September 23rd is Finally here
If you are a LEO user, you have probably waited for that date to put your LEO to use. We can now stake LEO as sLEO on leodex.io and receive staking rewards from the fees generated on the bridge. Two weeks ago I looked into how much USDC we could expect. I calculated an APR of around 26%, but as expected the amount of LEO staked on the dex has already grown by 1M and sits now just at over 2M staked.
Here is the comparison from two weeks ago. Note that the ~1M additional LEO only comes from 21 new stakers. It seems that mostly LEO whales are making the move.
The positive trend imo is that the trading volume has been fairly high of late with $100k-300k daily volume seen often. This shows that the Dex is receiving more recognition in the crypto world. The fees generated are therefore quite high and also means a high APR for stakers.
The Caveat
Now there is a rather large caveat when it comes to staking LEO on the Dex. I haven't seen it mentioned anywhere and only discovered it when bridging LEO myself. Fortunately I only bridged 120 LEO in total. What I noticed was a huge fee for bridging LEO. There is no warning when bridging and we can only see a fee on 0.99% when bridging from ARB>HIVE. The fact that no fee is stated for bridging from HIVE>ARB is problematic since users (like me) might assume that there is none.
The LEO Docs mentions fees, but I doubt many would first check here. What we can see is that we can assume a 1-5% bridging fee. The good news is that the fee revenue is being burned. The bad news is that the fee is much higher than 5%.
Over the last 3 days I bridged 10, 100 and another 10 LEO to ARB. The bridging fee was 12-13% for all amounts! You can see it here:
My wallet holding 97.95 LEO
I bridged 10 LEO
And received 107.95 LEO.
The fee is then the difference of
97.95 + 10 = 107.95
and the actual received which was 106.65
1.3 of 10 is a staggering 13%.
Other users confirmed this amount and I am assuming here that it has been rather stable at this rate. If so (and even assuming a lower 5% fee), it means that bridging LEO is expensive. In fact, if we get an APR of around 26% (very rough number), it would take around half a year to get the value back that was lost due to bridging. When comparing this to other staking launches we could probably assume to see an APR of 50-100% for the first weeks and then a steep decline and stabilization to around 10-30%. If so, it might be only a few months until one recovers the loss. But still... it's a pretty big caveat, even a "deal breaker" when motivating users to move their LEO to the Dex.
Conclusion
I am pretty divided when it comes to LEO. On the one hand, we see amazing work by the team and an attempt to catapult the Dex to the forefront, but on the other hand the team has big problems when it comes to transparency. I have pointed this out when examining LEO delegation rewards which is less than half of what the team has claimed, and I have noticed it now here as well. If I were making the UI for the bridge I would slap a big warning on it so users would know that they are losing around 13% of their LEO! On the bright side, I guess APR for stakers could be rather high if this means that less users will bridge their LEO to receive staking rewards.
As a general reminder: Please keep in mind that none of this is official investment advice! Crypto trading entails a great deal of risk; never spend money that you can't afford to lose!
⛅🌦🌧🌦🌧🌨☁🌩🌦⛅🌧☁🌤🌥🌪🌧🌨🌩⛅🌦☁🌤🌥🌤⛅🌤⛅🌦⛅
Check out the Love The Clouds Community if you share the love for clouds!
⛅🌦🌧🌦🌧🌨☁🌩🌦⛅🌧☁🌤🌥🌪🌧🌨🌩⛅🌦☁🌤🌥🌤⛅🌤⛅🌦⛅