All terms
A formula that sets a token price directly from how much has been bought.
A bonding curve replaces a liquidity pool with a formula. The contract mints tokens on demand and the price is a function of supply sold so far, so each buy pushes the price up along the curve and each sell moves it back down. There is no counterparty and no order book.
Launchpads use this because it means a token can trade from the first second with no liquidity provided by anybody. It also means the earliest buyers necessarily pay the least, which is why who bought first, and how much, is the first thing to check.
When enough has been bought the curve is usually closed and the collected funds are moved into a normal liquidity pool, at which point the token trades like any other.
A pump.fun launch where the price rises smoothly with every purchase until the curve fills and the token migrates to a real pool.
That the rising price on a curve is demand. It is arithmetic: the formula raises the price as tokens are bought, so the buyer can be one person with several wallets. The curve produces a chart shape whether or not anybody wants the token.
Common questions
Why does the price rise as people buy?
Can I sell back into a bonding curve?
Where this comes up on the site
The guides that actually use this word, rather than a list of everything we have written.
Where to go next
More defi terms
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