Wednesday, May 25, 2016

Fluctuations in Linden Dollar Value, And a Theory as to Why

By Bixyl Shuftan

In recent days, there's been some concerns about the Linden dollar due to fluctuations in it's value. While there have been swings in both directions, it's become generally much cheaper to buy Lindens from the Lab than to cash them out.

According to Tyche Shepherd's, the minimum rate on the Lindex on February 10 was 248 to the dollar, and the maximum 259. Last week on May 16, the minimum was 252 and the maximum 265. While not much for the typical Second Life resident, for content creators whom make a real-life living with their income from the grid, these increasing sell rates mean a dent in their income.

There's no shortage of opinions as to what's causing the price swings, as evidenced by the comments in the initial New World Notes article, the thread on the subject in the SL Universe forums, and a thread on Plurk. A common thought among residents discussing the matter is that Linden Lab is playing with the value of the Lindens themselves to encourage people to buy them. New World Notes tried contacting Linden Lab on the matter, but got no response. But talking with someone who used to work with the Lab, who preferred to remain anonymous, the man doubted that theory, "We were super-transparent about this years ago, and I doubt it's changed significantly in the time since I left. Linden Lab doesn't control the rates, the market does. If a number of larger businesses that have been holding significant L$ decide to liquidate and are willing to push the rate temporarily less financially favorably for sellers in exchange for more rapid exchange, then short-term small fluctuations like this happen."

So what businesses would be most likely to liquidate their assets? One sound theory, supposedly first came up with by Plurk user T-Kesserex, is that that the increase in people cashing out Lindens is coming from land barons selling theirs to help pay the one-time fees to lower sim rates which has been in effect since early April.  Tyche Shepherd reportedly estimated the total number of grandfathered full sims has gone up from 11 percent to close to 21 percent, a near-doubling. He calculated with the tier fees brought Linden Lab slightly over a million US dollars. With the top 20 landowners controlling about half the private estate regions, just a few moving to buy-down their sims to lower rates would involve a lot of Linden dollars.

But Inara Pey noted people were noticing fluctuations as far back as late 2015, well before the buy-down offer was announced in April, hinting while this might have accelerated the swings in rates it didn't explain them completely. Her suggestion was for those with a need or desire for more Linden dollars to take advantage of the lower rates while they last.

Sources:, SL Universe, New World Notes, Modem World 

Bixyl Shuftan

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