Bonding Curve Explained
A bonding curve is a mathematical model that defines the price relationship of a token based on its supply. It determines how the token's price increases as more tokens are bought (minting) and decreases when tokens are sold back (burning). This creates a transparent, algorithmic market maker where:
- Early buyers get lower prices.
- Later buyers pay progressively higher prices.
- Liquidity is programmatically managed.
BondCraft uses a linear bonding curve with the formula: