Catalyst Bonding Curve
Last updated
Last updated
Catalyst uses a price curve that defines the relationship between the price and supply of a token. In Catalyst, this mechanism ensures dynamic pricing and transparent funding for projects. Here's an in-depth look at how this works.
The bonding curve establishes a direct relation between the token's supply and its price.
As more tokens are minted (supply increases), the price rises.
Conversely, when the contribution is withdrawn (supply decreases) during the funding period, the price per token falls.
At the start of a project, tokens are offered at a lower price.
This incentivizes early contributors by allowing them to purchase tokens cheaply, encouraging early support and funding.
The bonding curve adjusts token prices in real-time based on current supply and demand.
The unidirectional, functional pricing model allows users to contribute at a predictable price increase and also comes with a built-in slippage protection.
Early participants benefit from lower initial token prices.
As the project progresses and more tokens are minted, the price of the tokens increases, rewarding early backers.
Fair Pricing: Ensures that token prices are fair and reflective of actual demand.
Incentivizes Early Support: Rewards early backers with lower token prices.
Liquidity Provision: Maintains liquidity, allowing tokens to be bought and sold easily.
Predictable Funding: Provides a predictable and transparent funding mechanism for projects.
By leveraging a bonding curve, Catalyst creates a dynamic and fair environment for funding innovative projects. For further reading on the topic, you may explore additional resources, articles, or books that provide a deeper understanding and more comprehensive insights.
