Satoshi Nakamoto created Bitcoin in 2009 based on the blockchain technology. It became clear the future of a cashless society was going to be closely tied with cryptocurrency. The blockchain method has inbuilt features that ensure the integrity of any data transaction by virtue of a decentralized digital ledger system. As the name suggests, it involves building data blocks that can be transferred between users while maintaining the overall integrity. This data can be anything—from financial to medical data—you might imagine. Innovations and improvements by different coins over the years have rendered the technology almost foolproof.
The LEO token was released by iFinex and through an IEO (Initial Exchange Offering) which was received with open arms by the crypto community. A total of 1 billion Leo tokens were made available. Of these, 660 million were launched on the EOS blockchain and 340 million on the Ethfinex platform. These were all taken up in a record-breaking period of 10 days and generated $1billion, showing just how enthusiastic the public is for the LEO token.
This is an article to explore the concept of the LEO token, how it works and why it is taking the crypto world by storm. We will also look at associated risks and how it is likely to play an important role in the fast-approaching age of free decentralized digital currency. However, in order to do that we’ll need to understand the company behind LEO as well as their operations.
Table Of Contents
- iFinex and Bitfinex
- Unus Sed LEO
- Bitfinex Hack
- Crypto Capital and Bitfinex Loss
- The LEO Token
- Benefits to Holders
- Prospects for Success
- iFinex and LEO Team
- Bitfinex Visibility
- iFinex Future Projects
- LEO token associated risks
iFinex and Bitfinex
Ifinex is the company behind Bitfinex, Ethfinex, EOSfinex, Liquid and a host of other operations. It was founded in 2012 by Giancarlo Devasini and Raphael Nicolle with a focus on the crypto space. Though currently working from Hong Kong it was incorporated and registered in the British Virgin Islands. It initially started operations under the Bitfinex business name and soon made a name for themselves as a forward-thinking company. Their innovativeness has led to a number of creations—each with a specific focus. Let’s take a look at them briefly.
Bitfinex is the market name of the company as well as its major crypto exchange platform. It is one of the biggest and most advanced exchanges fitted with innovative tools that allow everyone—from experienced traders to amateurs—to trade. It has achieved immense popularity with a daily trading volume of over $1billion according to CoinMarketCap which ranked it the 26th biggest crypto exchange.
Bitfinex Exchange Features
<script></script>The Bitfinex Hackathon Pt. 1. pic.twitter.com/kFx1B3HEtR
— Bitfinex (@bitfinex) 27 июля 2018 г.
As an exchange, Bitfinex is doing very well, with unique features such as peer-to-peer lending service that allows users to take part in margin trading. The P2P system allows a person to use a margin leveraged by another user’s balance, yet without having the money transferred through the exchange—which makes it a lot cheaper. Bitfinex also offers the margin up to 3.3x leverage.
This also means peers can take advantage of this feature for margin funding and thus earn interest without involving themselves in the process itself. This can be especially beneficial to those not experienced enough in crypto trading. Another important feature is that Bitfinex has one of the highest liquidity levels which means users can easily convert crypto to fiat upon demand.
Ethfinex
The Ethfinex platform is a spinoff of parent Bitfinex though specifically designed to host Ethereum’s ERC20 tokens. It uses the same engine and interfaces as Bitfinex so users can enjoy the same advanced experience. Ethfinex also hosts crowd sales for the ERC20 tokens beside basic trading and exchange features. Like Bitfinex, Ethfinex also allows margin trading and P2P margin funding.
EOSfinex
When EOS.io was introduced as an alternative crypto platform to rival Ethereum, heavy attention was aroused. Essentially EOS.io is a blockchain network wherein users with the native EOS token own that part of the processing power represented by their total tokens. This processing power can then be used to EOSfinex was built on the EOS.io platform to capitalize on the distinct advantages it offers. It is to be—once launched—a completely decentralized crypto exchange to handle thousands of transactions per second while keeping fees friendly.
<script></script>eosfinex is here.
— eosfinex (@eosfinexproject) 30 июля 2019 г.
eosfinex combines the speed and scalability of EOS with Bitfinex’s industry-leading trading expertise, resulting in an on-chain exchange built around speed, transparency and control.
Start trading today on https://t.co/ctqAe9muEb. pic.twitter.com/OwTIMBONBO
Liquid
iFinex launched Liquid in 2018 as a network to integrate crypto exchanges within a single system. This means that interexchange transfers can be processed quickly and at very low charges. This is, by all means, a great idea, as it could allow a lot of freedom in exchanging crypto with very low fees and incentivize more trading activity among the participant exchanges. As its own website puts it,
“Liquid is a unified, globally-sourced trading platform that bridges the worlds of fiat and crypto.”
Liquid allows traders to seek out exchanges with the most promising deals and switch seamlessly. However, the most important application results from crowdfunding whereby an upcoming project would hold a crowd sale on a single exchange and still receive subscriptions from all others on the liquid network. The is also the possibility of greater margin trading for P2P funding, up to 100x. Totaled up, opportunities are amazing.
It’s important to note that, as a leading digital currency transaction platform, Liquid introduced the use of credit and debit cards on the platform. This has helped it ease the trade and also introduce it to more mainstream users.
Unus Sed LEO: One, But a Lion
People frequently associate Unus Sed LEO with iFinex and related platforms. It is a Latin phrase that means “One, but a Lion”.
For iFinex this means attracting and retaining the best people for a particular job. It also means total commitment to reach the goals they set out to achieve.
Unus Sed LEO is thus the company ethos for iFinex and all associated projects. It is followed by the lean but incredibly talented team of developers currently running all their platforms at the time of writing. It is especially tied to the LEO token a matter of special consideration because LEO is essentially a token to help drag the company out of a tumultuous past and into an era of public confidence and trust.
Unus Sed LEO is an initiative for transparency in the buyback and ultimate burning of the LEO tokens. As intimated by the Bitfinex website,
“The initiative built around a real-time token burn redemption mechanism marks the launch of the LEO burn mechanism which will see iFinex gross revenues allocated to purchasing circulating LEO tokens at market rates.”
To get an understanding of what the LEO token issue, buyback and burning are all about, we'll first need to dip into the aforementioned tumultuous story.
Bitfinex Hack
n 2016 Bitfinex experienced an unfortunate security breach where the hacker(s) got away with almost 120,000 BTC. At the prevailing rates, the stolen coin was valued at over $72 million. The magnitude of the blow to the company was huge, given the immense amount involved. Indeed, it is still reeling in the effects of the loss.
Lots of customer accounts were affected in the hack in various magnitudes, and there was a general rush among users to withdraw the remaining balances. This would have been understandable, and any other company would have given in to the resulting pressure.
Bitfinex, however, reacted very differently. They immediately closed down all withdrawals and froze trading activity temporarily. Thereafter they shared out the loss equally to all user accounts at a debit of 37%. In a unique approach, they then credited each account with BFX tokens (Bitfinex’s own) at the rate of 1 BFX for every dollar lost in the hack. Those were all redeemed in the following 8 months at 100 cents on the dollar, except for some who opted to exchange theirs for an equivalent share in iFinex capital stock.
In addition to all recovery measures, Bitfinex created a tradable Recovery Right Token (RRT) for those who opted to take shares of iFinex stock. Those were for the event that if any for the stolen funds were to be recovered, the RRT token holders would be reimbursed at up to one dollar per token. Bitfinex has been pursuing many recovery options in collaboration with the US government especially if the said BTCs show in exchanges.
Crypto Capital and Bitfinex Loss
In early 2015, iFinex established banking links with a bank registered in the Virgin Islands in order to help provide liquidity. Major banks refused to provide these much-needed services citing lack of crypto regulation and stability among other reasons. Crypto capital was also providing payment processing to QuadrigaCX and other exchanges. Between late 2017 and early 2018, customers started experiencing issues with withdrawals, and it was later revealed that Crypto Capital had somehow lost an estimated $850 million of Bitfinex.
Bitfinex has been trying to maintain liquidity through various measures including assistance from Tether (a stable coin), for which it has come under immense legal difficulties.
The LEO Token
The LEO token was created as a lifeline for the company as they work on the recovery of the lost assets. This is quite a bold move on their part, although it has already paid off. It is intended to be at the heart of the Bitfinex ecosystem. Its main benefit will be to grant users discounts within the ecosystem, much like Ethereum.
LEO tokens were introduced in the market in such a way that the public buys a share of the token and after some time they burn it to repay those who purchased. That was in a bid to cover the losses incurred as a report by the New York’s Attorney Generals office.
Many believe it’s also following on the massive success attained by Binance with their BNB token, especially when you consider the buyback policy. Either way, the LEO token is set to propel iFinex to even greater heights.
Unus Sed LEO Tokenomics
Unus Sed LEO is a subsidiary on iFinex to offer the Unus Sed LEO token, which we will continue to refer to simply as LEO. A total amount of 1 billion tokens was made available in a private sale issued on the Bitfinex for ten days beginning May 20, 2019. One billion tokens were offered both on the EOSfinex platform (660 million) and the Ethfinex platform (340 million).
LEO Token Buyback
As stated in LEO whitepaper, iFinex commits to buying back LEO tokens on a monthly basis at a minimum of 27% of gross revenue obtained in the previous month. This will take place until no more LEO tokens remain in circulation, at the prevailing market price of the token. In addition, iFinex will purchase the LEO token with recovered funds from both the hack and the Crypto Capital fiasco to a minimum of 95% of recovered funds.
The buyback in such a case is to take place over a period not exceeding 18 months from the date of recovery. This is to prevent causing sudden market spikes of the LEO token prices which could also affect those of other associated tokens.
LEO Token Burning
LEO tokens repurchased will be burnt including tokens spent as fees. However, this will not be extended to Ethfinex which already has its own Nectar (NEC) token and has separate funds allocated. Burning will take place following the same schedule as the buyback. In line with its Unus Sed LEO transparency initiative, iFinex is maintaining a live record of all transactions of tokens bought back and burnt, and this information is available on this page.
LEO Token Utility
The LEO token is the utility token across the entire Bitfinex ecosystem. Holders will get to enjoy numerous benefits as they trade with Bitfinex, Ethfinex, and EOSfinex. Moreover, Liquid and other projects—both present and future—will also offer those discounts.
Benefits to Holders
iFinex has set up specific incentives to all those who hold LEO tokens. Those include but are not limited to:
- Takers fee across all platforms will be discounted by 15%; those with more than 5,000 USDT (Tether) worth of LEO tokens will also get an additional 10% discount. Both apply to crypto trading including stable coins.
- Those with very large holdings in excess of 1 million USDT will get additional 0.01 bits per transaction off for every 50,000 USDT increments to a maximum of 21 million USDT.
- Deposit and withdrawal transactions will also get a discount of up to 25%. Those with 50M or higher worth of USDT will be able to withdraw up to 2 million fiats at no cost, with additional withdrawals billed at 2% instead of the usual 3%.
- Takers fee will receive an additional discount of 0.01 bps for every 10,000 USDT held the previous month, capped at 2 bps.
- P2P lender will receive a discount in fees equal to 0.05% for every 10,000 USDT held in the trader's account, capped at 5%.
On top of those discounts, it is expected that the price of LEO token will continue to rise as iFinex continues to buy and destroy them because the demand for the token will keep rising. Just as the BNB token by Binance saw a rise from $0.11 to over $40 in some two years, LEO is expected to take a steep climb with especially if iFinex recovers the money frozen or lost in the aforementioned mishaps. It is currently trading at just over $1.9 at the time of writing.
Prospects for Success of the LEO Token
There are several factors that contribute to the success of any project in the crypto world. Those are public confidence, team fielding the project, project technical specifications, feasibility, and—finally—visibility on social media.
It is already apparent that public confidence is still solidly in favor of Bitfinex. Support for the various iFinex projects is not in want. Thus, we can expect with a fair level of certainty that the company will weather this storm and come out bigger and better. This confidence is the biggest contribution to the success of any project, but there are some other factors involved too.
iFinex and LEO Team
The people behind a project are the steering, charting the path to the original vision as powered by the public. If the team lacks commitment or have ulterior motives, then such a project would be doomed from the onset. Having taken a look at the people behind the Bitfinex brand we found a very committed and competent team.
- Giancarlo Devasini. One of the original founders still playing a heavy role as a partner and Chief Finance Officer. Started out as a doctor, he left practice in the 90s to follow his passion for technology. He formed a company that dealt in importing of computer spares. He sold this company in 2009 to retire but upon discovering Bitcoin in 2011, he was hooked and soon after teamed up with Raphael who had just created Bitfinex.
- Raphael Nicolle. He was a young IT technician back in 2011 who stumbled upon the source code that enabled him to build Bitfinex.
- Paolo Ardoino. Currently serving as the Chief Technological Officer for Bitfinex, Paolo joined the team in 2014 as a senior software developer. He has a strong background in programming and developing distributed systems. Before joining Bitfinex, he helped—as CTO in 2013—in developing Fincluster, a cloud-based financial application for advisors.
The entire technical bench consists of 25 developers who iFinex claims to be the best in the world. While these claims can be neither confirmed nor refuted, their work speaks for itself. The UI on the platform, as well as the engine behind them, are some of the most advanced as far as exchanges go. While maintaining an intuitive and easy to use low latency experience, the company makes sure relevant technical information is not compromised.
iFinex claims all technology is developed in the house except for their customer service ticketing system which they adapted for their own purposes. Their technology is certainly one-of-a-kind. They also hire top talents in all other fields and currently maintain a lean team of 125 spread out across the world.
Those are people who have stuck with the company through good and bad and have continued to deliver through it all. Their commitment has never been in question and neither has been their ability.
Bitfinex Visibility
Bitfinex remains active on all social media platforms and has always provided timely updates on all relevant incidences. One thing that sets them apart is their policy for transparency. They do not sugarcoat the hurdles they face and provide detailed information on any and all steps taken in such situations.
With these in mind, we can say that Unus Sed LEO has a very fair chance of success. The team behind them has been in the crypto space for over 7 years now and has the skills to deliver. They have shown determination in the face of adversity and we can reasonably expect them to stand by their projects so long as is necessary.
One of the most important considerations, however, is the token model. As intimated, LEO will be the utility token over the entire ecosystem as run by iFinex. This places it at the core of operations and means that the majority of traders on the Bitfinex, EOSfinex, Ethfinex, and Liquid platforms have sufficient incentive to utilize the token especially given the attractive discounts. Demand is high and will be going even higher in the future.
To put things into focus, the success of the LEO token will depend on the success of the entire company. So far it has done very well but the crypto world is one in which you need to keep on your toes. iFinex has a number of projects cooking. Therefore, we need to also take a brief look at those.
iFinex Future Projects
iFinex has already set out a road plan on what they want to achieve on current projects as well as those they hope to bring about in the future. A full document is available on the Bitfinex page.
Dazaar
Dazaar is conceived as the next generation marketplace, enabling anyone to share and retrieve large data sets on a decentralized, open-source, free, and encrypted network—without any borders.
Dazaar is to be built on the EOS.io network and will thus function like a P2P network of sorts between nodes. It will capitalize on the processing power availed by the system to allow sharing of large data sets at low cost especially to those with a sufficient number of tokens which in effect allow you to have control over a section of the network.
Betfinex
The betting industry is one of the biggest in the world, especially in the world of online services. It generates annual revenue counting billions of dollars. With the growth of the industry have come challenges such as dishonest bookies, high-latency gambling sites, and restrictions levied by any given jurisdiction. A blockchain-based platform is in a perfect position to deal with such issues, and the market is already ripe for such technology.
Gamblers are some of the most forward-thinking people and would welcome such development with open arms. A decentralized betting platform—perhaps with smart contracts to assure fast payout and low latency betting experience—would be a welcome change.
Some of the key features of Betfinex are as follows. It comes with a margin trading of up to 3.3x leverage which is a good lifeline for those who use it in betting. The platform offers secure and professional connectivity. It has a dedicated low-latency offer for institutional users. The company has also partnered with Market Synergy2 to offers users VPS solutions, co-location, and cross-connectivity solutions. Those come with dedicated full-time customer service to come to the rescue in case of any concern.
It is easy to use on mobile devices. The platform has a quick view-feature that comes with easy-to-control widgets, biometric identifications, and persistent settings that you can easily use across different devices.
Moreover, Betfinex ensures easy trading, being not limited to betting. It allows the users through margin funding (P2P) a method for lending their funds to the users who wish to purchase, and in the process, they gain profits on the interest. The interest is charged an automatic adjusting rate called Flash Return Rate.
Accessing Betfinex is easy. You can easily purchase them through over the counter market. This is where a user can legally buy the token from an authorized dealer without having to use the public order books.
iFinex Security Exchange
iFinex also harbors an ambitious plan to have a securities exchange hosted on the blockchain platform. Like conventional exchanges, it will have equity, debt, securities, and commodities like gold. It is going to be regulated and plans are already underway to secure licensing for the platform.
The best way to describe it fully is to quote their own words:
“The iFinex IEO platform will allow anyone with a Bitfinex or Ethfinex account to contribute to pre-vetted token sales directly from her personal exchange wallet. (Non-exhaustive checks as to technical, financial, and legal compliance are performed.) Projects which successfully raise capital on this platform are subsequently listed on two exchanges, as permitted by applicable law, and token sale participants receive their subscribed tokens in their exchange wallets. The first token sale is scheduled for June 2019.”
uFinex
No matter how much it seems the digital world is taking over every sphere of life today, there is the margin of the offline world still prospering. That is what uFinex looks to tap into. It is a system which looks to leverage the growth of digital currencies to the world using geographical settings and communities of interest.
Some of the envisioned features are the ability to adapt and run on any type of hardware and a fully open-source platform of libraries, tools, and protocols.
iFinex IEO Platform
This is a platform where every user who has Ethfinex and Bitfinex account can easily trade in the tokens straight from the personal exchange wallet. This is a way to raise funds for the company in a high-quality and trusted environment. This is due to the fine level of vetting on the site.
The functionality of this platform is most likely top-level. It is used by the already qualified Bitfinex and Ethfinex users who log in to the account using their current accounts. This ensures ease of access which translates into raising a lot of capital.
Eosfinex
This is a platform made to ease digital currency trading by combining the speed and scalability of EOS and the expertise of Betfinex to make a secure, transparent, and fast digital asset trading platform.
This platform is set to come with a lot of features to ensure superior user experience. Some of those features include fast transactions, the platform can compete for over 1,000 transactions per seconds which makes it one of the fastest digital trading platforms ever. It is secure and easy to trust as the traders involved already use the other platforms in the company. In addition, the platform offers a plethora of trading options for users to choose from.
LEO token associated risks
Needless to say, there are risks associated with the LEO token on an investment perspective. Crypto is still very much in its infancy and therefore anyone who chooses to invest in it needs to always keep in mind these inevitable risks. We’ll take a look at some of the problems looming ahead that pose a threat to the success enjoyed by iFinex.
Security
Like all exchanges out there, security remains one of the biggest concerns. Cryptocurrencies are usually stored in wallets managed by the exchanges and are always an attractive target for hackers given the large number of coins they hold. Such wallets are made especially vulnerable because they are usually hot wallets to facilitate fast transaction times.
Blockchain systems are by their very nature some of the most secure in the world, and with added security protocols that are the standard for the crypto industry. However, hackers are getting more sophisticated by the day and represent the biggest challenge so far. Bitfinex has borne the responsibility for the hack and indeed cannot be blamed solely for the loss. They have since that time taken proactive measures to prevent that from happening again.
Despite nobody can truly assure a future free of these attacks as no security measure is without fault. Another such attack would totally erode public confidence and could potentially strike a blow that the company would not recover from. Even rumors about one could have detrimental effects not only to iFinex but also to the entire crypto world.
When the hack was announced in 2016 such a panic was caused that the price of BTC plummeted about 5% on that first day alone. Indeed, it cannot be said that it has fully recovered since then as people have gotten a lot more wary of cryptocurrency. Another such attack would be a disaster, to say the least.
Competition
Blockchain technology has been described by many as being another "Wild West". Everyone is out hoping to strike it rich, but the territory is uncharted and the risks endless. This is what makes it so exciting and unpredictable. Moreover, this is what makes it rewarding at the same time. New technologies are constantly emerging and when a promising one has revealed a gold rush of sorts begins. As the market is virtually unregulated, this leads to unchecked migration as people are always looking for the next big thing.
Perhaps the best illustration for this is the Binance ICO in 2017. It has been termed the most successful crowd sale yet, and it propelled Binance to the first position as an exchange, a position it has held so far. This poses a challenge to Bitfinex because it could be that the next exciting service will come from different quarters to draw away the public. Although they continue to keep a competitive and innovative edge, sometimes that is not enough.
Government Influence
Many governments around the world continue to view cryptocurrencies and blockchain technology in general as a threat. The future promises of a free decentralized financial system are threatening to them because it would be largely unregulated. This would make it very hard for taxation as well as the imposing of governmental regulations. Criminals like money launderers are already having a field day away from the prying eyes of law enforcement agencies.
Due to these and other reasons, some governments have actually outlawed blockchain in their areas of jurisdiction (e.g. Iran, India, North Korea, Pakistan among others).
We certainly do not want to start theorizing on such a sensitive issue, but the message is clear. The governments could possibly maim the growth of cryptocurrencies at will and this is the main reason most cryptos are registered in "friendly" countries.
Conventional Financial Institutions
Fiat money remains the mode of day-to-day payments and most assets—fixed or otherwise—are valued in this manner. Therefore, cryptocurrencies still need to maintain an acceptable level of liquidity in order to remain useful. Herein lies the power that conventional financial institutions have, and so far, many of the major players are yet to fall in line with crypto but have adopted a wait and see attitude.
This leaves crypto exchanges with a challenge where they have to maintain liquidity for the sake of their customers while dealing with incapable institutions who happen to agree to provide the fiat to the crypto interface. Even then this takes place at exorbitant prices and with strict regulations.
Bitfinex will need to forge working relationships with these institutions which will be an uphill task given the heat they are currently under. Some of the stable coins are already well on their way on this journey, and some projects are already showing potential by providing models in which they could integrate blockchain technology into the existing Fintech infrastructure. If they fail in this, they will soon not have the necessary liquidity to support such a large exchange.
Conclusion
From a company that has walked the crypto landscape since it was virtually unknown and has grown to be a giant in the space, we expect that LEO will also be successful if outside expectations are kept to a minimum.