Bonding Curve

A token bonding curve (TBC) is a mathematical curve that defines a relationship between price and token supply.

In a typical TBC, the price increases as the supply of the token increases, and decreases as the supply decreases. As the Aavegotchi Bonding Curve was launched through an Aragon Decentralized Autonomous Initial Coin Offering (DAICO)

Mechanics

Minting / Burning on demand

Bonding Curves use a pricing algorithm to serve as an automated market maker and provide an always available source of liquidity. Users can interact with a bonding curve by staking tokens into the bonding curve’s reserve pool. When they do so, the bonding curve mints the corresponding tokens for the user based on the pricing algorithm. The newly minted tokens can have specific utility and even be traded among users, but can always be exchanged back through the bonding curve for tokens in the bonding curve’s reserve pool.

When a token is purchased via a TBC, each subsequent buyer will have to pay a slightly higher price for each token, generating a potential profit for the earliest investors. As more people find out about the project and the buying continues, the value of each token gradually increases along the bonding curve. Early investors who find promising projects early, buy the curve-bonded token, and then sell their token back can earn a profit in the future.

See more on Genesis

Augmented bonding curve

The Augmented Bonding Curve enables public goods-focused communities to have the same funding model as tech startups, but with a decentralized, open way for the public benefit.