Thread by @lawmaster

1/ I finally decided to look at LEO. There is a lot of shilling, a lot of hate so it’s always good to look at data and let it speak for itself. And as opposed to BNB burns, I like how granular the data is (every three hours)

2/ LEO is Bitfinex’s exchange token that was launched in May after allegedly raising $1 billion in a private token sale. Similarly to BNB, one of the most important value capture propositions is a quasi-claim to Bitfinex’s cash flow via the burning mechanism.

3/ Bitfinex buys back LEO tokens at market value worth 27% of the revenue and then burns them (every 3 hours) until all LEOs are removed from circulation. For now, Bitfinex only burns the revenue from trading fees but wants to add more streams eventually

leo.bitfinex.com

4/ The size of the burn logically varies depending on the revenue from trading fees and the price of LEO. So far, there have been 19 days of burns throughout which $2.8 million in LEO (~1.5 million LEO) has been burnt in 151 on-chain burning events.

5/ Interestingly, there have so far been two LEO burning gaps (both on June 26). But it seems that Bitfinex just burned the full amount after skipping one. Not sure why. Maybe @paoloardoino can clear up

6/ Knowing that the total burnt amount represents 27% of revenues from trading fees, we can deduce that Bitfinex generated nearly $10.4M in revenue from trading fees in the last 19 days. That’s, on average, $550k of revenue a day from trading fees. June 26 was the most active day

7/ But since we also know the figures for the reported trading volume on Bitfinex, we could get a better sense of how much of the trading volume Bitfinex captures as revenue (on average).

8/ As expected, the trend between volume and revenue is consistent — when volume increases, revenue increases as well and vice versa. But when looking at the ratio between revenue and volume, we can see that there has been a significant change in the last couple of weeks.

9/ Throughout the first four days of burns, Bitfinex captured more than 0.15% of the volume. But in the last two weeks, the ratio has dropped by 38% to an average of 0.1%.

10/ This could mean three things:

• Larger clients are trading on Bitfinex
• Bitfinex has not been burning enough LEO
• Bitfinex is over-reporting their volumes

11/ The likeliest reason (in my opinion) is that Bitfinex has been attracting larger clients. And larger clients could also be holding LEO, which gives them additional trading fees discounts.

12/ Bitfinex uses a tiered system for trading fees based on the monthly amount of executed orders, which means that the fees decrease as a participant’s monthly trading size increases.

13/ The increase of larger-volume clients would be consistent with the lack of retail throughout the recent price rally. Trading volume data suggests the catalyst on June 22 (when BTC first broke $10k) was a large trade/set of large trades on Bitfinex.

theblockcrypto.com/2019/06/25/wha…

14/ Therefore, the analysis of LEO burns could hint at whales playing a large role in the recent price rally.

According to @paoloardoino, the decrease in relative revenue to volume is caused mainly by the new discounts introduced for LEO holders as well as larger traders. And the LEO burning gaps were caused by Bitfinex's downtime when there was a planned upgrade