One of the latest trends in crypto, which has really taken off in 2019, is exchange utility tokens. These types of tokens have been around since 2017, but it wasn’t until this year that they stood out from the profusion of other altcoins.
The majority of altcoins continue to find new lows or are failing to gain any real momentum price-wise. On the other hand, exchange tokens are performing quite well. For instance, this year Kukoin’s token (KCS) went up 240%, OKEx’s token (OKB) went up 150%, Huobi’s token (HT) went up 380%, and the biggest gainer, Binance Coin (BNB) went up 534%. The market has clearly favored exchange tokens this year, but the question now is, will this trend continue?
Well, iFinex, the firm behind crypto exchanges Bitfinex, DeversiFi, and Eosfinex as well as the popular stablecoin Tether (USDT), thinks it will, which is why they recently launched their own exchange utility token, Unus Sed Leo (LEO).
In the following article, I provide a comprehensive and subjective look at Unus Sed Leo (LEO) so that you can fundamentally understand what LEO is. I delve into the characteristics that set it apart from so many other cryptocurrency projects and shed light on how it actually works.
So buckle up and enjoy this comprehensive guide to understanding the new and popular crypto exchange utility token – Unus Sed Leo (LEO).
Unus Sed Leo (LEO) is an exchange utility token at the heart of the iFinex ecosystem and is currently utilized on the Bitfinex cryptocurrency exchange. The LEO token was launched on May 22, 2019, following a private token sale raising $1 billion. The purchase price of Unus Sed Leo was 1 USDT for 1 LEO and the total supply of 1,000,000,000 (1 billion) LEO tokens were sold.
The primary reason behind Unus Sed Leo’s launch was to help alleviate Bitfinex’s budget deficit of $850 million. This budget deficit was a result of Bitfinex’s payment processor, Crypto Capital who allegedly lost $850 million of Bitfinex’s funds due to a government seizure. To make matters worse, in April 2019 New York Attorney General Letitia James filed a suit accusing Bitfinex of using Tether reserves to cover up the $850 million loss. This court case is still ongoing and is expected to be resolved in October.
All that being said, iFinex launched Unus Sed Leo to alleviate the loss of $850 million and has since stated that if the $850 million is somehow recovered from Crypto Capital, they would use 95% of the recovered funds to repurchase outstanding LEO tokens and then burn them. Additionally, the exchange also stated that an amount equal to at least 80% of recovered net funds from a prior $73 million Bitfinex hack in 2016, will also be used to repurchase and burn outstanding LEO tokens.
The repurchasing and burning of LEO tokens from recovered funds will reduce the token’s supply, which is expected to push the price up and protect investors from sharp declines in price.
LEO Tokenomics and Burn Mechanism
In addition to using recovered funds to repurchase and burn Unus Sed Leo, Bitfinex will also burn LEO tokens used to pay for trading, lending, deposit, and withdrawal fees. Even more, iFinex and its affiliates will also repurchase Unus Sed Leo from the market, at market rates on a real-time basis, equal to a minimum of 27% of the firm's consolidated gross revenues. This repurchasing and burning of LEO will continue until 100% of all tokens are redeemed, regardless of how high the LEO token price goes.
Therefore, this sophisticated burning mechanism coupled with the token burns from recovered funds from Crypto Capital and the Bitfinex hack is expected to increase the value of Unus Sed Leo tokens quite significantly. But that’s not the only benefit of this system, LEO token holders will also benefit from reduced volatility due to LEO tokens being purchased with recovered funds during certain times to prevent sudden market spikes, resulting in a more stable price.
Complementing the LEO token repurchasing and burn mechanisms is a transparency initiative launched by Bitfinex. The initiative provides real-time insights into all collected platform fees, iFinex revenues, and subsequent LEO burns. This information and more can be accessed at the “LEO Transparency Dashboard” at leo.bitfinex.com.
Purpose of Unus Sed Leo (LEO)
As previously mentioned, the purpose of Unus Sed Leo is to help alleviate Bitfinex’s budget deficit of $850 million. Besides this, LEO is the utility token of the entire iFinex ecosystem including their trading platforms and all future products and services. The primary use case of Unus Sed Leo among Bitfinex traders is to provide discounts on various kinds of fees when paid with LEO tokens. See the various discounts below:
Bitfinex Trader Fee Reductions
- Traders that use the LEO token to pay trading fees on all crypto-to-crypto (including crypto-to-stablecoin) pairs benefit from reduced taker trading fees by 15%.
- Additionally, traders holding 5000 or more USDT worth of LEO tokens in their account benefit from an additional 10% reduction on all crypto-to-crypto trading pairs, bringing the total fee reduction to 25%.
- Also, traders holding 1 million USDT or more worth of LEO tokens benefit from even more fee reductions with the maximum taker fee reduction being reached at holding 21 million USDT in LEO.
Bitfinex Lending Fee Reductions
- P2P financing lenders will get a fee discount equal to 0.05% for every 10,000 USDT in LEO tokens held in the trader’s account.
- The maximum lending fee reduction is capped at 5%.
Bitfinex Deposit and Withdrawal Fee Discounts
- LEO token holders receive up to a 25% fee discount on crypto deposits and withdrawals
- Traders who hold more than 50 million USDT worth of LEO tokens can withdraw 2 million USD fiat per month without additional fees. Withdrawals over 2 million USD fiat will have a reduced fee of 2% compared with 3%.
All in all, the primary purpose of Unus Sed Leo for traders/token holders is to accumulate and hoard the token as well as to use it for paying fees on Bitfinex. Traders with substantial amounts of LEO tokens benefit the most, and all token holders benefit from the incentives to acquire and hold Unus Sed Leo as it reduces the supply and increases demand. Couple this with the sophisticated repurchasing and burning of LEO tokens and you get very unique tokenomics that influence the price upwards.
Furthermore, Unus Sed Leo is expected to have more use cases in the future for iFinex’s other platforms, products and services including Bitfinex Derivatives, Eosfinex, iFinex IEO Platform, A Licensed & Regulated Security Token Exchange, Dazaar, Betfinex, Digital Assets on Lightning Network, and μFinex.
Unus Sed Leo (LEO) Issues & Controversies
The cryptocurrency industry is littered with controversial coins and Unus Sed Leo (LEO) may very well be one of them. Many cryptocurrency enthusiasts think this, not because of its technology or tokenomics, but because it was launched and issued by a controversial firm for controversial reasons.
As mentioned earlier, iFinex launched Unus Sed Leo to help alleviate Bitfinex’s budget deficit of $850 million. This reason alone is controversial, but there’s even more. Bitfinex is undergoing a lawsuit by the New York Attorney General Letitia James for using Tether reserves to cover up an $850 million loss of funds. Therefore, Bitfinex isn’t the most trustworthy company and there are a lot of uncertainties regarding their future. Also, iFinex is the parent company of the highly controversial stablecoin, Tether (USDT). Tether is speculated to have propped up the Bitcoin price throughout 2017 and is infamous for lacking transparency in regards to its Tether reserves.
All in all, iFinex is a very controversial firm with two of its largest entities shrouded with controversy. Therefore, Unus Sed Leo was kind of born controversial as it’s tied to a lot of negative baggage.
Adding to this controversy, iFinex’s EthFinex exchange, (now called DeversiFi), already has its own exchange utility token, Nectar (NEC). Therefore, it seems unnecessary to launch yet another exchange utility token for Bitfinex and the rest of iFinex’s products and services. Why didn’t iFinex just use Nectar (NEC) as it’s essentially used for the same thing? It all seems very strange and who’s to say iFinex won’t abandon Unus Sed Leo and just launch another token down the line? Therefore, iFinex cannot really be trusted and Unus Sed Leo is shrouded with controversy.
At first glance, Unus Sed Leo (LEO) looks like a very promising cryptocurrency with a very bright future. The token provides various incentives to token holders and is utilized on the Bitfinex exchange, which is one of the largest and most popular cryptocurrency exchanges in terms of daily trading volume. Also, it is said that Unus Sed Leo will be used throughout the entire iFinex ecosystem on all of its future platforms, products, and services. Therefore, the LEO token will potentially have a lot of new use cases going forward which could drive the tokens adoption and long-term success. Additionally, Unus Sed Leo has excellent tokenomics with Bitfinex and iFinex continuously repurchasing and burning LEO tokens. This will further reduce the LEO token’s 1 billion supply and is expected to result in an ever-increasing price.
However, there are some downsides to Unus Sed Leo due to its controversial launch and its parent company’s controversial history. These are things investors must be aware of because if iFinex or Bitfinex were to face serious legal action, there’s no saying how the market will react and what will happen to the company’s platforms, products, and services. Although, it’s also important to remember that iFinex and Bitfinex have already been scrutinized extensively and still continue to operate successfully thus far. All in all, Unus Sed Leo has a lot of potential to be a successful exchange utility token and it will be interesting to see how its future unfolds.
What do you think about Unus Sed Leo (LEO)? Do you think it’s worth investing in or does its controversial history turn you off? Let me know what you think in the comment section below.