Fix The Lindex!

Too many people sit on the forums and complain about the economy with the lindex instead of offering solutions. Maybe I am ignorant, but my idea is sound.
Places such as IGE.com sell game currency according to the amount on hand to be sold, and the demand for purchase. The lindex sells according to how little the seller is willing to get in order for their L$ sales to be purchased quickly. The more people keep posting thier L$ sales at a cheaper rate, the worse things are going to get for everyone else. So my question is why are we selling like this?
Have a set price to buy according to supply and demand like the normal stock market. If people want their L$ to sell at a certain price, they can set it so that when the supply and demand brings the buying price up or down to what they want to sell it for, it will sell without affecting the actual buying price by their order. Right now, if I decided to drop 1mil. on the lindex at L$300/US$1 anyone who was trying to sell their money for under that would not sell! I don't think this a good market. So what is it that made LL decide to let the sellers control the market simply by how fast they want their money to sell and how much of a loss they are willing to take?
Please correct me if I am wrong, or explain it to me in a way where I would approve of it.
I would like to see the lindex act more like the stock market as IGE and GOM did.

We may add limit buy orders to LindeX soon, if we do it will likely provide some of the functionality you're looking for.

Cheers,
Lawrence

How low will you let the L$ get before you make this a priority?

10/10/2005

12/28/2005

2/1/2006

Oh yes, something I forgot to mention. Unless there is a good explination for this, the Lindex is actually stealing money from the buyers and sellers!
Let me explain:

1) On the market line we see at the far left that L$ is selling for L$283/US$1 and on the far right, it is selling for L$274/US$1. And in the exact middle, L$ is selling for L$278/US$1.

2) When you go to buy L$, you are buying it at the middle price of L$278/US$1, but are filling the order of ther person who is selling their L$ at L$283/US$1. This is a difference of L$5/US$1 which means that the buyer is actually paying for more than they are getting, and seller is recieving less US$ than they should be getting at that sale since the order was not paid for at that set price.

3) I could understand if the buyer was paying the middle price, and the money orders were being filled on multiple levels, don't you think that if were a buyer buying at L$278/US$ that that is where the order would be filled? I would love to buy at L$283 instead of L$278, but why would I pay more to get less?

Needless to say, I would never buy any L$ from the lindex as it stands now. If you are doing this to collect a fee, then can this process, and show a strait buying or selling fee aside from the purchase.

OK, I'm done ofering my solutions for now. Anything you explain to me to assist in bettering my understanding of this situation?

Jason I just posted a thread on a very similar topic, I really like this thread and was hoping you would be willing to comment and offer insight and the information you have about making LindenX more like a market exchange than a currancy exchange window, i.e. AMEX, Wells Fargo, ect. that merely trade and take their cut (in the case of LindenX that is 3.5%).

It could be that LL wants the value of 1usd to equal ~ 300. See the market data on this and notice the trends and pushing back towards that number where it was in September.

"Curiouser and curiouser," said Alice (Through the Looking Glass)

Cheers.

- Calix

- Unnecessary!

Never fear! Due to artificial price fixing of the previous exchanges that everyone keeps mentioning, and all the available capital they ignored, the OVER INFLATED price of the $L was bound to drop with the arrival of an exchange which reflects a more accurate demand and supply curve, and honest market forces. But everything will level out eventually. Be comforted in the fact that people still like to get the newest hottest toy, or outfit, or whatever.

True it may appear that we are in a crisis and there may currently APPEAR to be no effective equilibrium force. Rest assured that there is an equilibrium point, we just haven't hit it yet. In the worst case scenario there come a point where people will just rather spend their $Lindens in world rather than exchange them for cash. Even this point will be higher than $0/$L.

Fortunately this extreme case isn’t very likely!

One equilibrium factor is the monthly cost of a premium account, and it's associated stipend. If one does not intend to own land, then they must be holding a premium account due to the beneficial monthly stipend of $L2000 a month ($L500/week X 4). One would only do this if the cost of $L2000 was more than or equal to their monthly fee.

At the time of this post, the exchange offers $L2830 for $10 US. Which means that no one who is paying attention to the market would hold on to a premium account unless they owned land. Assuming that all premium account holders were to drop their premium accounts right now and just outright buy their Lindens from LindeX, this would increase the demand for lindens in the market, ergo raising the price back up to $10/$L2000. One can correctly derive from this that the higher the value of the $Linden, the more demand there will be for premium accounts, and the more Linden Lab could get away with charging.

The other equilibrium factor is the value of land holding privileges. Land ownership is a premium perk that people will be willing to pay more money for. Right now for $10US, premium account holders receive a stipend equal to $7.06US. This means that the privilege of owning 512m of land is worth at least $2.98 to them. And the more land they own, the less that $2.98 difference will make to them. Those paying a tier fee of $40US a month are not going to give up their land and development over a $3.00 loss in stipend compensation.

So we have a base equilibrium force which pulls the equilibrium price of $Lindens towards $10US / L2000. That of course is the premium fee and stipend, which will always remain a stable factor for the equilibrium. However the value of land holding privileges is unstable and depends on the amount of land owned in SL, VS the amount of people who desire to just spend $Lindens. The more people who own large amounts of land, the less the $L will be valued. However if more of the population is landless, or only owning a minimal amount of land, then the more the $Linden will be worth to them, and to the market.

SOooo....
In other words, the equilibrium price of the $L is between $0/$L2000 and $10US/$L2000. I would expect it to be more towards the $10 side. I have an idea of where that might be but I'm not saying because I'm probably wrong, and I don't want to influence the exchange with rumors. Anyway, to know for sure, I would have to research the proportion of citizens that own large amounts of land, and examine spending habits, and I'm not getting paid for this so I'm just going to guess like everyone else.

In conclusion, the value of the $linden will stop falling before any sort of fatal crash occurs, so you can all stop panicking. This is not the end of the virtual world. Once equilibrium is hit, the value of the $Linden will in fact once again start a slow and steady rise due to the constant innovation and excellent content provided by out talented residents who make Second life more and more desirable everyday.

- Brodsky out

What you see is the effect of the $0.30 fee on buying.

The current rate $L sells at is 281L/1USD.
If you go to buy page and want to buy 10K lindens, the page shows it will cost you 35.89USD and the exachange rate of 278.6. How did they get the number?

10,000L / 281 = 35.59USD
35.59USD + 0.30USD fees = 35.89USD
35.89USD is what you really pay
10,000L / 35.89USD = 278.6 exchante rate

as you buy more L, the effect of the flat 30 cents fee becomes smaller. For example if you buy 100,000L the real exchange rate is 280.86. For 1mil it's 280.98 (we are talking about 1mil or more being for sale on Lindex at 281)

I hope this answers your question.

Well, that would be correct if I were paying by the month. But I'm not... like many other people, I paid by the year. So, ignoring present value calculations, I am only paying $6/month for those Lindens that would (as I write this message) cost me $7.40 on LindeX. Plus I get to own land... if I just had First Land, I could pay nothing extra.

Wow good point, so that would be something else to consider in caculating the equlibrium too. If people percieve the value of the linden to be steady, they may get yearly accounts. As long as the conpensation is more than you are paying, the demand for those accounts will grow, and the more Linden Lab can charge for them. But at the same time that means fewer $Lindens will be purchaced on the exchange which lowers the value of the $Linden. So the first equlibrium value will meet somewhere between the regular monthly compensation of 2000L/$10US and the yearly compensation of 2000L/$6US. This first equlibrium value will still be very stable compaired to the second factor. Of course yearly account holders effect the long run more than the short run.

*The value of the first equlibrium factor is between 2000L/$10 and 2000L/$6.00
*The value of the second factor (the compensation loss that land owners are willing to take ) will change depending on the density of land ownership VS. the desity of the population that doesn't own land but likes to spend Lindens (which I'm not even going to attempt to calculate, so I'll just make a guess).

I'm sure there are probably other factors involved as well. If Ive missed anything BIG please let me know. But the main point still stands. There is an equlibrium, the market will not crash. Just like in the real world, the only thing that could crash the market is a rumor that the market will crash (also global warming, the retirement of baby boomers, George W Bush, and Weapons of Mass Destruction). The best thing we can do to increase the demand for Lindens is to create better products and services in world which people would be willing to pay for. Everyone can contribute to this in order to make our micro-economy stronger.