There is a lot of discussion about the Leo Tokenomics 2.0. This is something that is going to radically alter the token system that Leo operates under.

Over the past few weeks, this was covered on both the AMA and Lion's Den.

We had insight into this from the Leo documents. This concept was spelled out there, although the timeline is being accelerated.

Originally, the goal was to move away from the inflation system around 2032. With the new approach, it is being moved up to 2025.

So what are the new tokenomics and why should users care? That is what we will explain in this article.

LEO Adopting The Bitcoin Model

There are two important points to consider. In fact, if you take nothing else away from this article, these are the two:

• nothing changes on InLeo
• Leo is adopting the Bitcoin model

As for the first, it is business as usual from the end user perspective. One simply posts, curates, and gets paid. LEO is paid out along with whatever other tokens are associated with particular upvotes.

The difference will be in where the LEO comes from. At present, it is from inflation, i.e. new LEO is printed. This dilutes the holdings which makes it tough from a pricing perspective without a great deal of growth.

Under the new tokenomics, revenues generated, mostly from LeoDex, will be used to buy the LEO token on the market and distribute it to the users. The idea is to plug the hole of sell pressure from people who simply earn and dump to one where buy demand enters.

Fixed Token Amount

One the day the switch takes place, we will have a fixed amount of LEO. In other words, the inflation rate is 0%. No new LEO are going to be created. What is out there is all that exists.

This is what I mean by the Bitcoin model.

For the sake of our discussion, let us say that there are 29 million LEO on the market the second the switch to the new tokenomics occurs.

From that day, going forward, the amount of LEO will only decline. The new tokenomic system is actually deflationary. Since growth on InLeo has not outpaced the inflation, the sell pressure took a toll. This could be reversed by flipping the situation around.

The reason why this is deflationary is because there will be token burns via the Leo bridge. When moving from one chain to another, a fee is charged to use the bridge. Each time someone does this, the protocol is paid (around 1%). Under the new system, this will be burned.

Thus, if someone moves over 1,000 LEO from Hive-Engine to Arbitrum, 10 LEO will get burned. That would pull the total, in our scenario, down to 28,999,990.

Ultimately, other revenues streams could be pushed into this, either as buy demand or via token burn.

We should see this conversion occurring by the end of June. That is the goal of the team.

Posted Using INLEO