Bonding Curve
Also known as: Token Curve, Supply-Based Pricing, Algorithmic Price Model
A mathematical formula that defines token pricing based on supply, often used in DAOs, token sales, and DeFi markets.
A bonding curve is a pricing mechanism where the cost of a token is determined algorithmically based on its supply. As more tokens are purchased (increasing supply), the price rises along a predefined curve. Conversely, selling tokens reduces the supply and price. Bonding curves are used in token launches, DAO treasuries, and AMMs to create continuous liquidity and predictable token economics. Common curve shapes include linear, exponential, and sigmoid. Proper design of bonding curves aligns incentives, encourages early participation, and provides automated market making without order books.