Archive - Oct 19, 2007
Second Life Net Worth: L$ 4500 (Down about L$ 462)
Unread emails in my main account: 620 (Down something like 900)
Monthly Unique Visitors to Orient Lodge: 2152 (Down from around 3200)
So, I’m catching up on my email as my blogging and Second Life trading falters.
In Mystik’s post, she suggests that perhaps shareholders should be reimbursed from the VSTEX risk fund. Samantha Goldflake, (not Goldnugget as Mystik calls here), points out that most of the funds in the risk fund are to come from successful IPOs, which VSTEX, being a new exchange, doesn’t have any of yet. She notes that since SLC came over from a different exchange, there was no IPO and hence, no IPO funds from them in the risk account. The other source of funds for the risk fund is a commission taken on stock sales. Unfortunately, I cannot access any data on SLC stock sales, but based on other data that I can find, my rough estimate is that around L$ 25,000 of SLC stock traded hands each of the fifty days it was on the market. With a 0.5% commission going into the risk fund, that works out to be about L$ 6,250 available in the risk fund for SLC shares. With around 2.5 million shares on the market, not counting the directors’ shares, that works out to be about a quarter of a Linden cent per share.
On the other hand, Samantha Goldflake claims that Mystik withdrew L$ 333,896 from VSTEX, or about L$ .13 per share. This seems to fit with Mystik’s apparent approach to dealing with finances. She ended her post by noting that “Well, the new CEO needs only distribute those shares as an option to an alt and dump them on market.” It appears as if Mystik’s approach is to search for ways of beating the system instead of finding ways to maximize shareholder value.
VSTEX appears to have worked hard to salvage a bad situation. If they are lucky, Mystik will act honorably and return the L$ 333,896 that she withdrew and they will find a shareholder of SLC similar to Monkey Canning who has stepped up to salvage Atlas Venture Capital. If not, they may need to dip into their risk fund and pay each stockholder something like L$ .0025 per share.
For some people, trading will remain part of a game in Second Life, where the Linden dollars earned are simply part of how you keep score. For others, it will remain a real market with real money and real risks. Given the pseudonymous nature of Second Life, these risks are likely to remain high, but the exchanges will continue to work to bring about new rules to mitigate some of these risks. As long as you carefully monitor our own risk portfolio, trading in Second Life is likely to remain a fun and potentially lucrative game.
Update: Based on data that a reader has sent me, it appears as if my estimate of L$ 6,250 in the risk fund was very optimistic. It appears as if about L$ 200 was added to the risk fund based on SLC trading during the month of October. Extrapolated out, that works out to be around L$ 560 during the history of SLC on VSTEX. However, SLC was trading at a higher price, and probably a higher volume during its initial days, so L$ 560 is probably the low end, and L$ 6,250 is probably the high end of funds available in the risk fund.