Are we witnessing the birth of a star?
***I have been here since Steemleo days on Steemit, and I have invested in all the projects our community leader Khal created, including WLEO 1 & 2 on Uniswap, Cubfinance on Binance Smart Chain, PolyCub on Polygon, and most recently Cacaoswap on Maya. And it has been an education learning about NFTs and wrapped tokens, yield farming and liquid provision, to name a few interesting things I have learned about decentralized finance. I even created and ran an investment club called @easydefi for 2 years and created and ran the @nolosslottery for 2 years, all of these using Leo tokens and decentralized projects created by our fearless leader @khaleelkazi. I have followed his lead across blockchains and ecosystems filling my head with knowledge and most of the time my wallets with tokens. I have learned by watching and participating in Khal's efforts to create a better decentralized finance project, as he built project after project. Each one being an better version of the previous one, evolving and containing solutions to previous discovered shortcommings.
This brings us to the most important rules of Decentralized FInance, and Cryptocurrency investing in general. Inflationary tokenomic projects with no intrinsic money earning strategies or utiity all have the same life cycle of hype, initial sales at low prices, rapid 5x or 10x rises in prices, tremendous token printing called inflation, early investors see big gains, and take their profits selling to middle or late entry investors, whose investment capitol becomes the profits or exit liquidity for the early investors, and then the mid to late term investors watch the token value plummet and they are left with tokens which lost 99% of their value. They are termed the classic bag holders of decentralized finance.
That's the bad news, the good news is that some projects figured out how to sustain high prices, it's called intrinsic utility and intrinsic earnings. This can be complex because sometimes we mistake external capitol entering an ecosystem as earmnings or value, when it is just hype. But few successful projects who maintain their tokens price are the ones which figured out how to deal with these flaws in the economic design.***
Honestly, everyone in cryptocurrency had to learn the upside and downside of decentralized finance regarding Liquidity Providision, Yield Farming, and all these other inflationary tokenomics, which failed... Ironically, everyone thought these DeFi strategies were going to change the world and make us all rich. They didn't Ironically, they made most of the investors poorer They were part of the amazing million dollar to billion dollar value run-up in token value that the world of cryptocurrency investors thought would never stop. But it did, and like a game of musical chairs, many of us were left standing with no place to sit. This famous decentralized finance revolution that shook the world with stories of great wealth being created during the famous DEFI Summer. The stories of instant wealth made us feel like Decentralized Finance was a God who could print money and make everyone rich.. Defi turned out to be a False God, who took money from the many and gave it to the few. This left some investors in a black hole of financial loss and despair. These Defi Liquidity Provider and Yield Farming Projects all had the same inflationary tokenomics, huge APR rewards for early investors, paid for by later investors, most lacked any intrinsic value and fewer still had any business model which actually produced earnings. Most just printed more and more tokens, which started out expensive and ended up worthless. But some did and survived and even thrived, so those were the ones Khal studied and now emulates. This time Khal may have finally discovered the secret sauce; featuring deflationary instead of inflationary tokenomics, protocol owned assets instead of outside investors "yield farmers" who dump thousands of tokens to take profits, and decimate token value, and the elimination of token printing as the source of earmings. Instead of printing tokens out of thin air, tokens are earned by a real business, generating real money, which feeds the defi system. is used for token buybacks and those are the source of earnings, not inflation. These solutions appear to solve all the causes of death identified in previous defi projects. Now all we need to do is watch and observe as the tokenomic mechanics play out. And see if indeed a Star has been Born... We will find out if Khal has finally built the Holy Grail of Decentralized Finance, by copying the traits of the successful decentralized finance projects and elminating the traits of the failures. So the rest of this essay is a deep dive into the tokenomics of Leofinance, Leodex and Protocol Owned Liquidity. It's a bit of a deep rabbit hole, but I have written it in plain English, and I hope this introduction has given you the motivation to read the rest of this article. Because I think if I am right, this project will be one of ever increasing wealth for it's investors and it may survie them and be a money making investment to leave to your children, as a generational wealth genrating machine that survives long past the first investor. Wow, there, I said it. Perhaps hyperbole or exaggeration, but perhaps not... Yes generational wealth. SO I hope your now excited to read the rest, and learn if a star has been born.
Only time will tell, but so far, it looks amazing...
LeoDex
Introduction
- Let's explore and expand upon the concept of Protocol Owned Leo (POL) and the economic flywheel it's designed to create for the LEO token ecosystem. This model represents a sophisticated evolution in tokenomics, moving beyond simple fee distribution to create a self-reinforcing cycle of value accrual, demand generation, and supply reduction.
Exploration and Expansion of Protocol Owned Leo (POL)
1. The Foundation: The Economic River of LEOdex
The entire system is powered by a single, fundamental source of external value: trading fees from LEOdex. This is the "Economic River."
Mechanism:
Every trade on the LEOdex platform generates a fee, collected in a stablecoin (USDC). This is crucial because it represents real, external revenue flowing into the LEO ecosystem, not inflationary token emissions.
Significance:
The health and growth of the entire flywheel are directly proportional to the volume on LEOdex. As volume increases, the "river" of USDC flows stronger, providing more fuel for the engine.
Calculation:
Based on one days revenues: example (330,000 volume generating $1,100 USDC), the effective fee rate captured for this system is approximately 0.33%. This rate is the throttle on the entire economic engine.
FeeRate= $330,000 $1,100 ≈0.00333 or 0.33%
2. The Core Component: Protocol Owned Leo (P-LEO) - The Demand Sink
picture source
P-LEO is the cornerstone of this model. It's not just staked LEO; it's a permanent, programmatic accumulator of LEO.
Definition:
P-LEO is a treasury of LEO tokens owned and controlled by the protocol itself. The key characteristic is that it is "perma-staked." This implies a protocol-level commitment to never sell this LEO on the open market. Its sole purpose is to accumulate more LEO.
The Auto-Compounding Mechanism:
When P-LEO receives its share of the daily USDC rewards, its programming is simple and relentless:
Receive USDC rewards.
Use 100% of that USDC to execute a market buy of LEO tokens.
Immediately stake the newly purchased LEO, adding it to the P-LEO treasury.
Economic Impact:
The Permanent Demand Sink: P-LEO functions as a "demand sink" or a "black hole" for LEO tokens. It creates a predictable, daily source of buying pressure that is completely divorced from market sentiment or speculation. Whether the market is bullish or bearish, P-LEO is a buyer. This helps to:
Establish a Price Floor:
The constant buying pressure can absorb sell pressure, creating a soft, ever-rising price floor over time.
Reduce Circulating Supply:
Every token bought by P-LEO is effectively removed from the liquid, tradable supply forever, creating a gradual "supply shock."
With a projected 1 million LEO staked at launch, P-LEO will immediately begin consuming its own share of rewards (projected at 10%), initiating this perpetual cycle from day one.
3. The Accelerator: LEO Strategy (LSTR) - The Strategic Whale
LSTR acts as a massive, aligned, independent entity that dramatically amplifies the effects of P-LEO.
Role: LSTR is a strategic fund
... whose primary goal is the accumulation and growth of its LEO holdings. It shares the same auto-compounding behavior as P-LEO, but also engages in its own aggressive accumulation strategy (buying 50-70k LEO/day).
The 10x Multiplier Effect (Capital Efficiency):
This is a key accelerator. It does not mean $1 becomes $10 magically. It refers to capital efficiency. Here's how it likely works:
LSTR uses its base assets (USDC, LEO) as collateral in DeFi.
They can engage in activities like providing liquidity, delta-neutral farming, or using derivatives (e.g., perpetual futures, options).
These strategies allow them to generate yield or trading revenue on their capital far in excess of simply holding it. The "10x multiplier" suggests that for every $1 of capital they hold, they can facilitate $10 of economic activity (e.g., trading volume, liquidity provision) which in turn generates fees and yield.
This amplified yield is then used to accelerate their primary mission: buying more LEO. In essence, they've built a highly efficient machine to turn capital into more LEO, faster than just using the base rewards.
4. The Flywheel Effect: A Virtuous Cycle
When you combine the Economic River, P-LEO, and LSTR, you get a powerful, self-reinforcing flywheel.
Here is a step-by-step breakdown of the cycle:
→ Trading & Fee Generation:
Users trade on LEOdex, generating a consistent stream of USDC fees (The Economic River).
→ Reward Distribution:
These USDC fees are distributed daily to all staked LEO (sLEO) holders.
→ Programmatic Buy Pressure:
A massive portion of these rewards (~40% according to projections) is received by P-LEO and LSTR. They are programmatically obligated to auto-compound, using their USDC to immediately buy LEO from the open market.
→ Price Appreciation & Supply Shock:
This relentless, daily buying pressure absorbs sell orders and reduces the available liquid supply of LEO, putting upward pressure on the token's price.
→ Incentive to Stake:
As the LEO price appreciates and the USDC rewards remain strong (due to volume), the Annual Percentage Rate (APR) for staking LEO becomes more attractive. This incentivizes more individual investors to buy and stake LEO, further reducing the circulating supply.
→ Increased Confidence & Volume:
A stable, appreciating token with a strong narrative of programmatic buying attracts more traders, liquidity, and projects to the LEOdex ecosystem. This leads to higher trading volume.
→ Loop Reinforcement:
Higher trading volume feeds back into Step 1, generating more USDC fees. This makes the "Economic River" stronger, which increases the USDC rewards for P-LEO and LSTR, leading to even greater daily LEO purchases.
The cycle repeats, with each rotation potentially stronger than the last.
Conclusion: Economic Implications
- The POL model described is a masterclass in aligning protocol incentives with token holder incentives. It aims to solve the classic problem of mercenary, yield-farming capital by creating structural, long-term demand.
- From Inflation to Deflationary Pressure: Instead of paying rewards through inflationary token emissions (which increases supply), this system uses external revenue to create deflationary pressure by permanently removing tokens from the liquid supply.
- Structural Demand: The demand for LEO is no longer based purely on speculation. It is now structurally embedded into the protocol's daily operations.
Scalability: The system is designed to scale.
- The more successful LEOdex becomes, the more powerful the flywheel grows, creating a direct and tangible link between platform success and token value.
- The combination of a protocol-owned demand sink (P-LEO) and a highly capitalized strategic accelerator (LSTR) creates a formidable economic engine designed for sustainable, long-term value accrual for the LEO token.
Last Words
- I hope that now you are filled with excitement and wonder.
- I hope you now understand why the Leo token price is climbing and LSTR price is climbing and why Surge maybe a another massive opportunity for you to get into the project when the token prices are low enough that hopefully the majority of community members can participate in what could be the best economic opportunity to occur in a while for our community in a while.
- Some of you may feel that your to late to the party for bitcoin. You are not, but only you should decide how to spend your own money and although I am explaining why I think this is a great investment, only you should decide how to spend your hard earned money. Don't invest because I think it's a good opportunity, learn about the project, understand it, and only invest if you are convinced it will succeed. You must take responsibility for your investment decisions and own the failures as well as the successes. That's the truth, no sugar coating. You are the Captain of your shiip, so only you are responsible when you decide to set sail places no one has gone before. Remember it's your money, so only invest in projects you are sure will succeed.
The End
@Shortsegments
Thank you for reading my post
This post was written by Shortsegments, who has been writing about cryptocurrency, the blockchain, digital ledgers, bitcoin, ethereum, and decentralized finance for seven years. You will find his articles here on his blog Link to his blog.
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