Uniswap keeps marching own creating a new paradigm in the industry. The LEO token has taken advantage of this and at the moment of writing this it has 380k USD liquidity on Uniswap.
Obviously, the incentive works 😊. Also having a great project!
source
At the moment the total marketcap for LEO is around 1.16M. What does it mean when a token with a marketcap of 1.16M has a liquidity of almost 400k?
This is quite a unique situation, because even with listings on CEX (centralized exchanges) usually the liquidity is much less than this. LEO has achieved far bigger liquidity dept on a DEX, than any CEX can provide.
Even more interesting is that Uniswap doesn’t works with the classic order books as a method for price discovery. It works on the principle of pools and liquidity in them. What matters is how big the pools are.
Uniswap as the name suggest is a swap platform. There is no buy or sell orders. The price is discovered based on the liquidity provided in ETH value and the matched amount of tokens.
At the moment LEO has 771K pooled LEO tokens and 548 ETH.
LEO Price = 548/771000 = 0.00071 ETH (0.248$)
Each time when a trade/swap is made some of the ETH tokens from the pool are converted to LEO or the opposite, depending is it a buy or sell. Once a liquidity provider pool its tokens, the amount of tokens they have is fluctuating and not fixed, depending on the price, or the swaps made.
How much is needed for LEO to go up in value?
First the optimistic scenario. How much buy pressure is needed for LEO to go up?
We will be looking at 4 cases:
- LEO at 0.3$
- LEO at 0.5$
- LEO at 1$
- LEO at 2$
What is needed for these prices to be achieved?
Using the calculation provided in the Uniswap whitepaper:
LEO_pool = 771,000
ETH_pool = 548
Ivariant = 771,000*548 = 422,508,000
Example when a buy is made with 10 ETH:
ETH_pool = 548+10 = 558
LEO_pool = 422,508,000/558 = 757,183
Buyer receives LEO: 771,000 - 757,183 = 13,817
When we iterate this for the price targets we get this:
| LEO Price $ | ETH | LEO | $ |
|---|---|---|---|
| 0.3 | 55 | 70,323 | 19,195 |
| 0.5 | 231 | 228,628 | 80,619 |
| 1 | 555 | 387,947 | 193,695 |
| 2 | 1,010 | 499,814 | 352,490 |
The $$ values are for ETH at 349$.
To get LEO to 2$ we need around 1000 ETH buy at todays price of ETH 349$. For a 1$, only 555 ETH 😊.
From the calculation above what we can conclude is that with the current pool size that LEO has,now it is possible to buy a 200k LEO and only doubling the price. The price for this trade will be somewhere in the average or around 0.33$. This kind of trades were simple not possible before.
I doubt that any CEX will bring this kind of liquidity.
How much is needed to push the price down?
Now that we have seen the optimistic scenario, lets take a look how much dumping LEO can take? How much LEO needs to be sold to push the price down?
We will be looking at 4 cases:
- LEO at 0.2$
- LEO at 0.15$
- LEO at 01$
- LEO at 0.05$
| LEO Price $ | ETH | LEO | $ |
|---|---|---|---|
| 0.2 | 56 | 88,000 | 19,593 |
| 0.15 | 122 | 220,000 | 42,458 |
| 0.1 | 200 | 444,000 | 69,890 |
| 0.05 | 302 | 950,000 | 105,572 |
For LEO to go down to 0.2 a 88k LEO need to be sold for 56 ETH. To reach the 0.15$ a total of 220k LEO needs to be sold.
In the past LEO has shown that it has one of the strongest hands in crypto. 220k tokens sold at ones is most likely not going to happen soon.
What the calculation above shows is that with the liquidity pool that LEO has build on Uniswap, stakeholders can now have a bigger confidence in the token. Pushing the price down significantly with the current size of the pool is very hard.
More than 200k tokens are needed to push the price down from 0.248 to 0.15$. At the same time a buy pressure of that same amount will double the price. Remember the dollar values are with the current ETH prices. LEO is now pegged with the ETH price. If ETH goes up in value in dollar terms so will LEO.
If the size of the LEO liquidity pool remains stable in the future the price of the token can barley move down.
All the best
@dalz
Posted Using LeoFinance Beta
Thank you for making this so crystal clear. Together with the fact, that a real project with a real use-case is behind this token, it is easy to see the potential that we have here. There are so many Tokens around that have only the speculative approach. The audience that Leofinance is aiming for, should much more vulnerable to this kind of story than any other group of people around. If Version 2 of Leofinance is online I would suggest doing a marketing campaign in "traditional" finance media with Adds and banners. It might be worth to think about a crowdsourcing approach to finance that campaign, also to tie the community closer to the project. Interesting times ahead.
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Thanks!
I'm not an expert on marketing campaigns, but I strongly support BUILD and PROMOTE, than just BUILD.
I guess some analysis needs to be made on the cost benefits, when running a campaign.
very cool calculations, I guess its all about the staying power, the less people in the LP the better the fees return driving more people into the LP, the more the people in the LP the higher the price moves and demand for LEO to support the pairs
I'd love to see the effect of a second LP, like on Balancer, wow, that would really throw calculations out the window
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I have looked into Balancer and it looked a bit complicated at first.
Looks like there are more options with different ratio for a pair, than the 50/50 on Uni.
But its like for more advanced users :).
Anyway I would like to see LEO there as well, although Uni seems to be the main factor these days.
I agree, it is complex but what I look at is the arbitrage opportunities, so the more pools the more sophisticated traders jump into both pools adjusting allocations to get the most yield. As well as moving tokens between various ecosystems, reducing the supply available
Also exposes the pair to new investors and that means more ETH backing it, which isn't a bad thing :)
LEO to $1 here we come
Very interesting analysis on the different scenarios with this Uniswap Liquidity.
Thank you 🙏
You are welcome :)
Posted Using LeoFinance Beta
I hope it continues to have a capitalization as strong as it is now, I cannot afford to invest in uniswap but I continue to accumulate and activate here, we will see how the market advances in the coming months
Posted Using LeoFinance Beta
I guess powering down HP two weeks ago to buy more LEO was a good idea after all.
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1000 ETH sounds like a lot. But there are plenty of people, some of them hanging out on our discord, that have more than that personally.
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Its not a lot :)
Funny enough if we have a smaller liquidity pool we will be able to get there more easy.
But overall I think having deeper liquidity outweighs the cons :)
Posted Using LeoFinance Beta
Great information. I have started a power down of HIVE to buy more LEO before the price gets too high. I am a very simple-minded investor and don't have the where-with-all to make big investments.
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Seriously it is working.
I guess the mindset is more defined
in leo community.
Great job everyone, hang tight.
Posted Using LeoFinance Beta
This is pretty cool analysis man! And it shows how realistic it is for LEO to reach $2
Posted Using LeoFinance Beta
Thanks.... a few k eth and of we go :)