I’ve recently joined Hive, and as someone who loves to explore shiny new things, I’ve been poking around the ecosystem to learn what it has to offer. One big part of Hive is InLeo (LeoFinance), a hub for financial content and tokenized interactions. While exploring it, I stumbled upon their newly launched token, $LSTR. Intrigued, I bought ~$4 worth of $LSTR; enough to remind myself to circle back and look closer at the token.
What is $LSTR for?
When I asked, I got a concise answer from @leostrategy: "Buy and HODL it for leveraged exposure to $LEO."
For those unfamiliar with the jargon, this means $LSTR is supposed to amplify the price movements of another token, in this case, $LEO. In theory, if $LEO’s price rises, $LSTR’s price should rise even more. But leverage and HODLing don’t typically mix. Leverage is a high-risk, short-term strategy meant to maximize gains (or losses), while HODLing is about weathering long-term volatility. Combining these feels like mixing oil and water.
Curious if there was more to it, I checked out the closest thing I could find to a white paper.
What the Blog Post Says
The post describes $LSTR as a fund that pools resources to buy and stake $LEO. Here’s the general idea:
Funds raised by selling $LSTR tokens are used to purchase $LEO, which is staked as LEO POWER.
Staking rewards are reinvested to buy more $LEO, compounding the fund’s value over time.
The post implies that as $LEO’s price rises, so will $LSTR’s price, because the fund’s holdings become more valuable. Speculative demand for $LSTR could amplify this effect.
Points of Concern
The blog post provides an overview, but there are some gaps and ambiguities that make it hard to fully grasp how $LSTR works in practice or how it delivers value to its holders. Here are the key areas I’m struggling to reconcile:
Is "Leverage" the Right Term?
In traditional finance, leverage involves borrowing or using derivatives to amplify returns. Here, there’s no indication of borrowing or other mechanisms typically associated with leverage. Instead, the fund’s strategy seems to rely on pooling resources and compounding staking rewards. If "leveraged exposure" is just a metaphor for increased exposure through pooling, it feels potentially misleading.
How Does LSTR’s Value Track LEO’s Price?
The post suggests that $LSTR’s price will rise as $LEO’s price rises, but there’s no explicit mechanism tying the two together. Without proportional backing (e.g., 1 $LSTR = a specific share of the fund’s $LEO holdings) or redemption rights, $LSTR’s price seems to depend entirely on speculative demand. This creates a disconnect between the fund’s performance and token holder value.
Who Benefits from Staking Rewards?
The fund reinvests all staking rewards into purchasing more $LEO, which grows the fund but doesn’t provide direct payouts to $LSTR holders. Unless the reinvestment creates proportional growth in $LSTR’s value (which isn’t clearly explained), holders are left waiting for speculative price increases without receiving tangible benefits.
What Is $LSTR’s Purpose?
As it stands, $LSTR seems more like a way to pool funds to buy and stake $LEO, supporting its price through consistent demand. This benefits the $LEO ecosystem as a whole, but it’s less clear what unique value $LSTR provides to individual token holders. If the goal is to support $LEO, that’s fine—but it’s not quite the same as being an investment vehicle.
Is $LSTR a LEO Buyback Tool?
Given how the mechanics are described, it seems that $LSTR functions as a buyback program for $LEO:
- Funds raised from $LSTR sales are used to acquire $LEO, creating upward pressure on its price.
- The fund locks up $LEO as LEO POWER, further reducing circulating supply and potentially boosting $LEO’s price over time.
If that’s the case, $LSTR’s value proposition might not be about delivering direct returns to holders but rather about supporting the $LEO ecosystem as a whole. That’s not inherently bad, but it’s different than what expectations are being set by LeoFinance's pitch.
Should You Buy $LSTR?
If you’re a $LEO supporter and see value in boosting its price and ecosystem, $LSTR might be a way to contribute. However, for those looking for personal returns, it’s worth considering:
- Holding $LSTR doesn’t currently offer direct payouts or intrinsic value beyond speculative price appreciation.
- If $LEO’s growth is your goal, buying and staking $LEO yourself might provide clearer and more direct benefits.
Final Thoughts
I’ll be honest: I haven’t sold my $LSTR, and I don’t intend to pass the bag to someone else. At the same time, I’m not certain I’ve fully understood $LSTR’s mechanics—and that highlights a bigger issue. The lack of clear communication and detailed documentation doesn’t just undermine $LSTR, but also casts doubt on the credibility of LeoFinance and Hive as serious platforms. For someone like me, who’s exploring Hive as a potential home for my Web presence, this raises concerns.
A platform driven by short-term profit motives, without regard for transparency or the long-term stability of its community, risks alienating those who might otherwise invest deeply in its growth—not just financially, but culturally and technologically. It reflects a strong bias toward capitalistic growth at any cost, which can inadvertently push away individuals who bring more than a desire to get rich quick.
If $LSTR is primarily about supporting $LEO’s ecosystem, that’s fine—but let’s communicate it clearly. Setting accurate expectations helps build trust and ensures that Hive’s projects attract contributors who are aligned with its long-term goals.
Does anyone else share similar concerns about how Hive's projects often prioritize short-term profits over building a sustainable, inclusive ecosystem? How can we ensure the community takes something as important as investing in the future seriously, both for Hive's long-term stability and to attract contributors who value more than quick gains?
