We’ve got to start selling L$ on LindeX. There have been a number of holdups until now, mostly related to the spiraling LindeX rate and panicky market. But the exchange has been stable now for almost a month. That stability could be due to a lot of reasons – Greenspanian pronouncements, reduced sources, transparency of economic info, etc. – but I think the biggest reason is just what Peter always said: We finally have buy limit orders to normalize activity, and now that they’ve had a chance to bake in, the market is stable.
In any case, the market is stable, and we’ve said that once the market is stable, we’d start selling L$. Sure, it will panic the market again, but if we do it right, we have enabled an incredibly high-margin revenue stream. So how do we sell? How much do we sell? At what price?
Quite a few folks argue that the amount sold must correlate exactly to some L$ charge, like upload fees or classified ads. I think the idea behind that thought is that the market will accept L$ sales that translate directly to services that the user community believes is beneficial, or at least believes has a direct relationship to system resources. I disagree with this for at least three reasons:
1) The market doesn’t think clearly enough, or monolithically enough, to accept that any particular L$ sink is a good candidate for L$ sale.
2) There’s actually no rational relationship between the amount of L$ we can or should sell and any one particular sink.
3) Someday – as we reduce the free sources of L$ – we need to be selling 100% of our sinks, and eventually even more than 100% our sinks. (It’s tautological: When there are no free sources, new L$ can only go into the L$ economy through sale of L$.) So we shouldn’t let the market get into a mode of judging whether any sinks should be sold, since someday we will need to sell all of them, regardless of whether the market thinks they’re “worthy” of sale.
So then, here is the selling strategy I’d propose instead:
Make an announcement on the forums to this effect: “At noon tomorrow, Linden Lab will place a sell order on LindeX in a US$ amount equal to [X]% of the L$ sinks over the last 30 days (including today). At the average sale price over that same period, this would be about US$[Y]. The offered sale price for this block will be the average sale price over the last 5 days, ending with today, or approximately L$[Z]. At the same time, we will place a buy order for exactly the same US$ amount, at the highest selling price for which there has been more than one sale over the last 365 days, currently L$[361? Peter to confirm]. After this sell and purchase order, Linden Lab will not buy or sell on LindeX for a minimum of 14 days, at which time we will evaluate whether the Linden economy requires additional L$ infusion.”
In other words, “We’re selling Linden Dollars. It’s a small amount of the last month’s sinks. If you want to panic, go ahead and panic. But if you panic through the highest price of the year, you’ll be selling right through our buy block that is the same dollar amount we just sold, so it’s like nothing happened.” Of course, the market could panic right beyond the block, but there’s no logical reason to under almost any theory. And since there’s no reason to panic through the high block, the market probably won’t panic at all. Well, let’s not say “probably,” let’s say “shouldn’t . . . but might anyway.”
I’d target the X% so that the $Y sale amount equals about $5000. And to the extent this proves a stable selling strategy, we’d slowly move that X% up. And eventually move to automated sales every week, then every day. Eventually, once the market is accustomed to the activity, we won’t need to put up the buy order block at all.
There are many many variations that could be as good or better selling strategies. Please feel free to comment away . . .