Definition
A bonding curve token is a type of crypto asset whose price is set by a mathematical bonding curve that links token supply to token price. Instead of relying solely on order books or external markets, the token’s price is determined by an on-chain pricing function that automatically adjusts as tokens are minted or burned. The bonding curve defines how the marginal price changes as total supply increases or decreases, creating a deterministic relationship between supply and price.
In many decentralized finance contexts, bonding curve tokens are issued and redeemed against a reserve asset according to the bonding curve formula. This structure allows continuous pricing and liquidity, because the contract itself acts as the counterparty for buys and sells. The concept is closely related to bonding curve pricing and can be implemented in systems that resemble automated market makers (AMMs), but is specifically focused on the token whose value is governed by the curve.
Context and Usage
Bonding curve tokens are often used as a mechanism for token launch, where early and later buyers face different prices according to the predefined curve. The curve’s shape encodes assumptions about how price should evolve with adoption, such as linear, exponential, or other functional forms. Because the pricing is rule-based, participants can infer the token’s marginal price from its current supply without needing traditional order book data.
In relation to a general bonding curve concept, the bonding curve token is the specific asset whose issuance and redemption follow that curve. When implemented in a way similar to an AMM, the bonding curve token interacts with a reserve pool to maintain continuous liquidity. This makes the token’s pricing transparent and predictable within the limits of the chosen bonding curve function, while still remaining subject to broader market forces when traded off-curve.