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Onchain Economics
Tokenomics

Bonding Curve

A mathematical formula that determines token price based on supply, enabling automated price discovery.

In-Depth Explanation

Bonding curves set price as a function of circulating supply—buy tokens and price rises along the curve; sell and it falls. This enables permissionless token launches without needing initial liquidity. Different curve shapes (linear, exponential, sigmoid) create different price dynamics. Pump.fun popularized bonding curves for memecoin launches.

Related Terms

Automated Market Maker

AMM

A smart contract that provides liquidity and enables trading using a mathematical formula instead of an order book.

Liquidity

The ease with which an asset can be bought or sold without significantly affecting its price.

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Emissions

New tokens distributed by a protocol as incentives, typically to liquidity providers or users.

Liquidity Mining

Earning token rewards by providing liquidity to a DeFi protocol.

Token Buyback

When a protocol uses revenue to purchase its own token from the open market, reducing circulating supply.

Dividend

Direct distribution of protocol revenue to tokenholders, typically in ETH, stablecoins, or the protocol's native token.

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