LBI Tied To LEO

in LeoFinance2 months ago

LBI is completely tied to Leo.

This might seem like I am being Captain Obvious yet there are implications here that few consider. The reason for this is we are dealing in an area that few of us have embarked on before.

The majority of us deal in a currency and that is it. We get paid in it, make purchases, and invest it. Our lives are spent dealing with a single currency, whether it is the USD, YEN, or GBP. Naturally, there are exceptions to this like when on travels. Nevertheless, for the most part, we operate in one currency.

This is not the case for multi-national corporations. They deal in many different countries, in a number of currencies. Hence, there revenues and earnings are subject to currency fluctuations.

It is a situation that can cause massive problems on the quarterly earnings reports. Of course, this is more of an accounting issue since it is unlikely that the different currencies are converted to a single one. For example, a company that is doing business in Japan will have revenues in the Yen. However, they also have ongoing expenses such as salaries which are also paid in Yen. Yet, if it is an American company, when reporting, the Yen has to be converted to USD on the financial statements.

LBI is in a similar position. All reporting is in LEO. This is how the fund was established. At present, this means little since most holdings are in LEO with a smidgeon of Hive. However, if the price of Hive skyrocketed, it could create a situation where the value of that, in LEO, drops.

Of course, since the percentage is so small it is not noticeable. Nevertheless, a larger stake in that or some other non-Leo investments could radically alter the numbers. As we saw in @spinvest, a falling Hive price actually made the Bitcoin held worth more. If the reverse happens, the value of the token falls since that is priced in Hive.

Please keep in mind that the perspective could change if one looks at the pricing in a third currency. For example, if the price of Hive increases, the value of Bitcoin in Hive will decrease, pushing the value of the SPI token down (since it is priced in Hive). However, the token could actually increase when priced in USD or EURO under the same scenario if both tokens are going up against fiat.

Which brings up another point: what is the objective of the individual. If one is eventually going to convert to fiat, then it is a good thing to look at the pricing in terms of that. Yet, if one is going to keep it Hive based, for example selling some SPI to get other H-E tokens, then the abovementioned situation is an issue.

Of course, nobody can control this. Markets go up and down, often misaligned from each other. This is why arbitrage situations exist and people profit off them.

The point is this is something to consider with LBI. It will not be exempt from this. The only way to avoid it is to remain a single currency fund, i.e. LEO. However, since we already have Hive as just part of the daily process, we know this is not possible.

Is all of this an accounting game? Perhaps. It is vital nevertheless, to consider what the token is priced in and how we want to approach it. At times, there are going to be opportunities that look good, yet we have to ponder what the denomination is. If for example, we expect a 10x in LEO yet only a 5x in Bitcoin, than buying BTC with LEO is not a good deal even though the price is going to go up (in our estimation). Looking at the investment through the lens of fiat is not helpful since we are not using fiat for the purchase.

LBI is priced in Leo and that is something we have to keep in mind with every decision we make. This is a radical change in thinking for most of us. Therefore, each opportunity is best explored through this lens. It is something we have to discuss openly to remind ourselves that while a move looks good in terms of our fiat thinking, it might be the worst move as it pertains to LEO.

Article by @taskmaster4450le

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I hope you have noticed you got few SOL tokens from @sk1920 and me. Please refrain from selling them, for some time at least. Ideally, I'd love you forgot about them

I completely agree that LBI earnings are completely tied to LEO and I have confidence in all the new developments for LEO. The new microblogging and LeoFi will definitely make LEO more appealing. Either way, I am considering LBI and LEO as a long term investment so I don't mind the occasional dips in the market cycle.

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Long term is what LBI is all about. We are here to provide a wealth building opportunity over years, not months.

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Great post. This is why whenever I calculate something related to hive I always calculate it in terms of my local currency.
I have a database which tells how much I have invested ( in Rs) and how much it is currently worth.
At the end as you mentioned it is about which currency we convert it into.

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Captain Obvious strikes again lol. No you are right and sometimes what is good for one it has the opposite on the other. The good thing about LBI is it is a long term thing so over a period of time this should balance out. I would like to see LBI have more Hive as i feel that we need both. I am looking at delegating some more over the coming weeks as every little bit helps the overall cause.

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Good thoughts! I am still trying to wrap my head around all of it. Thankfully, at least in my case, I don't plan on moving any of my LBI around so I am pretty set. I know there are some people who may not have the luxury or they might want to see the funds moved into different areas. I have a lot of faith that smarter people than myself are handling all of that. Besides acquiring more, this is one of those set it and forget it things for me.

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if the price of hive increased that much you could pay dividends in Hive as well ( you could power down at the rate at which curation rewards come in )

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I believe LBi been tied to Leo is great things as it help LBI moves towards same trajectory. With lots of development going on at Leo, we can envisage the direction it's likely take, it'll most likely favour investors in the long run even though we might experience occasionally dips.

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It is probably the best thing to be tied to on Hive.

Leo is certainly going places.

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I believe LBI is an enhanced investment by LEO.

That is, if LEO is worth $ 100 in 5 years, LBI could be worth $ 500.

We remain loyal to LEO and we will all be happy in the future :)

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Yes that would be true.

Of course, that would be in dollars. But in hive, for example, it might not correlate.

Right now it isnt an issue just something to think about in the future.

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At the end of the day, it is how much money a world business made for an individual that owned a part of the company. They don't care about how much Yen or Ruble or other money types the company made or lost they just care about what the bottom dollar was.

"For example, if the price of Hive increases, the value of Bitcoin in Hive will decrease, pushing the value of the SPI token down (since it is priced in Hive). However, the token could actually increase when priced in USD or EURO under the same scenario if both tokens are going up against fiat."

Alot of people dont get this, thank you for pointing it out :)

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For me it's the best decision that LBI is tied on LEO. I believe and hope tgat LEO is gonna make some hughe steps in the future (near or long doesn't matter!).

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This shall be seen as 1 LBI=X LEO,where is X is at the moment a growing number and always greater as 1.03 as we have at the moment. With the diversification it will fluctuate, of course, but the pegged value of the powered up value can only grow.

This is for what we signed up when we bought the first LBI and till we hold them, which might be a lifetime and beyond.

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Fully agree that LBI is completely tied to Leo.
Leo has so much potential and so many projects in development that will increase its value.
In addition, the fact that LBI is only tied to Leo makes LBI a special project that differs from other projects that are tied to multiple tokens.
Great article
!BEER

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I'm happy that it is linked to Leo, it keeps thing simple and if Leo goes where I think it will then I will be a very happy investor in LBI. I'm just happy that behind it are people who take these kinds of questions and situations into account.

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So many people are short sighted when it comes to investing which is unfortunate. LBI is a long term play just like Miners are within a tribe here on Hive. You wont make bank in the first year but think about 3 years from now when your $0.70 per LEO is instead $70 per LEO. For some reason most people have a hard time thinking in this way and instead sell and buy on emotion only.

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Wow. Very insightful. I'm glad I'm reading this and will keep it in mind for future decision making, even though I merely planned to HODL for the time being.

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Hey @lbi-token, here is a little bit of BEER from @libertycrypto27 for you. Enjoy it!

Learn how to earn FREE BEER each day by staking your BEER.

and it's interesting that new leo projects will come out like projectblank for example that will have as a base what else, leo! This will boost LBI as well!

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LBI + LEO = Great combo!

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Not much of a concern for me as I plan to let it staked peacefully.
But I feel way more comfortable being tied to a currency tied itself to a growing community/platform with a great vision for the future than being tied with any FIAT.
In terms of opportunity, ROI in LEO definitely needs to be considered first.

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While the declining price of LEO continues, I think it's a good time to buy into LBI than what was obtainable two weeks ago. We hope things would change at the brink of ProjectBlank and LBI would bounce. Already, I've made 30% profit from my LBI investment so far.

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Hive pumps, leo drops and that opens an opportunity for me to buy up more Leo. Use that Leo to achieve my 1k LBI dream and stake more Leo.

I am glad that LBI tied to LEO :-)
Rehive.

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