within that reach, your lindens won't get sold in a day. These numbers are also down, which is what I would expect if the linden value is dropping. Something is up. It's obviously not catastrophic, or they would not still be selling even the number they are now. It's almost like 1 decent size group of people, just stopped buying lindens. If that is what happened, and everyone else is fine, then I would expect to see the numbers level off within the month. Right now, it seems to be climbing still, but we'll see when another week passes.

Years ago, I also remember hearing about some person or team was responsible for keeping the linden exchange rate stable. I really have no idea what those people would do. There are also sinks that destroy lindens. Heck, I'm not sure how these new LL experiences work, but if they are giving away lindens, even that could have this kind of result. The newest just opened up a couple weeks ago.

[Qie Niangao]

There does appear to be a little blip on the Lindex market data for the first time in years. It doesn't seem to be sustained at a new rate, though, so I'm at a loss as to what it means.

If Supply had intentionally started selling L$s in volume at a higher exchange rate (lower L$ value), one would expect the rate would just stick at the new pegged price. Arguably, that would be a smart move for a company with a significant non-US customer base, given the gradual climb of USD value against most major currencies. (The idea would be for more L$ per USD, thus cheapening L$-denominated goods and services relative to the USD, slightly compensating for the decline in value of other currencies vs USD.) But that doesn't seem to be happening, as the rate drifts back toward status quo ante.

It's always been assumed that the Lab never buys L$s, and only exerts demand through L$ sinks, so the blip can't be due to some Linden on vacation who should be working the exchange levers. So, maybe those sinks are no longer effective enough -- which wouldn't be that surprising as upload fees become less common with a smaller share of residents creating content, and as land-based fees shrink for Search listings and classifieds. On the other hand, one would assume that Marketplace fees would be by far the largest L$ sink now, so the LindeX might be vulnerable to any glitch in that flow. (Were there any VMM problems, maybe? I wasn't paying attention.)

[Theresa Tennyson]

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Medhue Simoni wrote:

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Pamela Galli wrote:

I filed a ticket last week because my 248 limit order was not filled after 10 hours,,whereas until then it was filled in less than an hour. I wanted to know why the change. LL helpfully explained to me how a limit order worked. :matte-motes-bored:

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Yeah, LL processes around 70 million to 100 million lindens a day. So, if you aren't within that reach, your lindens won't get sold in a day. These numbers are also down, which is what I would expect if the linden value is dropping. Something is up. It's obviously not catastrophic, or they would not still be selling even the number they are now.

It's almost like 1 decent size group of people, just stopped buying lindens.

If that is what happened, and everyone else is fine, then I would expect to see the numbers level off within the month. Right now, it seems to be climbing still, but we'll see when another week passes.

Years ago, I also remember hearing about some person or team was responsible for keeping the linden exchange rate stable. I really have no idea what those people would do. There are also sinks that destroy lindens. Heck, I'm not sure how these new LL experiences work, but if they are giving away lindens, even that could have this kind of result. The newest just opened up a couple weeks ago.

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Bear in mind that the third-party Linden exchanges are  no longer in operation, and at least some of their former customers have been saying they won't buy Lindens.

[Loco Mycron]

 

No not tanking.

For a number of years I’ve routinely sold at 248. For each of my sims - this equates to selling 75811 per month to pay the $295 tier. If I start selling at 249, it will approximately add $1USD per month/ sim to my costs.

Conversely, this would equate to marketplace traders who earn $295 USD in sales losing approximately $1USD if they decide to sell at 249…

If you are pulling $3000 USD/ month out of SL it would cost you and extra $10 USD?

The question for me is - if I need to convert L$ - US$ immediately, it costs more.
If I can wait a day or two longer. It will cost the same.

The main point of difference being a matter of patience waiting an extra couple of days for the transaction to complete. 

[bebejee]

Are people in property business really earning that much?

[Qie Niangao]

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bebejee wrote:

Are people in property business really earning that much?

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They better be. Remember, LL only accepts US$ for estate fees and tier, so if landlords accept L$s from tenants, they'll be cashing out L$s in large quantities whether or not they're so much as breaking even.

[irihapeti]

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bebejee wrote:

Are people in property business really earning that much?

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they can. But if dont practice good business sense and discipline then can end up getting a big hurt

 

+

 

assume good practice tho

 

i use mainland as example

 

if have 10 standard mainland sims then 150,000 prims for $US1,950 a month. Then bc mainland get another 10% prim bonus. So 11 sims (165,000 prims) for $1,950. * 12 months = $23,400pa cost

 

at 1L per prim per week rental say

 

then max. earnings is: 165,000L per week

 

Sell at 248. 165,000 / 248 = $665 - ($24 (fee)) = $641. * 52 weeks = $33,332pa revenues approx.

 

$33,332 - $23,400 = $9,932 nett

 

the breakeven in this case is approx. 0.7L per prim per week rental. Or 115,500 prims rented at 1L per week

 

can look the inworld map and see who is doing ok on this scale, and more

 

+

 

also. a alternative

 

look at the low cost skybox rentals where the rentals are 1L and less even sometimes. The same prims are rented to more than 1 tenant at the same time

 

the landlord in this case is working on the assumption that not all the tenants will login to their skybox at the same time. Most of these landlords have a clause in their tenancy agreement about this. Basically what do you expect for your 20L a week rent

 

this way of doing it (double renting the same prims, triple renting and more in some cases) is how some of the now big barons got started, for a smaller starting outlay/risk

 

+

 

edit: cant count. is why I am not any business person

 

[Pamela Galli]

I just received payment for a 248 limit order I placed 8/30. Way longer than the usual hour. Plus the amount was a few dollars less than usual.

[Frankie Antonioni]

I think when LL banned third party L$ resellers, the L$ went down. You can still buy L$ on ebay, but it will cost more. I think I saw 10,000 L$ for $45.00.Last I checked, there were about three, or four listings.

LL should rethink their policy on third party resellers. Perhaps they could allow companies to sell L$, if they provide RL info.

[Pamela Galli]

This seems so sudden. Turn around went from years of about an hour, to all day, now multiple days.

[drusilladarkwillow]

They had announced a new platform that will be released where nothing will transfer over including your currency. Of course, I keep hearing different things about it. I think at this point, most people are waiting to see what's going to happen with it and if it's going to happen at all before they spend a lot. Also the number of active users have dropped and I don't see as many people shopping as much as they used to. A lot of people already have what they want and need and are at a stagment which is bad for us that sell our lindens back though.

Things may pick back up once school has gotten on a good headway though.

[Qie Niangao]

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drusilladarkwillow wrote:

They had announced a new platform that will be released where nothing will transfer over including your currency. Of course, I keep hearing different things about it. [...]

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You shouldn't have heard different about that thing: Ebbe has said consistently that the L$ will be used in the new platform, too. That's one reason this current micro-fluctuation might even be of interest.

One would eventually expect some real swings and liquidity problems in a market for a virtual currency if it were used solely by the few stragglers in a fading platform. That makes it very important for the L$ that it have some prospect beyond the waning SL market.

The current LindeX behavior doesn't seem very manacing in that regard, but now a few days later, it does appear that the target trading range has solidly shifted up by L$1 per USD, or 0.4%. We have easy access to all the L$ trading data, so we can know exactly what's happened: the very smallest change possible.

The thing is, we also know that all those years of no change whatsoever was because the rate is perfectly controlled (supply-side), so we're left with the question: why has LL engineered this tiniest possible shift, and might it suggest more shifts to a new, higher target?

[Qie Niangao]

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Pamela Galli wrote:

I just received payment for a 248 limit order I placed 8/30. Way longer than the usual hour. Plus the amount was a few dollars less than usual.

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This seems so sudden. Turn around went from years of about an hour, to all day, now multiple days.

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Pamela, if you look at that link I posted, and select the 90-day range, you'll see that the few days before and after month-end are by far the highest trading volumes each month, and I doubt that's because of a huge influx of L$ buyers. Instead, I imagine a monthly influx of sellers compete with each other to supply a relatively constant demand.

As I posted above, it does appear that the target exchange rate has shifted one L$, but nonetheless, if you want more predictability in your trading, avoiding month-end and -start may help.

[Pamela Galli]

I cash out about every three days, the same order every time, so usually including at the beginning and end of the month.

Basically, I just wonder what is driving this, but past experience is that I never understand explanations of the causes. 

[Chic Aeon]

Just wanted to say that my business is good and steady compared with the season and other years.

 

The end (for awhile anyway -- who knows) of the third party currency exchanges likely has something to do with this. Podex is still viable in OpenSim, but that was a big change and for some folks not one they were willing to live with.

I never buy currency so I really don't pay all that much attention.  And yes, Ebbe has repeatedly stated that money as well as friends lists will transfer over to Sansar. However, things do change and plans don't always come to fruition. Some things "promised" at the beginning will likely not be in the final package.  BUT that Sansar is still a  LONG ways off; I don't see that having much to do with the state of SL.

 

 

 

[Medhue Simoni]

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Theresa Tennyson wrote:

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Bear in mind that the third-party Linden exchanges are  no longer in operation, and at least some of their former customers have been saying they won't buy Lindens.

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Good point, but I'm not sure what the timing of all that is.

[Medhue Simoni]

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Loco Mycron wrote:

 

No not tanking.

For a number of years I’ve routinely sold at 248. For each of my sims - this equates to selling 75811 per month to pay the $295 tier. If I start selling at 249, it will approximately add $1USD per month/ sim to my costs.

Conversely, this would equate to marketplace traders who earn $295 USD in sales losing approximately $1USD if they decide to sell at 249…

If you are pulling $3000 USD/ month out of SL it would cost you and extra $10 USD?

The question for me is - if I need to convert L$ - US$ immediately, it costs more.

If I can wait a day or two longer. It will cost the same.

The main point of difference being a matter of patience waiting an extra couple of days for the transaction to complete. 

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The point is not really how much someone is losing. I'm talking about the slide, as things start to snowball. This week it's 248, and next it will be 249, and 250 after that. It seems that things have steadied, but it was a significant shift. My sales were actually better than normal for this past week.

[Medhue Simoni]

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Qie Niangao wrote:

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The thing is, we also know that all those years of no change whatsoever was because the rate is perfectly controlled (supply-side), so we're left with the question: why has LL engineered this tiniest possible shift, and might it suggest more shifts to a new, higher target?

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This is exactly my point. It might have even essentially became a 2 linden shift.

[Medhue Simoni]

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Pamela Galli wrote:

I just received payment for a 248 limit order I placed 8/30. Way longer than the usual hour. Plus the amount was a few dollars less than usual.

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You have to figure that around 280,000,000 lindens were sold, or more in those days, with many bidder under bidding at 249. 1 look at the data from the last week or so, and we see more than average amounts of lindens sold each day, which has caused the 248 bids to stabilize a little. It's likely that this shift will end with most of us, from now on, cashing out at 249.

My sales were up this past week. It's hard to say that is because of anything specific tho.

[Ravie Bunny]

In my mind, I think these are some of the causes:

1. The exchanges selling off their excess L$ inventory.  This would cause a massive influx of L$ into the market, easily eating up all the 257 buy orders wiping them out. I suspect this still isn't done and there is still a lot of L$ to sell.

2. The way Linden Lab has been treating the skill gaming program is absolutely atrocious and many operators whom in the past would keep large L$ balances on hand are now cutting their balances and holdings, putting many more sell orders in than in the past.

3. A lot of people, in general, have been losing confidence in the Lab (myself included, sadly) and simply do not invest anymore here. Between the false DMCA garbage a lot of creators deal with, to their treatment of the Skill Gaming program, to the lack of common decency many large land owners get.. people are quite frankly just tired of Linden Lab -- and Sansar just adds to that.

Also, the lindex exchange as been borked for awhile, actually -- ever since they announced the end of the 3rd party exchanges. I watch the lindex a lot, and the 257 buy orders had been teetering between 5 million and 25million for months and the sell orders have been over a hundred million for awhile. It just finally gave way and looks like it's here to stay.