Exchange utility tokens appear to be the hottest new thing in crypto and they are being touted as the ultimate safe bet.
Following the ICO boom of 2017, several cryptocurrency exchanges discovered a new opportunity to raise funding by issuing their very own digital tokens. These new “platform tokens” quickly became popular and saw great success as they offered token holders various benefits including:
- Reduced exchange fees for trading, deposits, and withdrawals
- A share in exchange profits through bonuses and dividends
- Exclusive access to contests, tournaments, airdrops, and more
- Voting rights for exchange listings
The most notable exchange token to have launched thus far comes from the world’s most popular cryptocurrency exchange, Binance who launched Binance Coin (BNB) in August 2017. BNB went from just $0.11 in August 2017 to nearly $40 in June 2019, making it the most successful exchange token to date.
Other exchanges following in Binance’s footsteps with the issuance of exchange tokens include KuCoin, Huobi, and Cobinhood. The utility tokens issued by these exchanges have garnered a lot of interest, but they haven’t come close to the success achieved by Binance’s BNB coin.
However, there is now a new prospective exchange utility token called Unus Sed Leo (LEO) that’s issued by iFinex, the firm behind popular crypto exchanges Bitfinex, Ethfinex, and Eosfinex.
What is Unus Sed Leo (LEO)?
Unus Sed Leo (LEO) is an exchange token that was launched on May 22 by iFinex, the parent company of Bitfinex, Ethfinex, and Tether. The LEO token is an exchange utility token for current and future iFinex trading platforms and services.
It was launched to the public following a private sale raising $1 billion. During this private sale, the purchase price of Unus Sed Leo (LEO) was 1 USDT for 1 LEO and the total supply of 1,000,000,000 (1 billion) LEO tokens were sold.
At the time of writing LEO tokens are trading a $1.88 and can be traded against the US dollar (USD), Tether (USDT), Bitcoin (BTC), Ethereum (ETH), EOS (EOS), and MakerDAO’s decentralized stablecoin (DAI).
Unus Sed Leo has already garnered a great deal of interest and is currently ranked number 14 on CoinMarketCap and rising quickly.
Why Did iFinex Launch an Exchange Utility Token?
Cryptocurrency exchanges issue their own exchange tokens for a variety of reasons; to attract more users, to benefit existing users, and to generate more profits. iFinex is no different.
However, the primary reason they issued the LEO token when they did is because in 2018, Bitfinex’s payment processor, Crypto Capital, was subject to a partial government seizure equating to $850 million of Bitfinex's funds. Bitfinex is actively working to expedite the return of these funds but there is no certainty they will be able to recover them.
Therefore, to alleviate this cash shortfall, iFinex conducted a private offering of $1 billion for its Unus Sed Leo token.
If Bitfinex is successful in recovering the $850 million funds from Crypto Capital, they stated that an amount equal to 95% of the recovered funds will be used to repurchase outstanding tokens and then burn them. As well, Bitfinex will also use 80% of recovered funds from a 2016 hack to repurchase and burn Unus Sed Leo tokens.
The repurchasing and burning of LEO tokens from recovered funds will reduce the token’s total supply and drive the price up through time.
The Unus Sed Leo Burn Mechanism and LEO Tokenomics
In addition to the repurchasing and burning of tokens mentioned above, iFinex and its affiliates have even more repurchasing and burn commitments as part of the LEO tokenomics.
As described in an official Bitfinex Medium post on the matter:
“We have decided upon a continuous burning mechanism – verifiable and in real-time – to keep the process as fair as possible for our users. As our revenues flow in continuously, we felt that the fairest approach to token buybacks would be one built around continuous and constant redemptions. We are doing this to remove the possibility of uncertainty from LEO holders, subsequently allowing our community to track iFinex revenues, as well as LEO token burn quantities, in an open manner.”
iFinex and its affiliated entities will buy back Unus Sed Leo tokens from the market, at market rates and on an hourly basis, equal to a minimum of 27% of consolidated gross revenues of iFinex.
This burn mechanism will continue until no more tokens are in commercial circulation. Additionally, Unus Sed Leo tokens used to pay trading fees on Bitfinex will also be burned.
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.
Also, as stated in the Unus Sed Leo token whitepaper, recovered funds will be used to purchase LEO tokens at certain times to prevent sudden market spikes, resulting in a more stable price:
“It is expected that smaller recovered amounts would be utilized for repurchases within a shorter time frame but that larger recoveries may be utilized throughout the 18-month period to offer protection from sudden market spikes and will result in a Volume Weight Average Price (VWAP).”
Moreover, to complement the Unus Sed Leo burn mechanism, Bitfinex has launched a transparency initiative that provides real-time insights into all collected platform fees, and subsequent LEO burns.
LEO token holders can view and track iFinex revenues, as well as LEO token burn quantities, in an open manner via the “LEO Transparency Dashboard” which can be accessed at leo.bitfinex.com.
Benefits Available to LEO Token Holders
Unus Sed Leo is the utility token at the heart of the entire iFinex ecosystem. Meaning token holders will experience benefits across all of iFinex’s trading platforms and future projects, products, and services.
As of right now, the current benefits of being a LEO token holder are laid out below:
Bitfinex Taker Trading Fee Reductions
- All LEO token holders will benefit from reduced taker trading fees by 15% overall crypto-to-crypto pairs (including crypto-to-stablecoin).
- Also, taker fees will be reduced by an additional 10% for all crypto-to-crypto trading pairs for traders who hold 5000 or more USDT worth of LEO tokens in their account.
- Additionally, extremely large LEO token holders of 1 million USDT or more worth of LEO tokens will benefit from further reduced holdings. The maximum taker fee reduction is 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 can receive up to a 25% fee discount on crypto deposits and withdrawals.
- Holders of 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%.
Other iFinex Trading Platforms, Products, and Services
- Other iFinex platforms, products, and services will offer similar discounts like the ones listed above for LEO token holders.
- iFinex’s forthcoming platforms, products, and services include; Bitfinex Derivatives, Eosfinex, iFinex IEO Platform, A Licensed & Regulated Security Token Exchange, Dazaar, Betfinex, Digital Assets on Lightning Network, and μFinex
As for other benefits for LEO token holders, iFinex and Bitfinex will be announcing more and more discounts and benefits as time goes on and the Unus Sed Leo ecosystem develops.
Should you invest in Unus Sed Leo?
Investments are decisions that only you should make.
But if you are a user and believer in iFinex and the products and services they offer, being a LEO token holder might prove to be very beneficial.
As outlined above, there are many benefits to holding Unus Sed Leo if you trade on Bitfinex, and more and more incentives and benefits will be announced as time goes on.
Furthermore, apart from the benefits offered to LEO token holders, the LEO token has strong tokenomics that are poised to see that LEO tokens continuously increase in price or at least hold a fairly stable value.
Therefore, Unus Sed Leo has the potential to be an excellent investment. However, the success of LEO is largely dependent on the success of Bitfinex and iFinex affiliated products and services.
If you believe iFinex will continue to succeed in the crypto industry, I would say it’s highly probable that Unus Sed Leo will offer a great return on investment.
What do you think about iFinex’s Unus Sed Leo (LEO) exchange token? Will it become as successful as Binance’s Binance Coin (BNB)? Let us know what you think in the comment section below.