LindeX at 251

[Qie Niangao]

It's certainly odd. There's clearly something in the database that these records are reporting, but it's difficult to guess what it could be.

The recent date in the "Time Closed" field is why these surface in the 30-day history. Charlotte's are near the beginning of the recent event; Rya's near the peak. 

My hunch is that the reports have practically nothing to do with the data on which they're "reporting" -- no market buy lasts for years and then gets "system_cancel"-ed. The quantities seem unlikely too... would these merchants ever cash-out so completely as to need to buy a few thousand L$s in the viewer? Maybe, but seems more likely it's just "noise" -- completely unrelated records in the database that the reporting software doesn't know how to interpret.

Maybe such reporting errors happen all the time, and normal people only just notice them when reallly paying attention to Lindex details?

Or that were triggered by something that only rarely happens, but happened during the event? (where that "something" is subject to interpretation by wild conspiracy theory or software SNAFU depending on the fitting of one's tinfoil hat).

Or that are symptomatic of some larger bug that actually contributed to the event somehow, delaying market buys or something?

[Rya Nitely]

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Qie Niangao wrote:

The quantities seem unlikely too... would these merchants ever cash-out so completely as to need to buy a few thousand L$s in the viewer?

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I wasn't a merchant in 2008. That was a typical transaction for me back then. I always bought in the viewer, didn't know any better :matte-motes-bashful-cute:

[KarenMichelle Lane]

Interesting - Nothing notable at all except the change in the exchange rate. The 30 day volumes were at their bouncy norm.. It's looking like a small number of people wanted to dump their $Lindens over the last 12 days. That was offset by people not wanting to dump $Lindens at the depreciated exchange rates and those who purchased the cheaper $Lindens who probably expected the market to return to it's norm or who were needing them to spend. [if you are planning on buying goods in the MarketPlace then the more $Lindens the better.].

The dumping activity could have been a very small panic based on a rumour.

 

[Phil Deakins]

I'm not keen on the rumour idea. If there was a rumour that caused the selling of the very big amounts, then I am sure that we would have heard it, but we haven't.

Overall, there was a huge amount sold at the higher rates - 50 to 100 million? For that to happen it would have needed a few users with astonomical amount of L$, or a lot of users with samll amounts exceeding a million, or something in between. I don't believe anyone keeps astronomical amounts so, if it was a lot of users responding to a rumour, then we would surely have heard the rumour. I still favour it being LL wanting some quick cash for whatever reason.

[Qie Niangao]

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Phil Deakins wrote:

Overall, there was a huge amount sold at the higher rates - 50 to 100 million? 

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Except that's not really huge amounts. It's normal Lindex volumes. Remember, even the largest merchants are small fry on the Lindex compared to Estates who must push through a huge flow of L$s just to pay their US$ tier, never mind any to keep for themselves. And when their tier comes due, they have no luxury of waiting around for better prices.

(That's not to support "rumors" as an origin for this event, but I do think whatever the originating cause, it got amplified by some degree of panic. I mean, the whole event at its peak swung the market less than 10%, but folks were posting "DON'T PANIC PEOPLE!!!11!!" as if the end of the world were nigh.)

[KarenMichelle Lane]

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Phil Deakins wrote:

I'm not keen on the rumour idea. If there was a rumour that caused the selling of the very big amounts, then I am sure that we would have heard it, but we haven't.

Overall, there was a huge amount sold at the higher rates - 50 to 100 million? For that to happen it would have needed a few users with astonomical amount of L$, or a lot of users with samll amounts exceeding a million, or something in between. I don't believe anyone keeps astronomical amounts so, if it was a lot of users responding to a rumour, then we would surely have heard the rumour

. I still favour it being LL wanting some quick cash for whatever reason

.

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Regarding the Quick Cash Funding Theory, I don't believe that the LindeX has any profit oriented traders in LL's employ. So a forced manipulation of the basis price from 251 to a spot high of 269 ir so offers 18 lindens on the dollar more to collect a fee % from per transaction dollar. Seems like a poor take if that was indeed the plan and at what cost? Linden Lab exposes that they manipulate the L$ market price?

In fact, on a L$50,000.000 Daily Volume Day Linden lab loses $6,972 - $6,505 =  $469.00 USD in fees on a 251/269 L$/dollar difference in the exchange rate. Unless you are suggesting that LL was selling the Lindens for USDs which makes no sense. USDs in the escrow account backing up the Linden Token Reserve don't deplete the amount of Linden Tokens available. That USD cash is not available to spend elsewhere. It is the equivalent of using currency [uSD] to back up the Linden Tokens.

Linden Lab makes more off the fees charged when the $Linden trades at 251.

 

 

[Phil Deakins]

Yes, I was suggesting that LL was selling the L$, meaning that they get 100% of the US$ spent on them instead of the tiny fee.

I have no idea what you are talking about, about the escrow account, token reserve, and the money not being available to LL.

[Rya Nitely]

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KarenMichelle Lane wrote:

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Unless you are suggesting that LL was selling the Lindens for USDs which makes no sense. USDs in the escrow account backing up the Linden Token Reserve don't deplete the amount of Linden Tokens available. That USD cash is not available to spend elsewhere. It is the equivalent of using currency [uSD] to back up the Linden Tokens.

Linden Lab makes more off the fees charged when the $Linden trades at 251.

 

 

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We discussed this as a possible reason all last week, on this thread and the other one. Also in SLUniverse where the whole thing was actively discussed. This was strongly suggested as a possible reason. Not one person came up with this argument against it. Perhaps you have more insight, because I also don't understand what the 'escrow account' has to do with it. I can't see why Linden Lab can't print new money, if they choose to do so, and sell it for USD.

The LindeX has gone back down toaround  252, so they aren't experiencing a significant loss in fees.

[KarenMichelle Lane]

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Rya Nitely wrote:

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KarenMichelle Lane wrote:

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Unless you are suggesting that LL was selling the Lindens for USDs which makes no sense. USDs in the escrow account backing up the Linden Token Reserve don't deplete the amount of Linden Tokens available. That USD cash is not available to spend elsewhere. It is the equivalent of using currency [uSD] to back up the Linden Tokens.

Linden Lab makes more off the fees charged when the $Linden trades at 251.

 

 

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We discussed this as a possible reason all last week, on this thread and the other one. Also in SLUniverse where the whole thing was actively discussed. This was strongly suggested as a possible reason. Not one person came up with this argument against it. Perhaps you have more insight, because I also don't understand what the 'escrow account' has to do with it. I can't see why Linden Lab can't print new money, if they choose to do so, and sell it for USD.

The LindeX has gone back down toaround  252, so they aren't experiencing a significant loss in fees.

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Rya Nitely wrote:

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KarenMichelle Lane wrote:

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Unless you are suggesting that LL was selling the Lindens for USDs which makes no sense. USDs in the escrow account backing up the Linden Token Reserve don't deplete the amount of Linden Tokens available. That USD cash is not available to spend elsewhere. It is the equivalent of using currency [uSD] to back up the Linden Tokens.

Linden Lab makes more off the fees charged when the $Linden trades at 251.

---

We discussed this as a possible reason all last week, on this thread and the other one. Also in SLUniverse where the whole thing was actively discussed. This was strongly suggested as a possible reason. Not one person came up with this argument against it. Perhaps you have more insight, because I also don't understand what the 'escrow account' has to do with it. I can't see why Linden Lab can't print new money, if they choose to do so, and sell it for USD.

The LindeX has gone back down to around  252, so they aren't experiencing a significant loss in fees.

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Yes, Linden Lab [prints] the amount of $Linden Tokens that are allows ro be bought & sold on the LindeX. Over the past 15 days of this float on the basis exchange rate of the $Linden the volume has remained more or less remarkably the same. Account holders were still selling $Lindens to fund their USD accounts. I'm one of them. I doubt that account holders seeing the exchange rate change chose to fund their USD accounts with real USDs in order to pay their tiers & fees to Linden Lab rather than lose at worst L$18/dollar. That would make no economic sense.

Therefore the overall constant daily volume of $Lindens traded shows that mostly normal trading was occurring on the LindeX.

This would also suggest the the exchange slide rate was influenced by other factors.

Did Linden Lab dump $Lindens at the L$260+/1 USD exchange rate? For a quick profit? You can only think that if everyone else held out and stopped selling $Lindens. [i for one did not because I had fees to pay]. The number of people in these forums that indicated that they were not selling was negligible.  Most of the complaints were from those with unfulfilled sell orders still seeking the L$251/1 USD exchange rate.

In the absence of a dramatic change in the exchange volume and a strong indicator that account holders were still cashing in $Lindens to pay tiers & fees, where is the proof that a Linden Lab sell-off occurred?

Did the equivalent of an average of $L50,000,000 remain unsold belonging to Account Holders so that the Linden Lab could liquidate that same amount in unwanted $Lindens priced to sell for USDs?

Does Linden Lab in fact trade [for stabilizing or for profit reasons] in the LindeX at all? As the regulating body and owner of the LindeX that has some big ethical issues wrapped up in it. Linden Lab is not the Fed. Quantitative Easing IS a scam to prop up a losing economy. In this case we're hearing that Linden Lab is manipulating the LindeX for it's own gain.

My take is that Linden Lab remains ethical in running the LindeX. I still can smell the slime from the Faux Banking Business debacle from years ago. Linden Lab is surely not going to head in that direction. There lies the end of Linden Research should they be caught.

IMHO that is.

 

 

 

[Qie Niangao]

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KarenMichelle Lane wrote:

Does Linden Lab in fact trade [for stabilizing or for profit reasons] in the LindeX at all? As the regulating body and owner of the LindeX that has some big ethical issues wrapped up in it.

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The Lab has always sold L$ in order to keep the game currency supply from drying-up due to "sinks" such as upload fees, Search and Classified listings, Marketplace fees, and anything else L$ denominated, which draw down the supply (much?) faster than the few remaining L$ sources (notably stipends to the dwindling Premium membership).

Back in the day, they used to issue monthly economic statistics on all sources and sinks, including how much income they generated selling L$s to replenish the money supply.

That's the thing, though: the Lab sells L$s regularly. There's nothing unusual about it. Now, it would be possible for them to suddenly start dumping an unusual amount on the market and thereby sell much more than their usual share of L$s for a while during which residents' standing sell orders wouldn't execute at their old rates, and it might take a while for those residents to adjust their orders to the new exchange rates (and maybe even pile-on some extra selling at even worse rates if they get a little nervous that the currency might be tanking).

I don't think that happened, personally, because the longer term increase in revenue would be negligible, and might even be negative. That's because, if the Lab dumped a bunch at junk rates just to capture the market for a whie, they'd displace residents who nonetheless will eventually have to sell at some rate -- and while those residents are selling at whatever rate, Supply doesn't get to execute its usual sales.

Put another way, they could possibly "borrow" some US$s in accelerated L$ sales, but they'd lose it back quickly forgoing sales on which they regularly rely. The short-term benefit might have been tempting if the need were desperate enough and the amount were enough to matter, but we know the total volumes weren't that huge and we also know that at least some of that modest volume was resident sales anyway.

I doubt Linden had any hand in this at all, other than maybe another L$1 uptick in exchange rate that they seem to be doing semi-annually recently.

[Rya Nitely]

We will probably never know the reason. The only thing anyone can do is speculate.

What we do know is that for over 4 years the market was stable. I'm sure there were plenty of rumours during this time, I'm sure there were always some people wanting to sell fast during this time, but for 4 years resident activity did not nudge that stability by one single point up or down.

If this was based on a rumour it would need to be so big and so terrifying we would have heard it.

Of course there is no proof that Linden Lab was involved in it. But there is also no proof they weren't. They certainly have the power to do it. If residents had such power and can move the market so significantly, on an unknown rumour or a few people wanting to sell fast, then we would have seen much more volatility over the past 4 years - but we never did.

ETA: Reply is more to KarenMichelle

[Rya Nitely]

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KarenMichelle Lane wrote:

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Therefore the overall constant daily volume of $Lindens traded shows that mostly normal trading was occurring on the LindeX. 

 

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The constant daily volume staying normal makes sense because it is not only determined by supply, it's also determined by demand. If the demand for L$ is unchanged then the daily volume would be unchanged. If we have an increase in supply and no increase in demand, L$/US$ would go up, as we saw, with no change in daily volume.

I also sold my L$ during all this, at 263. So people could still sell but at a much higher L$/US$ because of the increased supply feeding an unchanged demand.

I'm not saying that LL increased the supply of L$, I'm just speculating like everyone else. But if they did, then it would have the effect we saw.

 

[Rya Nitely]

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Qie Niangao wrote:

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That's because, if the Lab dumped a bunch at junk rates just to capture the market for a whie, they'd displace residents who nonetheless will eventually have to sell at some rate -- and while those residents are selling at whatever rate,

Supply doesn't get to execute its usual sales.

 

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or Supply doesn't need to execute its usual sales. The selling is done, and future need is met in advance.

[Qie Niangao]

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Rya Nitely wrote:

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Qie Niangao wrote:

That's because, if the Lab dumped a bunch at junk rates just to capture the market for a whie, they'd displace residents who nonetheless will eventually have to sell at some rate -- and while those residents are selling at whatever rate,

Supply doesn't get to execute its usual sales.

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or Supply doesn't need to execute its usual sales. The selling is done, and future need is met in advance.

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True. And I'm one who always suspects the Linden organization of stabbing each other in the back trying to make themselves look good, so if one Linden manager could make their numbers for the quarter by "stealing" from future quarters -- no matter how much damage it does to other products (such as Land) -- then they very well might, inasmuch as such blood-spurting rivalry has always been rewarded, not penalized.

(I don't know, is the Lindex organizationally adjacent Marketplace?  If so, one would expect the same rampant ineptitude. Historically, though, it hasn't shown that heavy hand of utter cluelessness.)

[Theresa Tennyson]

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Qie Niangao wrote:

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KarenMichelle Lane wrote:

Does Linden Lab in fact trade [for stabilizing or for profit reasons] in the LindeX at all? As the regulating body and owner of the LindeX that has some big ethical issues wrapped up in it.

---

The Lab has always sold L$ in order to keep the game currency supply from drying-up due to "sinks" such as upload fees, Search and Classified listings, Marketplace fees, and anything else L$ denominated, which draw down the supply (much?) faster than the few remaining L$ sources (notably stipends to the dwindling Premium membership).

Back in the day, they used to issue monthly economic statistics on all sources and sinks, including how much income they generated selling L$s to replenish the money supply.

That's the thing, though: the Lab sells L$s

regularly

. There's nothing unusual about it. Now, it would be

possible

for them to suddenly start dumping an unusual amount on the market and thereby sell much more than their usual share of L$s

for a while

during which residents' standing sell orders wouldn't execute at their old rates, and it might take a while for those residents to adjust their orders to the new exchange rates (and maybe even pile-on some extra selling at even worse rates if they get a little nervous that the currency might be tanking).

I don't think that happened, personally, because the longer term increase in revenue would be negligible, and might even be negative. That's because, if the Lab dumped a bunch at junk rates just to capture the market for a whie, they'd displace residents who nonetheless will eventually have to sell at some rate -- and while those residents are selling at whatever rate, Supply doesn't get to execute its usual sales.

Put another way, they could possibly "borrow" some US$s in accelerated L$ sales, but they'd lose it back quickly forgoing sales on which they regularly rely. The short-term benefit might have been tempting if the need were desperate enough and the amount were enough to matter, but we know the total volumes weren't that huge and we also know that

at least

some of that modest volume was resident sales anyway.

I doubt Linden had any hand in this at all, other than

maybe

another L$1 uptick in exchange rate that they seem to be doing semi-annually recently.

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There would be a good reason for Linden Lab to make Lindens slightly cheaper - right  now and for as long as the exchange was around L$250 to the dollar, if you buy Lindens in the viewer (the way the average user does it) a round number of Lindens - say L$2000, the default in the viewer - sells for slightly more than an even number of dollars when you factor in fees, etc. During the recent spike the same amount sold for slightly less than an even number of dollars. It's easier to make a sale if your price is slightly under an even number of currency units - that's why things in stores are usually priced at $7.95 instead of $8.00. If the Lindex was manipulated to bring the exchange rate to a point where Lindens typically sell for the slightly lower price they'd get more impulse purchases.

[Qie Niangao]

Oh, that's an interesting theory for these little upticks. It seems more plausible than earlier speculation (mine included) that it might be trying to address the relative strength of the USD against most other world currencies.