LEO Token (LEO) is the utility token intended for the use on the Bitfinex exchange and other trading platforms managed by its parent company iFinex. The token is hoped to strengthen the Bitfinex community and optimize the platform’s operations.

What Is LEO Token?

Following its May 2019 launch, the Bitfinex exchange token named UNUS SED LEO (LEO) token managed to make headlines by its surge to the upper ranks of the cryptocurrency tokens ranked by the value of their market capitalization. In early June 2019, LEO token seemed to reach the shores of the famed top 10 token club, drawing comparisons with the similar tokens, such as the Binance Coin (BNB) which is the native token of the cryptocurrency exchange Binance.

In May 2019, the parent company behind the Bitfinex exchange, iFinex, released a whitepaper in parallel with the launch of the private token sale. Based on the data found in the paper, iFinex plans to issue no more than 1 billion LEO tokens. Each of them will be pegged to the tether (USDT) stablecoin. Following the conclusion of the sale, Bitfinex enabled trading with the LEO on May 20, with the tokens being tradable against BTC, USD, USDt, EOS, and ETH.

What Is LEO Token Used For?

LEO token is supposed to make the platform it runs on a more attractive option for its holders by introducing a whole range of planned benefits for them:

• The LEO token will support the reduction of taker and lending fees for the use of trading platforms, products and services offered by the iFinex. iFinex is the Hong Kong-based operator of the Bitfinex exchange and EthFinex digital asset trading platform. All tiers of LEO holders’ taker fees are supposed to be reduced by 15% for all crypto-to-crypto pairs, including the crypto-to-stablecoin pairs. Bitfinex has also recently announced that LEO holders with more than 5,000 USDt in LEO will have their taker fees reduced by an additional 10%. This refers to the tokens found in their accounts in the previous month, with the calculation covering all of the days in a calendar month. This is supposed to include all crypto-to-crypto pairs, while the additional UNUS SED LEO fee benefits are planned for the introduction in the coming weeks. Financing lenders are also entitled to fee discount to 0.05% for every 10,000 USDt in LEO tokens in their accounts.
• As LEO is the utility token found at the heart of the Bitfinex ecosystem, it is supposed to optimize the trading processes taking place in it. The LEO token team promises that up to 25% of trading fees will be deducted first in LEO, provided that the trader holds these tokens. At the same time, traders will be able to buy any fee level in LEO for an interval of 30 days, using an amount of LEO equal to 75% of the delta ratio between the average fees that would be generated within one month and the current trader tier in USDt. The reduction should be applied for all fees charged by both Bitfinex and Ethfinex platforms. Similarly, LEO holders are entitled to a 25% crypto withdrawal and deposit fee discounts. In other words, Bitfinex will make it possible for any user holding more than 50 million LEO to withdraw USD 2 million without incurring additional fees.
• Proceeds from the LEO token initial exchange offering should help the organizers improve their business prospects. Funds generated as part of the sale are described by iFinex as being suitable for general business purposes, strengthening of the company’s working capital and the coverage of expenditures, operating expenses as well as repayment of debts and recapitalization.

How Does LEO Token Economy Function?

LEO token uses token burns as the method to deflate its value. Compared to what is found with a similar Binance Coin, the burns of LEO token are supposed to be faster and have the following features:

• Based on the information presented in the LEO whitepaper, the token burns are supposed to occur on a monthly basis. iFinex is supposed to buy back and burn a minimum of 27% of the consolidated gross revenues of iFinex in the previous month. The process is to be repeated as long as the tokens are found in commercial circulation. Based on unconsolidated reports, the profits made by iFinex managed to reach USD 404 million in 2018.
• iFinex also plans to repurchase and burn the outstanding LEO tokens through the use of the funds recovered from the Crypto Capital, a Panama-based payment processor company often mentioned with regard to a purported affair involving Bitfinex (including an alleged loss of about USD 850 million). The repurchases will proceed across multiple transactions as long as the team deems it necessary to complete this process.
• A similar approach will be used for the funds recovered from Bitfinex hack which took place back in 2016. The amount planned for use in this manner should be equal to 80% of the redeemed funds from the hack, with a planned 18-month period for this activity acting as a shield against market spikes.

Project History

Bitfinex was established in 2012 as a peer-to-peer Bitcoin-focused exchange, making it one of the older exchange players in the blockchain industry. In May 2019, its core team, which also managed the LEO token project, numbered more than 100 professionals. In line with the company’s stated philosophy of favoring quality over quantity, the headcount of those strictly working on the development does not go above 25.

In August 2016, Bitfinex announced that it was a target of a security breach. More than USD 72 million in BTC was reported as stolen from the customer’s accounts managed by the company. In 2019, the exchange came under fire together with Tether for failing to disclose the loss of over USD 850 million in connection with the deposits of the Crypto Capital company. It is also alleged that Bitfinex was involved in an undisclosed and conflicted transaction with some customers. The legal battle with the state of New York is ongoing as of June 2019.

In May 2019, Bitfinex and its sister company Ethfinex have announced the launch of their initial exchange offering (IEO) platform named Tokinex. Unlike the initial coin offerings (ICOs), with IEOs the exchanges act as a guarantor and conduct a due diligence check on the team of professionals involved in it.