What is Leo (LEO) crypto coin? A clear guide to its purpose, benefits, and risks

What is UNUS SED LEO (LEO)?

UNUS SED LEO is a utility token created by iFinex Inc., the company behind the cryptocurrency exchange Bitfinex. It was launched on May 21, 2019, not as a speculative investment, but to help Bitfinex recover from the financial fallout of the 2016 hack, where $850 million in customer funds were lost and later seized by U.S. authorities.

Unlike Bitcoin or Ethereum, LEO doesn’t aim to be a decentralized currency. Instead, it’s built to serve one purpose: to give Bitfinex users real, measurable benefits in exchange for holding the token. Think of it like a membership card that cuts your trading fees, reduces your borrowing costs, and rewards you for bringing others to the platform.

How does LEO work?

LEO runs on two blockchains at once - Ethereum and EOS. About 64% of the total supply (595 million tokens) exists as an ERC-20 token on Ethereum, making it compatible with wallets like MetaMask. The other 36% (330 million tokens) lives on the EOS blockchain, which is faster and cheaper for transfers. This dual-chain setup gives flexibility but also adds complexity. If you send LEO to the wrong chain, you could lose your tokens permanently.

Bitfinex controls the entire system. It doesn’t rely on third-party cloud services. Instead, it runs its own data centers to ensure uptime and security. Since its launch, Bitfinex has maintained a 99.99% uptime record - a rare feat in crypto.

Why do people hold LEO?

Most people hold LEO for one reason: savings. The token gives you direct discounts on Bitfinex trading fees based on how much you own:

• 100-500 LEO: 15% discount on trading fees
• 501-2,000 LEO: 20% discount
• 2,001+ LEO: 25% discount

If you trade $10,000 a month, a 25% fee discount saves you $250. Over a year, that’s $3,000 in savings - more than enough to cover the cost of buying 2,000 LEO at $8.76 each.

LEO also reduces funding rates on margin trades and boosts referral bonuses. Active traders who make 20+ trades per month report 22% higher net profits after accounting for LEO discounts, according to Bitfinex’s internal data.

The deflationary burn mechanism

What makes LEO stand out from other exchange tokens like Binance Coin (BNB) or OKB is its legally binding buyback and burn system.

Every month, Bitfinex takes 27% of its net profits and uses that money to buy LEO tokens from the open market - then burns them permanently. This reduces the total supply. If profits aren’t enough to hit the 27% target, Bitfinex must cover the difference using its core business revenue over a four-year window.

As of Q3 2023, over 17.5 million LEO tokens have been burned - about 1.89% of the original supply. The largest single burn happened in April 2021, when 1.2 million tokens worth $12.5 million were destroyed in one go.

This isn’t just marketing. It’s a contractual obligation. That’s why analysts at Messari called LEO’s burn rate “significantly more aggressive than the industry average of 15-20%.”

How does LEO compare to other exchange tokens?

LEO wins on transparency and predictability. BNB has far more real-world use cases - you can pay for flights, hotels, and even buy crypto with it. But LEO’s burn mechanism is the most enforceable in the space. OKB and HT have no legal commitment to burn tokens, making their value more speculative.

Who should hold LEO?

LEO isn’t for everyone. If you trade infrequently or use other exchanges like Coinbase or Kraken, LEO gives you zero benefit. You’re just holding an asset tied to a platform you don’t use.

It’s ideal for active traders on Bitfinex who make dozens of trades a month. For them, LEO isn’t an investment - it’s a cost-saving tool. One Reddit user reported saving $1,850 in trading fees over a year by holding 1,200 LEO.

But if you’re a casual investor or just buying LEO because it’s “cheap,” you’re taking a big risk. Bitfinex’s market share has dropped from 3rd to 15th largest exchange since 2019. If Bitfinex loses more users, demand for LEO drops - and so does its price.

What are the risks?

LEO’s biggest weakness is its total dependence on Bitfinex. 98% of its utility is locked inside Bitfinex’s ecosystem. That’s far more concentrated than BNB, which has real-world partnerships with Uber, Airbnb, and others.

There’s also technical risk. Many users have lost money by sending LEO to the wrong chain. A Trustpilot review from August 2023 describes a $350 loss after sending EOS-based LEO to a MetaMask wallet - which only supports Ethereum. Mistakes like this are common among new users.

Regulatory risk is real too. The SEC issued a Wells Notice to iFinex in 2022 over concerns LEO might be an unregistered security. The case was settled in February 2023 with an $18.5 million fine, but regulators are still watching. Any future enforcement action could hurt the token’s value.

What’s next for LEO?

Bitfinex has a roadmap for 2024. The biggest update is the planned launch of a decentralized exchange (DEX) in Q2 2024. If LEO is integrated there, it could become more useful beyond just spot trading.

Another potential move is entering the online gambling market. Bitfinex is exploring partnerships with online casinos to let users pay with LEO and earn 5-10% cashback. That’s a $93 billion industry - but also a high-risk, heavily regulated one.

Analysts are split. VanEck predicts 8-12% annual growth through 2026 based on buybacks. Bernstein Research warns of 20-30% downside if Bitfinex keeps losing market share. CoinDesk’s September 2023 survey found 65% of professional analysts believe LEO has a 70% or higher chance of surviving five years - mostly because of its burn mechanism.

How to get started with LEO

If you’re on Bitfinex and trade regularly, here’s how to use LEO:

1. Create a Bitfinex account (if you don’t have one)
2. Buy LEO on Bitfinex, Gate.io, or another supported exchange
3. Transfer it to a wallet that supports the correct chain - MetaMask for Ethereum LEO, Scatter for EOS LEO
4. Hold it in your Bitfinex wallet to unlock fee discounts automatically

Avoid sending LEO between wallets unless you’re certain of the chain. Always double-check before confirming a transaction. Mistakes here are irreversible.

Final thoughts

LEO isn’t a get-rich-quick crypto. It’s a utility token designed for active Bitfinex traders who want to cut costs. Its strength is its transparent, legally binding burn system - something no other exchange token can match. But its weakness is its narrow use case. If you don’t trade on Bitfinex, LEO has no value to you.

For the right user - someone who trades frequently and trusts Bitfinex’s infrastructure - LEO makes sense. For everyone else, it’s just another crypto asset with no clear edge.