Bonding curves, a new way to launch tokens and fund projects
TL;DR: A bonding curve is an always-on smart contract market maker, and the token price rises as people buy. Based on a 2019 call: it rewards early backers, can bring some price stability and funds a project all the time.
This is based on a call from 2019, here is the recording https://youtu.be/Y-QazkphlNA?si=NAQaHONIrTDgfNKt
What a bonding curve is
In crypto the usual ways to launch a token often end with prices you can't predict and a very wild market. Bonding curves are a different way to do it.
They give the whole thing more structure, and that can be good for the people who build the project and also for the people who buy in early.
You can think of a bonding curve as a smart contract that is a market maker for the token of your project, always on and fully automatic. The price of the token is not fixed.
It follows a formula that is set up front, and the price goes up the more tokens people buy. If someone sells tokens back, the price goes down again. And there is no time limit.
You're not stuck with one big sale event, the smart contract is always there and buys or sells tokens at the current price.
Why use one
So why look at bonding curves at all. Early birds get the worm, people who buy early get a better price, and that gives them a reason to back the project while it grows.
The slow price changes can also bring some stability and help avoid the sudden "pump and dumps" you sometimes see in crypto. And you get funding all the time, not just in one sale, so it fits projects that need support for a long time.
Bonding curves aren't just a clever technical trick. They solve a real economic problem, how you line up the interests of the people who build a project with the people who support it first.
Compared to ICOs and fixed prices
If you compare it to ICOs, those often use auctions where the price is hard to predict, and a bonding curve gives you a price from a formula. Normal fixed-price tokens don't have this price adjustment built in, and with a bonding curve the whole system reacts to demand.
So a bonding curve makes sense if you want a funding model that lasts a long time, if you want to reward the people who believed in your project early with better prices, and if you care more about some price stability than about gains that could explode but are also riskier.
