The most recent AMA revealed how LEO is embarking upon a new era. We are about to enter a much larger ecosystem that could establish Leo as a legitimate DEX.

What takes this one step further is the fact that it provides much a value to the entire Hive ecosystem.

For years, people were asking for HIVE to be listed on exchanges. Unfortunately, centralized exchanges tend to require a large payment to get the listing. We also see how the actions of governments could end up negating this pathway for users.

That leaves decentralized exchanges. Here is where Leo is starting the process.

The AMA was very explicit how this is going to work.

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Leo As A DEX To The Outer [World

Hearing the explanation of how this is going to work revealed exactly what is taking place. Basically, we are looking at a town that was next to a couple highways with millions of cars passing. The problem is none of that traffic finds the town since there are no ramps. The traffic keeps whizzing past.

What Leo is building is the first ramp of this kind. We saw a lot of smaller initiatives that had mixed results. Here is where the entry into the Maya world is important.

Another factor is $LEO is going to be the centerpiece. The main thoroughfare is the LEO-CACAO liquidity pool. Here is where everything we are discussing touches.

On the Hive side, we have HIVE, HBD, and all the H-E tokens. Each of these will be able to use this pathway to get into whatever coin or token that Maya handles.

We are being told, and teased with screenshots that we will be able to swap HIVE. Here is where following the path is important.

How do you get from HIVE to LEO? Obviously this requires swap.hive to convert on Hive-Engine. Once there is LEO, that is bridged on Arbitrum, where it is swapped for CACAO, and then flipped into whatever the output is (such as Bitcoin or USDC).

We then have the same thing if we are using a H-E token. I am not sure if this will be live immediately but the process is the same.

It is important to note all of this will be handled by the UI. People will simply enter HIVE as the input and USDC as the output. The steps to complete the transaction are handled all on the backend.

Leo As The Centerpiece

If we are dealing with Hive coins and H-E tokens, there are two important pools.

Basically, the value that is in each of these have to be significant to handle all the swaps. This means we are dealing with the diesel pool on H-E and the liquidity pool on Arbitrum.

Liquidity is going to be key. This means the activity is going to increase as people move value in and out of the platform.

Hopefully it is clear how $LEO is going to be key in this.

Since the connection if through the LEO-CACAO liquidity pool, we see how each transaction generates fees. Many people are limited in their ability to get in and out of HIVE. In many geographic areas, it is not easy.

It appears, for those people, this solves the problem. Getting into something like USDC, Bitcoin, or USDT means being able to access most exchanges.

What happens to those transaction fees?

Here is where the design builds upon itself.

The fees are used to buy $LEO and locked in the pool as permanent liquidity. To truly be effective, the pool will have to be deep. Over time, the fees should increase, pushing more liquidity into the pool. This is how it builds upon itself.

Another key point: LEO is operating as a vehicle currency in this situation. It is the link between Maya and Hive or H-E. To go between either is going to require LEO.

This is very powerful. It is a role that the US Dollar (actually eurodollar) serves for the global economy. This means that central banks always need dollars to meet the needs of the commercial banks.

LEO is going to serve this role with Maya.

Full DEX

So far, we only focused upon the ties to Hive. However, the LeoDex does not require this.

There is going to be the ability to swap native coins for each other. For example, people will be able to connect their Bitcoin and Ethereum wallets and trade BTC for ETH. Whatever pairing is available on Maya, it will eventually be possible through LeoDex.

In other words, we are dealing with a service that can be promoted to people outside the ecosystem.

Of course, anything that goes through the UI generates fees, further feeding the liquidity pool.

The present market capitalization of LEO is around $1.8 million. This is a small number compared to what might be required to handle the transactions. The key is permanent liquidity being locked up. This is effectively removing value from the free market although it doesn't lock up the tokens since those could be pulled out and CACAO put in.

We also have to keep in mind the other avenues are revenue are still in place. The goal, over time, is to keep expanding these so that we see even more pressure on the token.

For example, the idea of having either a certain amount of Leo Power or premium membership could equate to a discount on the trading fees through LeoDex. Since it is all under one umbrella, these are some of the incentive mechanisms that can be built in.

Once this goes live, we will see how things expand. The potential exists for this to be a strong revenue center.

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Posted Using InLeo Alpha