Over the last couple articles we dove into the idea of flywheels and how they apply to digital platforms.
In this article we will hone it in a little more to concentrate upon LEO. As we noted in other articles, a flywheel can actually contain smaller flywheels. This can get narrow in focus, with each one being a part of a larger flywheel.
This compounds the impact over time.
For Leo, we will focus upon LeoDex, which is a piece of the overall.
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With this, we will only cover a piece of what the DEX will offer Leo. To be specific, we will focus upon LEO as a vehicle currency.
The core of LeoDex is the LEO-CACAO liquidity pool. This is resident on Maya and requires an equal pairing of LEO along with CACAO.
As the pool grows, the size of the transactions can increase. LEO is the "gatekeeper" between the Hive ecosystem and the outside world. This is what all transactions from Hive will pass through.
That means whether swapping from HIVE, HBD, or a Hive-Engine token, LEO is going to be required. This is true whether going in or out of the ecosystem. The only question is where the LEO is moved from. Is it in this pool when going from outside to Hive or the LEO-SWAP.HIVE diesel pool on H-E?
Whatever the direction, LEO is at the core of the transaction.
This is one of the components to our flywheel. The fact that LEO is the vehicle currency, i.e. the bridge from Hive based coins or tokens to the outside world means that enough have to be available.
Here is where liquidity is each pool is needed. The deeper each one is, the larger the size of transactions that can be processed. For example, a million dollar transaction cannot occur from BTC to HIVE unless there is the available liquidity.
This is where we see another component. A deeper LP means LEO as a vehicle currency is enhanced. As larger transactions can be processed, fees increase, creating more permanent liquidity.
The movement of LEO between H-E and Arbitrum (where LEO is located for Maya) generates fees. Each time someone moves LEO, there is a .5% fee. This is a bridging fee that is used to fund the diesel pool.
It is easy to guess where this is going.
As more enters the diesel pool, that becomes deeper. This occurs with more transactions. Once arriving on Arbitrum, any transactions there, i.e. swapping of LEO to anything else incurs the fee on that end. This is used to deepen that pool.
Hence the bridge is another piece of the flywheel.
LEO holders obviously have an interest. The question is whether this will appeal to anyone else. Here is where more assets are the key.
We mentioned HIVE and HBD. This is a now issue with people on Hive. LeoDex can solve a major problem with those coins.
This opens up the door to more transactions as people on Hive look to enter or exit the base layer coins by swapping with other L1 coins.
Here is another feeder system into the flywheel. Now the ones who could use the service are outside Leo. Even if it only applies to those who are on InLeo, this is more utility for each user since they can also engage with their Hive coins.
Then we have Hive Engine. How would you like to take some of them and get some BTC or ETH. That is possible.
Now we have the potentiality of LeoDex being used for people to enter or exit those.
But wait there is more.
During the most recent AMA, we were told that, at some point, Splinterland tokens would also be added. This is another honeypot of activity that could flow through LeoDex.
Reverting back to the earlier points, this all flows through the bridge and uses LEO as the vehicle. That means it will be going through the pools, with fees along the way.
This is a simple example of how the flywheel operates on Leo.
As you can see, there is no single event that "reaches the stars". Instead, like all flywheels, the process starts and builds over time. The goal is to generate momentum, increasing each area along the way.
It is how digital platforms leverage aspects against itself. This can cause growth to operate at a pace that exceeds the non-digital world.
With Leo, it is one flywheel effect, but there are others.
