What Is a Bonding Curve in Crypto?
A bonding curve is a mathematical formula used in token economics to determine the relationship between price and supply in a predictable and automated way. It is widely used in DeFi, automated market makers (AMMs), and tokenized ecosystems.
๐น How It Works:
1๏ธโฃ When tokens are bought, the price increases.
2๏ธโฃ When tokens are sold, the price decreases.
3๏ธโฃ A smart contract manages this pricing model without intermediaries.
๐น Why It Matters:
โ Provides automatic liquidity in DeFi markets.
โ Encourages early adoption with lower initial prices.
โ Ensures fair and transparent pricing for tokens.
Understanding bonding curves is crucial for navigating crypto trading, DeFi, and tokenized economies!
