Monitoring the Linden Supply

What does that mean for the virtual economy going into November? Over time, Linden Lab has needed to increase the number of sinks in SL and reduce the number of sources in order to stabilize the quantity of Linden in the system and its value.

As noted, the largest catalyst for a further devaluation of the Linden is an increase in stipends paid to premium users. As more and more premium users sign up, the larger the Linden source becomes. However, Linden Lab is taking sensible steps to curb this rise.

New premium accounts that are registered on or after Nov. 1 will have a weekly stipend of 300 Linden, down from 400. Stipends for current premium accounts will not be affected. Some older premium accounts were originally offered a weekly stipend of 500 Linden that remains in place for now, as these accounts are considered grandfathered.

"Second Life has nearly doubled in size in about a month, but buying and selling of Linden is not something this new wave of immigrants is engaging in," says Au. "I have to think Linden Lab is looking at ways to encourage them to do so, and decreasing the Linden stipend may be part of a larger trend of policy decisions in that direction."

While the difference is 100 Linden, or 37 cents, the reduction gives Linden Lab some control of the sources entering the market. By keeping a lid on volatility through monitoring stipend payments, swings in valuation for the Linden are becoming more controllable.

However, questions still remain about what the change will do to membership. It will be interesting to see if the reduction in stipend payments will be the deciding factor for users planning to open premium accounts in the coming months.

"The upcoming stipend change will substantially increase activity on the LindeX, as Linden Lab taps down on the amount of 'free' Linden they put into the world," Au says. "That'll keep inflation in check, while also nudging Residents to buy and sell L$ on the LindeX more."

Also, will Linden Lab do away with the entire idea of stipend payments as a measure to exercise more control over the Linden currency? While these grandfathered premium accounts seem immune for now, only time will tell what's in store.