Hi Leo folks, Recently, I read some articles about SURGE and became intrigued by the beautiful concept that Khal's team has built. I’ve reflected deeply on it, and here’s what I’ve come to understand:
1. What is SURGE?
- SURGE is the newest token created by Khal's team.
- It serves as a collateral loan mechanism for the team.
- Initial Sale: 500,000 SURGE tokens priced at 4 SWAP.HIVE each. If sold out, the team will acquire 2M SWAP.HIVE. You can read more detailed information in this post
2. Why do they need SURGE?
This is the reason shared by the team:
a big reason why we are launching SURGE today. SURGE allows LEO holders to take profits from the rise in LEO's price, buy SURGE and have a downside-protected token (liquidation preference at $1 means that initial sale buyers at $0.90 are protected at $1) while earning stable, reliable and growing yield in the form of HBD (or LSTR) paid weekly to your wallet.
However, I have a different perspective - I remember reading articles about LSTR by the Leo team, where their target is to acquire 10M LEO by 2025. - LEO’s price skyrocketed—rising 10x in one month due to the team’s buyback efforts from July 11 to August 11. It peaked at 1.24 SWAP.HIVE per LEO on August 13.
- If LEO’s price keeps rising, the team will have to pay more to buy back tokens—which they likely want to avoid.
- So, they created the SURGE token on August 11 and immediately announced it to the Leo tribe.
- SURGE offers a solid yield of 15% annually. With a 20% discount during the initial sale, the yield can reach up to 18%—assuming long-term holding.
- If you buy SURGE during the initial sale and sell it during the open sale (after September 17), you can instantly pocket a 20% profit.
- With such attractive returns, many of us (myself included) bought SURGE, causing a scarcity of SWAP.HIVE. The easiest way to get more SWAP.HIVE is by swapping LEO, which created sell pressure and led to a drop in LEO’s price.
- As LEO holders saw the price decline, they sold more to lock in profits, further dragging the price down.
- With the lower LEO price, LSTR can accumulate more LEO. I believe this is the real reason behind the creation of the SURGE token.
3. What are the next steps?
- After the initial sale, I think many SURGE holders will take their 20% profit, which could push the price down. LEO shared the mechanism to keep SURGE at $1, but I’m not convinced it’s strong enough. I expect SURGE to trade below $1—hopefully not under $0.80.
SURGE is not a stablecoin. It is not intended necessarily to maintain $1. However, the mechanics of SURGE are such that it should trade around $1.
- The sell pressure on LEO will ease, and its price may gradually rise again.
4. What are your actions?
It depends on your risk taste. - Playing safe - can buy and keep LEO token. I think it will be worth more than 15-20% per year compared to holding SURGE - Playing more risk - buy SURGE now at a discount price and take back the initial capital after the initial sale. Keep 20% profit as SURGE.
I would love to hear your opinion or perspective about SURGE :)
Disclaimer : This is my own study. Please do your own research and consider carefully before taking any action.
Posted Using INLEO