On the Recent L$ Weakness…

This isn’t just a panic.  The market has fundamentally shifted and there isn’t sufficient buying pressure to sustain the amount of L$ that are being printed through stipends and etc.

This was bound to happen at some point because no network can grow forever.   Not quite a ponzi, but ponzi-like in the sense that Linden Lab’s actions required constant growth that never leveled off or dropped.

So anyway things should continue to bounce around.   The only thing keeping a lid on the L$ at all is because people have ingrained ideas about the worth of the L$, which leads speculators to lay down big bets when the L$ bounces up.  If it weren’t for people willing to pick up “cheap” L$ at 300, we’d have much more of a breakout.

This psychological inertia won’t last forever.  There’s only a few possible outcomes I see:

  • Linden Lab takes action to revalue the L$
    • Accepting tier in L$… comes straight off the bottom line, the owners and VC will not like this one.
    • Cutting stipends retroactively.   If they just cut stipends while retaining premium membership the way it is users will be upset.  So if they go this way, they’ll have to do something drastic: get rid of premium entirely, for every account regardless of age.  They’d have to make this effective on the renewal date so this measure would take about a month to really start having an effect.
  • Linden Lab does nothing.  Demand for L$ may increase, but it’s June, so that’s kind of doubtful with people doing things outside.

There should be some solid foundation this weekend as demand picks up again.  Around the beginning of July, things might get nasty.  I predict fireworks around July 4th.

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