What is Bonding Curve?
Automated DeFi mechanism dynamically adjusting token prices based on supply, ensuring liquidity.
A bonding curve is an innovative decentralized finance (DeFi) mechanism used to automatically calculate token prices based on token supply. It’s represented mathematically as a curve on a graph, illustrating the relationship between token supply and price. As users buy tokens, the token price moves upward along the curve. Conversely, selling tokens moves the price downward along the curve.
Bonding curves enable automatic market making without requiring traditional liquidity pools, ensuring predictable pricing, transparent token valuation, and continuous liquidity.
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