LEO

What is UNUS SED LEO (LEO)?

UNUS SED LEO is a utility token used across the iFinex ecosystem, primarily to give users of the Bitfinex exchange discounts on trading fees.

Meaning “one, but a lion” in Latin, UNUS SED LEO is a reference to Aesop’s fable that refers to the philosophy of quality over quantity, with one lion cub in the story being proven preferable to a litter of sows.

The irony fails to escape many, however. While Bitfinex remains a large cryptocurrency exchange, it is often synonymous with controversy and has been overtaken by several other major exchange platforms.

The LEO token has garnered considerable attention as a novel means of fundraising. Part of its appreciation has been attributed to iFinex’s plan to conduct monthly repurchases of LEO from the market to burn the token and tighten its supply.

When Was UNUS SED LEO Launched?

UNUS SED LEO was launched in May 2019, following the seizure of Crypto Capital funds by the governments of Poland, Portugal, and the USA. Crypto Capital was iFinex’s payment processor at the time, and the seizure left iFinex with a financial shortfall.

To recover these funds, iFinex launched the LEO token after unveiling plans to buy back the token from investors until no more LEO remains in circulation. Alongside these plans, iFinex also put in place a transparency initiative to try and prove to the community that stated targets are continually being met.

The LEO token was issued in a private token sale, with 1 billion LEO being sold for USDT at a 1-to-1 exchange rate. This effective raise of $1 billion in stablecoins recouped the loss of $850 million seized from Crypto Capital.

At the launch of LEO, iFinex stated that, if recovered, 95% of the Crypto Capital funds would go toward repurchasing and burning LEO tokens. Furthermore, the company also said that at least 80% of funds recovered from a previous Bitfinex hack would also be used for repurchasing and burning LEO tokens.

This innovative method of covering a financial shortfall is in fact a tried-and-tested scheme by iFinex, given that Bitfinex used the BFX token to cover losses from that same hack.

What is the BFX Token?

In 2016, Bitfinex ground to a halt after a hack resulted in 120,000 BTC, worth just under $70 million at the time, being stolen. This was the second largest exchange hack at the time, trailing only the infamous Mt. Gox hack. Following this hack, Bitfinex decided to socialize the loss across all account holders. Customers who experienced a 36% generalized loss percentage in their accounts were given BFX tokens to record these losses. These BFX tokens, each representing $1 of the customers’ losses, were then gradually redeemed by Bitfinex. This redemption was completed successfully in just eight months. 

Who are the Founders of UNUS SED LEO?

UNUS SED LEO was launched by iFinex, which was founded in Hong Kong in 2012 and incorporated Bitfinex a year later. Bitfinex’s founders are Chief Strategy Officer Phil Potter, CEO Jan Ludovicus van der Velde, and CFO Giancarlo Devasini.

Potter and Devasini were named in the “Paradise Papers,” a data leak identifying over 120,000 companies and individuals having employed offshore service providers in tax havens.

As per the Paradise Papers, Devasini and Potter are directors of Tether, the company behind the controversy-ridden stablecoin USDT. This is in contradiction to the pair’s long-standing attempts to distance the two companies. Potter worked for Wall Street giant Morgan Stanley during the ‘90s but was fired in 1997, following the publication of a New York Times article that was less than flattering about his character. Devasini, meanwhile, was also in hot water on occasion during the same decade, picking up a 100 million Italian Lira fine for selling pirated copies of Microsoft software.

How Does UNUS SED LEO Work?

The LEO token is an exchange utility token by definition, providing holders with benefits in terms of reduced trading fees proportional to how many LEO tokens they hold.

Holders of between 1 USDT and 5,000 USDT worth of LEO tokens are classed as Level 1 users and get a discount of 15% on securities-to-crypto and securities-to-stablecoin on their taker fees.

Holders of 5,001 to 10,000 USDT worth of LEO tokens get a 25% taker fee discount on the same trades as well as an additional 10% discount on their taker fees for securities-to-fiat.

Finally, holders of more than 10,000 USDT worth of LEO are classed as level 3 users and get a 6 bps in addition to all of the discounts level 2 users enjoy. The holdings are based on snapshots taken daily, and users must have held the minimum amount of LEO for their level across the entirety of a 30-day period to avail themselves of the discount.

What Makes UNUS SED LEO Unique?

The LEO token could be considered unique because of iFinex’s commitment to buying LEO from the market every month.

27% of the revenues generated by iFinex are used to buy LEO from the market and burn tokens, with the company saying that “the burn mechanism will continue until 100% of tokens have been redeemed.”

How is the UNUS SED LEO Network Secured?

UNUS SED LEO doesn’t actually have its own network. Rather, the LEO token was deployed on the Ethereum and EOS blockchains, meaning that those same blockchains are responsible for the security and veracity of LEO account positions.

Ethereum is currently secured by the Ethash proof-of-work algorithm, which sees thousands of computers play the role of miners on the network, racing to solve cryptographic puzzles. The node that wins this race is granted the right to create the next block on the blockchain and is rewarded with a sum of ETH called the block reward.

This current implementation of Ethereum relies on computing power, but Ethereum will change to proof-of-stake consensus once testing on its ETH 2.0 merge is completed. Proof-of-stake grants nodes a chance to validate blocks on the blockchain relative to how much ETH they have locked away in the protocol.

This locking of valuable ETH, along with the risk of having the locked “stake” confiscated, disincentivizes behavior against the protocol.

EOS also uses a proof-of-stake variant for consensus. In fact, EOS is one of the definitive PoS chains, as it uses a delegated proof-of-stake mechanism invented by its founder, Dan Larimer.

What is the Use of LEO?

The primary use of LEO is as a utility token for the iFinex ecosystem and Bitfinex cryptocurrency exchange. In addition to the taker fee reductions mentioned earlier, the LEO token also provides a withdrawal and deposit fee discount of up to 25%.

There is also a possibility that any future iFinex products and platforms will involve the LEO token. However, its current utility remains with Bitfinex.

Who Controls UNUS SED LEO?

LEO is controlled by iFinex, the company that issued the LEO token. The company is also the owner of Bitfinex and the operator of the USDT stablecoin, Tether.

iFinex was sued in 2019 by the Office of the Attorney General of New York for allegedly using Tether’s USDT to cover up $850 million in lost funds. The lawsuit was concluded two years later, resulting in an $18.5 million fine for Tether and Bitfinex and an order to cease all trading activity in the state of New York.

The Attorney General of New York also mandated that Tether and Bitfinex include information about fund transfers and verification that both entities have “appropriately segregated client, reserve, and operational accounts.”

How Much LEO Is In Circulation?

The LEO token was launched in a private token sale, issued at 1 USDT apiece and deployed to the Ethereum and EOS blockchains. 660 million ERC-20 LEO tokens were issued on Ethereum, and the remaining 340 million LEO tokens from the total 1 billion supply went onto EOS.

The LEO token supply has shrunk since its launch, with iFinex pledging to repurchase LEO from the market and burn the tokens. Its supply currently sits at just over 985 million LEO, with 953 million LEO in circulation.

How Do You Buy LEO?

Since LEO is the native token of the Bitfinex ecosystem, one of the best places to buy it is, naturally, the Bitfinex securities exchange. Most of the LEO token’s liquidity is on Bitfinex, and that’s where you can take advantage of the trading fee discounts granted by holding the token.

It is possible to buy LEO on other exchanges as well, thanks to the interest in the LEO token and its relatively large “market cap,” which places it among the top 20 cryptocurrencies.

LEO tokens can be purchased using fiat USD on many exchanges, and they can also be traded against USDT, BTC, and even other cryptocurrencies like EOS and Ethereum.

Is It Possible to Buy LEO Instantly?

If you’re buying LEO on a cryptocurrency exchange, the process will be instant for all intents and purposes. As long as there’s sufficient liquidity, market orders on a spot exchange are processed immediately. A limit order may take a while if the LEO token is trading some distance away from your set price, though.

Buying LEO on a decentralized exchange or via peer-to-peer trading on Ethereum or EOS may not be quite as quick, but the advantage of staying on-chain is that the LEO tokens will hit your own wallet quickly.

Transferring LEO from an exchange to your own wallet, on the other hand, might be a slow process, given all of the KYC (Know Your Customer) and AML (Anti-Money Laundering) processes exchanges often have to execute before releasing funds.

How Do You Store LEO?

The LEO token’s main utility is found on the Bitfinex exchange, so, unlike most cryptocurrencies, the best place to store LEO may well be on the centralized platform itself.

Storing LEO on Bitfinex will allow you to take advantage of discounts on taker fees on various types of trades, with the catch being that you’ll have to hold tokens for 30 days before the discounts are activated.

LEO can be held in private custody, too, and for that, you’ll need either a cold or a hot wallet that’s compatible with EOS or Ethereum.

A cold wallet, referring to cold storage, is not connected to the internet. Offline devices, such as computers, and simply a piece of paper with private keys are some examples of a cold wallet.

A hot wallet, meanwhile, is a wallet that is connected to the internet. This could come in the form of either a browser plug-in, an app, or a node that stores the entire blockchain or a smaller piece of software.

UNUS SED LEO Energy Consumption

UNUS SED LEO doesn’t have its own blockchain platform. Therefore, as a cryptocurrency, it doesn’t actually use any energy.

It could be argued that the LEO token uses a small proportion of the bandwidth of the Ethereum or EOS blockchains and that the office space and infrastructure of Bitfinex and iFinex contribute to LEO’s energy use.

Still, this level of energy consumption doesn’t make it terribly significant in the grand scheme of things when compared to the consumption of the banking system. As estimated by Galaxy Digital, global banking consumes over 263 TWh of energy every year, a figure that no cryptocurrency threatens to overhaul.

Is LEO a Good Investment?

UNUS SED LEO is a cryptocurrency that was issued with a “market cap” of 1 billion U.S. dollars, catapulting it to the upper echelons of coin lists everywhere.

Unsurprisingly, this sort of debut attracts attention. The LEO token has gone from strength to strength since, with the initial private investors seeing gains of over six times their investment during the token’s rise.

The iFinex pledge of directing revenues towards the buyback and burn of the LEO token hits the right chords with many investors. And, if the company continues to deliver on this promise, the LEO token may continue to appreciate.

However, the LEO token carries plenty of risks as well. Association with iFinex, Bitfinex, and Tether is seen negatively in some quarters, especially considering that the LEO token was issued in response to a shortfall that the New York OAG alleged to be a “cover-up.”