I have often wondered why LEO has value, and why has it been so successful so far. So I thought I would have a go at thinking this through. So ultimately if we go back to basics it all boils down to Supply and demand Source:http://pdpics.com/

What is creating demand for LEO

The LEO finance team are true thinkers o this topic, and they have carefully and slowly created demand for the token. Some of the things I have seen are

Advertising revenue on the posting platforms

The advertisements on the posting platforms create a a war chest of real money to support the token. I have read before (I can't remember where) that the advertising revenue goes towards purchasing LEO on the open market, to purchase LEO. this immediately creates demand. Better still these LEO tokens I believe are burned, reducing supply (more on that later)

Promoting a Post

This is a genius idea, where if you would like your post to be promoted, and more likely to generate upvotes, you can burn LEO. This not only burns more LEO (supply again.. sorry) but it creates demand for LEO. Take my example, I wanted to promote this post, but because I love LEO so much I have no Liquid LEO (as its all staked) so the only way to promote this post is to buy more LEO to burn. This creates more demand.

Earn investment returns from powered up LEO

So there are those that want to own LEO to receive the benefits of the earnings that could result, such as when you Power up LEO, you receive curation rewards, and for those that don't have time to curate, I am sure there are services that you can delegate your LEO to to curate on your behalf (Please post in the comments some options for people to Delegate their LEO to)

Speculation

Lets not forget speculation, there are some out there with a belief in the coin, this creates value, as they are speculating that the coin will go up

Building Social Networks

Lets be honest writing posts, curating, and building up social networks on this platform is fun. Having LEO power, means you can reward really good content, with a meaningful reward, and this is either fun, and satisfying. This creates a desire to buy LEO on the open market so you can have more influence on the LEO network. An example would be, if you like upvoting comments, but want to upvote more than 10 times a day, you can drop yoru upvote percentage form 100% to less, but if you don't have enough LEO power, your votes might be worthless if they are too small. thereby creatign demand

earning opportunities through Defi

With the launch of CUBDefi, this creates more demand for LEO because there are earning opportunities on CUB Defi for the wrapped LEO token. At the time of writing providing liquidity to the pools could earn over 200% p.a. (note this excludes impermanent losses that may occur).

Any other reasons?

I am interested in the readers views if there are other ways you can use LEO, that create demand, who knows you might be able to buy physcial goods in the future.

So what is happening with Supply?

Well, value comes about by demand and supply, so with any coin that gives away free rewards, this must be funded form somewhere, and LEO like most coins use inflation to do this. This means that LEO is periodically created to distribute the rewards. Now I am not familiar with the exact tokenomics, but I am guessing the rewards will be slowly declining over time to boost its value. inflation can stimulate the economy though, as more rewards are available creating an inventive or more posts, curation and activity in general.

This is very similar to the fiat worlds, where governments can use inflation and interest rates to control the level of activity in an economy. I wonder when LEO will build its own central bank and through some governance facility be able to set interest rates earned on LEO. I would love to borrow some LEO on Defi (collaterised against my existing LEO power) so I can power up even more... hmm maybe something for future discussion.

Problems with inflation

The problem with inflation is that tokens are devalued with inflation, so tokens really need to encourage an increase in activity to match the increased supply. LEO seems to be doing that successfully

Burning tokens

So what sets LEO apart is the amount of tokens it burns, it burns them through add revenue, and promotion of posts, and I have seen burns happen just for the support of the token as well. So what effect does burning have? it reduces supply, so if the market capitalisation of a coin stays the same, the value of the coin goes up.

So how do we encourage more burning? well like LEO has done, create use cases for burning, like promoting a post, or having an add on the network.

Conclusion and call to action

So LEO has put lots of thought into its token with various ways it creates demand and restricts supply putting overall pressure on the price to go up. so lets all use LEO and its features, to drive revenue.

A reminder to post in the comments any LEO curation services to delegate LEO to.

Also in the spirit of this post to reduce supply, if the rewards exceed 10 LEO, I will burn 50% of those after 10 LEO (i.e. if I receive 15 LEO, I will burn 2.5 LEO, wouldn't that be a great automatic feature to have a call option style payout ability)

Posted Using LeoFinance ^Beta