Supply Linden sales

The last time LL was heard from regarding the new limits placed on Supply Linden selling L$ on the LindeX was on 31 Aug when Lawnence said: "There is no target exchange rate, and we don’t intend to prevent market movement altogether, just to slow it down when (or hopefully before) it becomes too rapid. As we gain experience with this I’ll attempt to quantify what we mean by “too rapid”, but certainly the 2.5% difference between two twelve hour averages like we saw in the past few days is in that ballpark."

When I left for Hawaii on 16 September Supply linden hadn't started selling L$ on the LindeX. The minimum exchange rate on that day was L$273/1. On the 18th of September the minum exchange rate hit L$272/1 for the the first time since the 2nd of September and that didn't seem to trigger a response by Supply linden either as it shouldn't according to the statement made by Lawerence quoted earlier. On the 21st Supply Linden started selling L$ I'm sure just to increase the money supply some but when the exchange rate hit L$272/1 again on the 23rd the amount of new L$ sold swelled to L$4,901,613. If there is no target exchange rate why did LL panic just because the exchange hit the same low rate again for the third time in September?

By the end of the 26th that figure had swelled to L$8,433,282 and the minimum rate never saw L$272/1 again as the total L$ sold by Supply Linden at the end of the month was L$20,117,994. Even if LL had decided the nonexsistant exchange minimum rate should be L$272/2 why did LL keep selling L$ at a rate of L$274/1? Why not just sell L$ at L$272/1, afterall you sold L$11,684,712 in just 4 days?

Finally, should you have badly miscalculated and the exchange now starts to rise, at what exchange rate will Supply Linden stop selling to maybe stem the rise in exchange rate?

I just looked at the July growth in the L$ supply which was the last month where we had 4 stipend Tuesdays like Sepember. In July the L$ supply grew L$39,221,868 and the minumim LindeX exchange rate fell from L$302/1 on 7/1/06 to L$297/1 on 8/1/06 or about 2%. Obviously there needed to be an increase in the amount on new L$ introduced into the SL economy if LL didn't want to see a similar 2% decrease in the exchange rate in September. In September the growth in the L$ supply was L$57,694,568, that is an increase of 47% over the July data. My question is how was this figure determined or is no one watching what Supply Linden is doing?

If LL used the August data to determine the amount of new L$ to introduce in September they should have normalized it for a 4 stipend Tuesday month and they would have found that the L$ supply only grew by L$37,719,820. Lets see that is a decrease in the amount of new L$ introduced of 3.8%. Maybe that is why the minimum exchange rate on the LindeX fell from L$297/1 on 8/1/06 to L$275/1 on 9/1/06 or 7.4%. Clearly there had to be an increase in the amount of new L$ introduced but how in the world did LL come up with the amount they sold?

Supply Linden took over $70,000 that could have went to content creators. And at the same time fought to prevent the value of the linden returning to what is was before LindeX opened.

As as a content creator I feel LL is sticking it to us pretty good.

What I would like to know is what is the reasoning behind that and why wont you let the linden value return to what it was before LindeX opened?

If there is no good reason to do so than please stop meddling with the exchange and let it reach it's equilibrium.

I've merged these threads about Supply Linden and LindeX, and will forward them to the right Linden.

Svar, I think you're mis-attributing some trades to Supply Linden because their trading pattern for that time period doesn't quite match up with what you're saying. Another thing to keep in mind is that we're working on steading the average overall rate, not the average market buy <-> limit sell rate, and are trading accordingly. That makes the whole thing a bit more complex.

As for deciding how much to sell and when, we're still in the learning phase right now and are trying different strategies and measuring the results. We're not very likely to share the details of the final selling strategy so that nobody starts to game the system. We may however share the details of our L$ supply analysis... I think we're getting close to having an easy to explain rule-of-thumb for monthly L$ source sizing.

We are having a look at what amount of total L$ sources that we estimate the economy will need each month and working at getting our L$ trades closer to that number as we gain experience with this.

While there are a lot of similarities with long established economies, there are at this point in time some very big differences that impact market behavior and make it difficult to meaningfully apply many standard economic measures and principles. It's a situation where we have to learn as we go. That being said I'm pretty happy with our performance over the past couple months and am looking forward to getting even better at this. To that point, several more people here at Linden Lab have recently taken a strong interest in the economy, and so we've probably doubled the number of brain cycles being thrown at it here at LL.

Cheers,
Lawrence