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Bonding Curve Explained

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Last updated 1 year ago

The Bonding Curve Mechanism

Prices for keys/votes follow a distinct bonding curve, which means prices increase when users buy more keys/votes and decrease when they sell them.

Tomo's bonding curve was designed to benefit early supporters. This mechanism allows users to anticipate pricing impact and ensures there is always sufficient liquidity within the platform, as users trade against smart contracts instead of traditional order books.

  • Bonding Curve's Function => f(price) = (supply^2)/43370.

  • Price refers to the current ETH rate at which user can purchase the next key/vote.

  • Supply refers to the outstanding amount of keys/votes that holders currently own.

  • Example calculation => for the supply of 209 keys/votes, price equals 1.0072 ETH.

Visualization - Tomo's Bonding Curve