The advantage to digital platforms is the tentacles can extend in many direction, equating to value arising. The central component of a structure like this is whatever incremental value is spread across the entire ecosystem.
Part of LEO is the recently introduced LeoDex. This is a decentralized exchange tied to the Maya Protocol.
How much value does an exchange add? This is a pretty straightforward answer. It all boils down to volume. Of course, there is a difference between DEX and CEX in valuation. There are different components that factor in such as revenue streams.
Nevertheless, we can use some of to get a rough estimate of some type of impact.
Bitstamp Sold For $200 MIllion
Some might have seen the news that Robinhood purchased the centralized crypto exchange Bitstamp. The purchase price is $200 million in cash.
Bitstamp's team will "join forces" with Robinhood, in what Robinhood Crypto general manager Johann Kerbrat described as a "strategic combination" that will help the platform "expand our footprint outside of the US and welcome institutional customers to Robinhood."
Obviously, Robinhood is looking at expanding its operations.
This comes in spite of the SEC being after Robinhood, accusing it of dealing in securtiies.
The move for Bitstamp means that it is going deeper into crypto. Robinhood began offer Bitcoin and Ethereum on its application in 2018.
Valuation of LeoDex
Obviously, we are dealing with apples to oranges. LeoDex is roughly 2 months old while Bitstamp is an establish crypto exchange. We could also look at the likes of Uniswap to also estimate value, but are dealing on a much smaller scale.
That said, it is good to have an idea about what is out there and how things can move.
Let us first start with Uniswap.
According to CoinGecko, the market cap for that token is $8 billion. When looking at the different levels of trading, we can see how it comes in near $1 billion in volume per day.
That is a tad bit higher than LeoDex.
Then we have Bitstamp. That was sold for $200 million, hence a much lower value that Uniswap is commanding. What does the trading volume on that exchange look like?
According to the information on Coingecko, it has $217 million in volume the last 24 hours.
A case could easily be made that the value of a CEX is different from a DEX. Certainly, there could be different metrics applied.
Using this arbitrary model, it looks like the CEX has a 1:1 value compared to the trading volume. If we use Uniswap as the metric, it is an 8:1 ratio.
That means if we see LeoDex reach a daily volume of $10 million per day, we have the value of at least that.
Of course, this doesn't include whatever value is derived from other aspects of the platform.
Social Layer
The volume on LeoDex is almost zero so the idea of valuing it is negligible. However, it does set a target for use to monitor in the future.
An advantage that Leo does have is that it has a social layer. This is something that can have a great deal of value. In fact, I think this will ultimately make up the majority of the total market cap of cryptocurrency.
Leo is a social platform which does offer some benefits. This can be a feeder system into the LeoDex.
Also, Leo has its own token which is at the center of the platform (and DEX). To show how this aids, the trading volume on UNI is almost $250 million each day. While it isn't a huge portion of the overall activity on that DEX, it is a significant amount (presuming most of it is done on Uniswap.
Obviously, all of this is focused upon potential. We are in the very early stages, hence it is important the progress against the backdrop of the potential that exists.
Could we see LeoDex as a $50 million DEX? Based upon the metric for Uniswap, if that anywhere near accurate, we are looking at roughly $6 million in daily trading volume.
It is a long way from where we stand now (like $6 million per day) but the first step is getting the DEX set up.
A multi-pronged approach is always a healthy way to grow the value. We will see how this unfolds as we keep adding more features and utility to the platforms.