What is LEO? Understanding Bitfinex's novel utility token

LEO is the utility token of the Bitfinex exchange. It arrived in 2019 and quickly grabbed headlines for raising $1 billion through a private token sale in just 10 days, according to Bitfinex’s CEO.

Behind LEO’s appeal is its purpose — to incentivize involvement in the Bitfinex exchange and wider community by granting holders a host of benefits. As such, LEO is a purpose-built utility token without the complex technical underpinnings of Bitcoin or Ethereum.With its high-profile origins and a steady footing in the crypto market today, LEO deserves a closer look.

In this article we’ll walk you through the digital asset’s purpose, tokenomics, future prospects, and more.

LEO’s origins

UNUS SED LEO is the full name of the token, which is drawn from a Latin phrase that signifies uniqueness and ambition. In 2019, driven by its own ambitions, iFinex, the parent company of Bitfinex, held an initial coin offering (ICO) that launched 1 billion LEO tokens at $1 each.

On launch, 66% (660 million) of the tokens were shared via Ethereum with the remaining 34% (340 million) launched on the EOS blockchain. This dual protocol approach is relatively unconventional in crypto, and is intended to provide greater flexibility and ease of use for token holders, among other advantages. As a result, LEO functions as both an ERC-token and an EOS token.

LEO’s role in the Bitfinex ecosystem: LEO utility

LEO’s utility centers on attracting users to the wider exchange and incentivizing their involvement. Greater involvement can, in turn, support the smooth running of the exchange. However, Bitfinex has also been transparent about the token’s use for business purposes. According to the founding team, LEO claims to be the heart of the entire iFinex ecosystem. As such, LEO token holders can enjoy the following benefits:

Trading fee discounts

Similar to utility tokens like CRO, holders of LEO tokens are granted reduced taker and lending fees on the Bitfinex exchange. All tiers of token fees encountered by LEO holders are reduced by 15% when trading crypto-to-crypto pairs. Meanwhile, those with more than 5,000 USDT equivalent in LEO gain a further 10% reduction in taker fees across all crypto-to-crypto pairs. This includes crypto-to-stablecoin pairs.

Funding fee discounts

Funding fee discounts also apply. Peer-to-peer (P2P) financial lenders access the equivalent of a 0.05% discount on P2P lending fees for every 10,000 USDT held in LEO tokens. The discount is capped at 5%, when 1 million USDT in LEO is held across the previous month.

Withdrawal and deposit fee discounts

From on-ramps to off-ramps, LEO holders can enjoy up to 25% crypto withdrawal and deposit fee discounts. Additionally, holders of more than 50,000,000 USDT worth of LEO tokens in the previous month will be able to withdraw 2,000,000 USD worth of fiat each month without incurring additional fees.

Affiliate program multipliers

Affiliate program members are rewarded when their members hold LEO. Should a member have an average holding of LEO tokens greater than 500 USDT equivalent, affiliate members gain additional multipliers as follows:

• 500+ USDT LEO equivalent = 1.1x multiplier

• 5,000+ USDT LEO equivalent = 1.2x multiplier

• 50,000+ USDT LEO equivalent = 1.5x multiplier

Keen to learn more about upcoming LEO utility plans? Check out the LEO white paper for more details.

Business purposes

According to the white paper released by iFinex on the launch of LEO, proceeds generated from the token may also be used “for working capital and general business purposes”. Between May 2016 and August 2019 — when the white paper was released — the iFinex team had grown to a headcount of just over 100, according to the document, including 25 developers.

A closer look: LEO’s dual protocol build

Although not entirely unprecedented, the dual-protocol approach taken for the development and distribution of LEO is distinctive. This approach could have various implications for the token and wider project.

The best of both blockchains

Issuing LEO on two standards allows the token to leverage the strengths of both. Ethereum is well regarded for its robust security and widespread adoption, while EOS provides faster transactions and lower fees.

Interoperability and flexibility

By existing on two blockchains, LEO’s users gain welcome flexibility. Users can choose the blockchain that best meets their needs, whether that’s security, speed, scale, or other. This advantage also brings the possibility of greater liquidity for LEO, as users of both blockchains are incentivized to use the token.

Possible technical complexity

Building the token across two blockchains does potentially add an extra layer of complexity. It means managing two separate sets of smart contracts, token balances, and integrations with different wallets and exchanges. This complexity requires dependable technical support and could present challenges related to user experience and maintaining consistent functionality.

LEO tokenomics

As of mid-December 2023, LEO had a circulating supply of 928.2 million and a market cap of $3.5 billion. This placed the asset just outside the top 20 cryptocurrencies by market cap, according to CoinMarketCap, making it a significant player in the space.

LEO adopts a token burn mechanism to permanently remove tokens from circulation. The process is intended to have a deflationary impact and help the token to appreciate in value. Token burns can also support decentralization within a project, promoting fairness and equity among community members.

Supply mechanics

Bitfinex has made public its intention to buy back and burn all LEO tokens in circulation to essentially pay back those who purchased the digital asset following the 2019 ICO. LEO’s ICO was reportedly held to raise funds to cover debt.

Revenue from parent company iFinex will be used to purchase the token monthly at the prevailing market rate. iFinex and its affiliates will buy back LEO at a minimum of 27% of the entity’s consolidated gross revenues from the previous month.

It’s uncertain how long the buyback and burn process will take. Asset holders can withdraw their tokens from an exchange and store them in personal wallets, making it more challenging for iFinex to access and purchase all tokens in circulation.

What does the future hold for LEO?

LEO is relatively unique in that its owners have defined a clear plan for destroying the token in a phased manner. In theory, this could create scarcity and lead the token’s price higher. As a consequence, more users may be attracted to the platform to capitalize on the discounts referenced earlier in this article. What happens after all LEO tokens in circulation have been bought back and destroyed remains unclear.

The final word

LEO stands as one of the more unique tokens in the crypto space today, being a utility asset in the Bitfinex ecosystem that’s slowly being removed from circulation entirely. Its dual-protocol build is also relatively novel in crypto circles, making it an intriguing project to many.

Being built across two separate blockchains brings several opportunities to developers and platform users, as they gain greater choice over the chain that best suits their preferences. Although the LEO token sits just outside the top 20 digital assets by market cap at the end of 2023, its future prospects are uncertain given the in-progress plans for a structured buyback and burn.