An unknown token that is in the top 20 of biggest market caps and is linked to one of the oldest exchanges in crypto. Today we take a look at LEO Token (LEO) that was primarily designed for use within the Bitfinex exchange.
LEO, or UNUS SED LEO (Latin for “One, but a lion”), is a utility token launched by iFinex (the parent company of the well-known Bitfinex) in May 2019 in response to financial challenges the crypto exchange faced.
Many difficulties stemmed from the alleged seizure of funds by Crypto Capital in 2018 and a significant security breach in 2016 where 119,756 BTC ($72 million) were stolen.
iFinex Inc., the parent company of Bitfinex and issuer of the LEO token, is a financial technology company based in the British Virgin Islands and was established in 2012. Despite its pioneering status, Bitfinex faced numerous challenges, including security breaches and legal issues.
The concept for LEO was proposed by Dong Zhao, a notable crypto investor in Bitfinex and now serving a sentence in China.
This review of Leo Token (LEO) was created for informational purposes. This article is not intended for promotion.
One legal issue was when U.S. prosecutors accused iFinex of illegally covering up a loss of $850 million by misappropriating funds from Tether (USDT), another entity under the iFinex umbrella.
Tether claimed that each USDT was backed one-to-one by U.S. dollars. However, this claim was later modified to include cash equivalents and other assets, indicating that USDT was not fully backed by cash as initially stated.
To manage the shortfall and mitigate potential impacts on its operations, Bitfinex borrowed funds from Tether’s reserves. This action was disclosed following an investigation by the New York Attorney General’s Office. To cover the missing funds and stabilize its financial situation, Bitfinex launched the LEO token.
The proceeds from the LEO token sale were allocated to several key areas:
This approach mirrors Bitfinex’s previous strategy with the BFX token, issued after a major hack in 2016. Bitfinex successfully redeemed these tokens during the 2017 bull market.
LEO primarily serves to offer trading fee discounts on the Bitfinex platform, with the discount rate dependent on the amount of LEO held. The following benefits can be attained by holding LEO:
Holders of LEO tokens enjoy reduced fees on trades, including a 15% reduction on crypto-to-crypto trading fees, with an additional 10% off for those holding over 5,000 USDT equivalent in LEO.
For peer-to-peer lending, users receive a 0.05% discount for every 10,000 USDT in LEO they hold, maxing out at a 5% discount when holding 1 million USDT in LEO.
Significant discounts are also available for withdrawal and deposit fees, especially for users with large holdings of LEO tokens.
Holders of LEO tokens may be granted access to premium services and events on Bitfinex and affiliated platforms.
Similar to Binance‘s BNB, the LEO token is designed as an exchange utility token offering various benefits to its holders, such as reduced trading fees on Bitfinex. However, BNB has more liquidity and has become more widely used because Binance is the biggest exchange to date.
During an Initial Exchange Offering (IEO) in May-June 2019, where each LEO token was priced at $1, the company raised $1 billion within ten days from both private and public sales. The total initial supply of LEO was capped at 1 billion tokens.
A distinctive feature of LEO is its dual blockchain structure. The token is distributed across two major blockchains, with about 660 million tokens on the Ethereum blockchain (using the ERC-20 standard) and approximately 340 million on the EOS blockchain.
One interesting aspect of the LEO token distribution is the absence of a formal lockup or vesting period. According to reports, the tokens were fully unlocked either at the Token Generation Event (TGE) or shortly thereafter.
This means that token holders had immediate access to their LEO tokens without any restrictions on selling or transferring them.
Another significant aspect of LEO is the token burn mechanism. Bitfinex commits to buying back LEO tokens from the market using a portion of its earnings and then burning them. This process reduces the overall supply of LEO, potentially increasing the value of remaining tokens. Over two years, more than 50 million LEO tokens have been burned, underscoring the platform’s commitment to the token’s long-term value.
Additionally, LEO features a buyback and burn mechanism, where iFinex uses at least 27% of its gross revenues each month to purchase and permanently remove LEO tokens from circulation.
Furthermore, LEO tokens used to pay trading fees on Bitfinex are also subject to being burned, which further reduces their supply. However, it’s worth noting that tokens cannot be burned on Ethfinex, as it has its own token, NEC, which serves a similar purpose.”
Despite the controversies surrounding its launch, LEO has managed to survive, probably because the exchange Bitfinex itself keeps running. For its exchange, it is integrated and a valuable component.
We see it creeping into the top 50, not knowing what it does or where to trade it. But now we know it is pegged to the assets behind one of the oldest exchanges in this space. Whether it will outperform or just survive will depend on the survival chances of this exchange.
Despite the controversies that surrounded its launch, LEO Token has proven to be a resilient token. Its survival is closely tied to the fate of Bitfinex, one of the oldest and most prominent exchanges in crypto space. As LEO continues to climb the ranks, it’s clear that this token is more than just a utility coin—it’s a reflection of Bitfinex’s commitment to its users. The same can be said for its potential decline.
Disclaimer: Trading and investing in cryptocurrencies (also called digital or virtual currencies, altcoins) involves a substantial risk of loss and is not suitable for every investor. You are solely responsible for the risk and financial resources you use to trade crypto. The content on this website is primarily for informational purposes and does not constitute financial advice.
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