LeoBridge Will Send The Price Of LEO Flying
LeoBridge is an application that the Leofinance team is going to roll out. This will be one of the first applications that will allow people to take their ERC-20 tokens (Ethereum) and swap them for BEP-20 tokens (BSC). Essentially, it is a bridge that will assist in the interoperability between the two chains.
This is one of those applications that, if it catches on, it will be wildly successful. It is potentially targeting a very large audience.
Ethereum, as most of us are aware, has the most DeFi activity, at least in terms of TVL, of any chain. The challenge is the fees associated with it. This is opening the door for the explosion of DeFi on BSC. With fees that are pennies as compared to the dollars on Ethereum, this is opening the door for much smaller players. Over the weekend, someone mentioned the ETH fees were $77, compared to about 40 cents on BSC.
We also have the situation where there is not an easy way to move from Ethereum to BSC. Binance tokens are not supported in the United States making it a challenge for people in that country to convert their stuff over. Here we see built-in audience for the application.
So why will this send the price of LEO flying?
To answer the question, we need to understand how the ERC-20 to BEP-20 conversion works.
Basically it looks like this:
ERC-20(ETH)--->wLeo--->LEO--->bLEO--->BEP-20(BNB)
The key is going to be the wLEO and bLEO. There is going to have to be a ton of tokens locked up AND at great value in those pools for this to operate. It is vital to recall that liquidity pools are based upon the value in USD. Since the Ethereum, as an example, will be swapped, it is going to require a lot of wLEO to equate to $2,300 for each Ethereum.
We see the same situation on the other end, although perhaps to a lesser degree.
Of course, there is incentive to have plenty of tokens in each pool since the fees will explode if the application is popular. One of the incentives for many liquidity pools is the fees generated for providing the trading pairs.
The supply and demand equation sums this up nicely. Since there will be a lot of incentive to lock LEO up (in both wLEO and bLEO), the supply of the token on the open market will diminish. At the same time, we can see how demand is increasing since people will want to get involved in the pools to reap a return.
LEO is already a tightly held token. We see the amount staked on chain is already significant. If we see a massive desire to lock the token up, the price, in USD terms, could explode higher. In fact, a higher token price is almost necessitated.
While everyone is obviously looking at the benefit to CubFinance of LeoBridge, it is important for us to not overlook the fact that it is of great benefit to Leofinance. Since the token is going to be woven into the application, in three phases, we are going to see the value expand a great deal.
Once again, we will see liquidity being an issue. This means that the price, in USD terms, really has no choice other than to push upwards. It will add more value to each of the liquidity pools, enabling more transactions to take place.
Many tokens are looking for use cases (sinks). As we can see here, there are two pools that are going to eat up LEO.
CubFinance is already an extremely successful project with near $20 million TVL. It garnered a great deal of attention but we must not overlook the impact upon Hive.
There is a lot going on within the Leo ecosystem and applications such as they are going to enhance the value of everything tied to it. We are seeing already the difference that LeoBridge can have.
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Posted Using LeoFinance Beta
