It's been an exciting few weeks on the Hive blockchain. The introduction of wHIVE showcased what is possible when you create a bridge between blockchains. Now, you can wrap your HIVE tokens and utilize wHIVE for ETH-based protocols like the Uniswap DEX.
Many of us who live on Hive and have experience using Ethereum have talked about the massive potential of connecting two blockchains. When you take the power of Hive and connect it to the vast ecosystem of Ethereum, magical things can happen.
That's why I'm excited to announce that we've begun development on Wrapped LEO with the wHIVE developer @fbslo.
In our 2020 roadmap, we mentioned plans for our new project dubbed "LeoFi" this year. The development of LeoFi is now far ahead of schedule thanks to the development work by fbslo. wLEO is the first step in that plan to bridge LEO to financial protocols on the Ethereum blockchain.
External Exchanges Here We Come!
One of the core visions for LEO is to bring in more users and investors. We want to continually make it easier and easier to buy, sell and utilize LEO on a daily basis - whether you're on Hive or not.
I've always believed that we would make it to a number of big external exchanges, but I thought that we would do it under the guise of an SMT. Now that we're launching wLEO, you'll start to see wLEO listed on exchanges like Uniswap - which just surpassed the daily trading volume of Coinbase as of yesterday.
This is something that I've explained to a few people about Uniswap and wHIVE - Uniswap is merely the first step. If you can gain enough liquidity in the liquidty pool and enough daily volume in terms of trading, then the whole world of DeFi opens up to you.
Many protocols and speculators look purely at the activity in your Uniswap pairings (i.e. wLEO-ETH) to see whether your token/project are "real" and worthy of investment and potential listings on DeFi platforms.
I managed to get into contact with a few people who have experience with DeFi protocol listings and also got a few packets of information about what it truly takes to get fully listed on exchanges like Uniswap, etc. The general consensus is more liquidty = more listings. Anything under $50,000-100,000 USD in your liquidty pool, and it's hard to get taken seriously.
This is truly a game of liquidity and trading volume. wHIVE has done relatively well since it is so new and there is no real project head. wHIVE is 100% community initiated and funded and there is no central team out there providing liquidity/liquidity incentives.
This is where wLEO can shine in its own light. Here is a snippt from the Synthetix team which explains the importance of having deep liquidity pools on Uniswap (which is why so many tokens make this their main focus):
"A deep pool of liquidity enabling frictionless conversion between ETH and sETH will enable users to exit the system in a cost effective manner and provide confidence to the Synthetix.exchange." 1
As a rule of thumb, just think: more liquidity = more users = more attention = more listings.
$20,000 Starting Liquidity
Since the launch of wHIVE, I've spent a lot of time trying to understand this DeFi game and how tokens thrive on protocols like Uniswap. The key is liquidity and trading volume (as I've mentioned). I have also been paying attention to successful tokens and token launches as ERC20's on Uniswap and many teams are doing two core things:
- Providing an initial chunk of liquidty to get the ball rolling
- Providing liquidity incentives for users to get involved and build the ecosystem
To address point #1, LeoFinance will post an initial liquidity of $20,000 USD to our wLEO-ETH pairing on Uniswap. As things progress and new pools are added, LeoFinance will continually provide initial liquidity chunks to other pairings and protocols outside of Uniswap.
I was speaking with a few LEO community members and large stakeholders yesterday about how we can continually provide more liquidty to this pool. The ultimate goal is to get above $100,000 so that we can then take that visibilty to Uniswap for a full listing and ultimately show that to other DeFi protocols and ask for listings elsewhere. One problem that we have with LEO (which has been outlined by community members like @edicted) is that we actually have a lack of liquid LEO tokens.
Our community is a community of deeply entrenched HODLers. As you can see on the latest @leo.stats report, about 90% of all LEO tokens in circulation are actually powered up and therefore, not currently available for providing liquidity to protocols like Uniswap. The power down time for LEO POWER is 4 weeks (paid out in 1/4 chunks each week).
A new way to get paid for HODLing LEO: as of today, the only real way to earn an on-going ROI with your LEO is to stake it (power up) and curate content. Many community members have said that they don't like to curate content. They prefer to earn a passive yield and some also don't want to have to power up for 28 days. They'd rather keep their stake liquid.
Here's where having wLEO gets interesting. These authors and stakeholders can now take a portion (or all) of their LEO tokens that they've earned/bought over the past year and they can wrap it into wLEO. They can then take their wLEO on the ETH blockchain and provide it to the Uniswap liquidity pool (and other liquidity pairings as they arise) and utilize their LEO to earn a passive yield without powering it up.
We think that this is a major win for stakeholders of LEO because now you have a way to earn outside of LEO content curation. Not everyone wants to be a curator and that is totally fine. As far as I'm concerned, the more ways that you can utilize LEO, the better.
Liquidty Incentives
As many of the initial liquidity providers of the wHIVE pairings have noticed, the initial rewards of providing liquidity to a newly launched Uniswap token are not very high. This is a chicken and egg problem.
When you have a new pairing, it has low liquidity and thus, low trading volume. When you have low trading volume, you have low fees being collected. When you have low fees being collected, LP's (Liquidity Providers) aren't able to earn much.
To solve this issue, it is common practice for new tokens on Uniswap to provide additional liquidity incentives via their token or other tokens airdropped to LP token holders (when you provide liquidty to a Uniswap pool, you receive LP tokens - see the below screenshot of wHIVE-ETH LP token details).
LeoFinance will provide initial liquidity incentives for the first 90 days of the pool from our bounties fund as a trial period. If this incentives program proves to be beneficial in gaining more liquidty, more LEO/wLEO token investors and more trading volume, then we will look to divert a small % of the total LEO inflation purely to liquidity pool incentives (a tiny % coming from miners and a tiny % coming from author/curator rewards).
I think I've clearly outlined the incredible benefits of providing liquidity to the wLEO token pairs. Some may be concerned with using a very small % of inflation to reward liquidity providers, but this is likely one of the most beneficial ways that investors can contribute to expanding the LEO economy and opening up our platform to more eyeballs and ultimately (what we all want): more Hive accounts created and daily active users. As we see the results from this program, we'll release more details.
Liquidty Incentives:
The LEO Bounties fund has a total supply of 3,000,000 LEO tokens. When LeoFinance (formerly named SteemLeo) was launched over 1 year ago, the plan was laid out which stated:
"Ongoing bounties will help to distribute 3 million LEO to active users over the coming years. This LEO will be distributed slowly and carefully to users that we believe will add value to the
SteemleoLeoFinance network in the long-term."
After more than a year, we've barely scratched the surface on this fund, as we have had a few small initiatives to release the tokens to users who add value to the growth of the network. Our new liquidity incentive program will distribute 10% of this bounties fund over the next 90 days to users who provide liquidity to the Uniswap pool. The value of building this pool and getting LEO listed on external exchanges/ETH-based protocols cannot go understated.
I view the launch of wLEO as a kind of "IPO". LEO and LeoFinance have been built into a box as a subcommunity on the Hive blockchain. With the launch of wLEO on Ethereum, we're opening up the floodgates to a whole new pool of investors, bloggers and potential users and use cases for the LEO token economy and LeoFinance platform. This launch will take us from being a subcommunity on Hive to being a more legitamized project in the world of crypto. Making our community's true purpose more achievable: onboard more users to LeoFinance and Hive.
The Structure:
- LP token holders will receive a proportional % of the total incentive pool based on their share of the pool (i.e. if you own 5% of the total liquidty pool, you'll receive 5% of the incentive pool)
- LP bounty rewards will be paid out 1x a week for 90 days (~12 weeks)
- Changes to your LP balance will reflect in the following week payout period (i.e. if you add to your balance in the current reward period, it won't take effect in your additional bounty payout until the next week)
- If you remove liquidity from your address in the current week reward period, then that will make you ineligble for the incentive fund payout for that week (prevents abuse)
- Rewards can either be paid out as wLEO or LEO (which will dictate whether they're paid to your ETH address or to your HIVE address)
- A minimum of $100 in liquidty provided will be required to receive additional incentives from this bounty fund (prevents spam abuse)
Please note: This structure is likely to stay in place, but is subject to small changes before the actual launch of wLEO. On launch day, we'll lock in the final details so that you know exactly what the LP rewards look like before you jump in.
Big Changes Coming to LeoFinance
I know this is a lot to take in. This post is actually twice as long as the one you're reading, but I decided to split some of the information up. There's a lot happening right now for the LEO token economy and LeoFinance platform. For one, we've got the new interface nearly ready for open beta (which will probably happen just days before the launch of wLEO - I'm actually writing this post from the interface right now).
wHIVE was a lot for people to take in as well. When you're accustomed to using a blockchain like Hive, it can be a little confusing to jump over to a chain like Ethereum which has vastly more dApps, users, fees and tx wait times. Hive is an incredible blockchain in terms of usability, 0 fees and 3 second transactions. That's why it's the best platform for LeoFinance to be built on.
The key is that we're keeping all the benefits of having LEO and LeoFinance on Hive, but now we're using wLEO to plug-in to the multi-billion dollar industry that DeFi has exploded into.
Our dream of having LEO listed on external exchanges like Uniswap (DEXs) and also Bittrex, Binance, Huobi and others is closer than ever. As an ERC20, wLEO can be listed on any pretty much any major crypto exchange out there. The first step is getting this Uniswap gateway funded and utilized. From there, we'll take our platform to greater heights with the new interface and onboarding programs and from there, we'll take this community to the moon as we contact major exchanges and ask for a wLEO listing.
The future is exciting. Will you join LeoFinance and our mission to grow our platform and expand the Hive ecosystem?
Please leave any questions you have about anything in this post below. I'll take the top questions and turn it into an AMA video this week.
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Earn LEO + HIVE rewards by creating crypto/finance-related content in our PeakD community or directly from our hive-based interface at https://leofinance.io.
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Posted Using LeoFinance Beta