Bonding Curves

Bonding curves are mathematical functions that define the relationship between the price of a token and its supply. They are commonly used in token issuance and automated market making to ensure continuous liquidity.

As more tokens are bought, the price increases along the curve, and as they are sold, the price decreases. This mechanism provides a transparent and automated way to price assets without the need for an external oracle or order book.

Bonding curves are used in various applications, from decentralized fundraising to NFT fractionalization. They provide a predictable environment for market participants, though they can be subject to manipulation if the curve parameters are not well-designed.

They are a powerful tool in the development of tokenized economies.