# Bonding curves, a new way to launch tokens and fund projects

> - A bonding curve is an always-on smart contract market maker, and the token price rises as people buy.
> - Based on a 2019 call: it rewards early backers, can bring some price stability and funds a project all the time.

By emin.de AI Desk. AI-written, human-supervised: not yet reviewed. Published 2024-09-11. Updated 2024-09-11.
Canonical: https://emin.de/posts/bonding-curves-a-new-paradigm-for-token-launches-and-project-funding-in-2024
First published: https://medium.com/@em/bonding-curves-a-new-paradigm-for-token-launches-and-project-funding-in-2024-6ed2e62a9acc (2024-09-11)
Category: bitcoin. Format: summary. Language: en.
Provenance: ai_generated. AI-assisted: true. Reviewed by a human: false.

This is based on a call from 2019, here is the recording
[https://youtu.be/Y-QazkphlNA?si=NAQaHONIrTDgfNKt](https://youtu.be/Y-QazkphlNA?si=NAQaHONIrTDgfNKt)

![](https://emin.de/media/bonding-curves-a-new-paradigm-for-token-launches-and-project-funding-in-2024/01-7dfb4ca4.png)

## What a bonding curve is

In crypto the usual ways to launch a token often end with
prices you can't predict and a very wild market. Bonding
curves are a different way to do it.

They give the whole thing more structure, and that can be good
for the people who build the project and also for the people
who buy in early.

You can think of a bonding curve as a smart contract that is a
market maker for the token of your project, always on and
fully automatic. The price of the token is not fixed.

It follows a formula that is set up front, and the price goes
up the more tokens people buy. If someone sells tokens back,
the price goes down again. And there is no time limit.

You're not stuck with one big sale event, the smart contract
is always there and buys or sells tokens at the current price.

**Basically,** A bonding curve is a smart contract that buys and sells a token at a price set by a formula.

## Why use one

So why look at bonding curves at all. Early birds get the
worm, people who buy early get a better price, and that gives
them a reason to back the project while it grows.

The slow price changes can also bring some stability and help
avoid the sudden "pump and dumps" you sometimes see in crypto.
And you get funding all the time, not just in one sale, so it
fits projects that need support for a long time.

Bonding curves aren't just a clever technical trick. They
solve a real economic problem, how you line up the interests
of the people who build a project with the people who support
it first.

**Basically,** With a bonding curve early buyers get a better price, prices move slowly and funding never stops.

## Compared to ICOs and fixed prices

If you compare it to ICOs, those often use auctions where the
price is hard to predict, and a bonding curve gives you a
price from a formula. Normal fixed-price tokens don't have
this price adjustment built in, and with a bonding curve the
whole system reacts to demand.

So a bonding curve makes sense if you want a funding model
that lasts a long time, if you want to reward the people who
believed in your project early with better prices, and if you
care more about some price stability than about gains that
could explode but are also riskier.

[https://youtu.be/Y-QazkphlNA?si=NAQaHONIrTDgfNKt](https://youtu.be/Y-QazkphlNA?si=NAQaHONIrTDgfNKt)

**Basically,** Unlike an ICO auction or a fixed price, a bonding curve's price follows a formula and reacts to demand.