Bonding Curves
A bonding curve prices a token by how much supply has been bought: buying pushes price up along the curve, selling pushes it down.
Quick answer
A bonding curve is a pricing formula: the more supply that has been bought, the higher the price, and selling moves back down the curve. It lets a token trade before it has a traditional liquidity pool.
What it means
Instead of matching buyers and sellers, a bonding curve prices each buy and sell directly from a formula tied to supply sold. Early purchases sit low on the curve; as demand climbs the curve, each new buy costs more.
Why it matters
This is why the earliest buyers of a launch have a much lower cost basis than people who arrive after a pump. It also concentrates risk: if demand reverses, price slides back down the same curve.
What happens if you ignore this
If you don't understand the curve, a fast-rising price feels like proof the token is 'winning' — when it's just the formula charging later buyers more. Buy high on the curve and the same mechanism that lifted the price will drop it just as fast the moment buying slows.
Advanced explanation
Different launchpads use different curve shapes (linear, exponential, or constant-product style). The simulator here uses a clearly simplified educational curve to build intuition, not to reproduce any specific launchpad's exact formula. Once a funding threshold is met, the token typically migrates to a standard DEX pool and stops pricing from the curve.
Story
Marco watches a brand-new token's price tick up every few seconds and reads it as unstoppable momentum, so he buys near the top of the curve.
He expects the steady climb to keep going.
The climb was just the curve charging each new buyer more. When buying pauses, sells push the price right back down the same curve — and he's underwater almost immediately.
On a bonding curve, price rises because people are buying, not because the token is 'succeeding.' The earliest buyers pay the least; late buyers carry the most risk.
Beginner tips
- A rising curve price means more buying, not a guarantee the token will keep climbing.
- The earlier you are on a curve, the cheaper your cost basis — and the later, the riskier.
- Selling moves price back down the same curve, so exits can be sharp.
Common mistakes
- Assuming the curve guarantees the price keeps rising — selling moves back down it.
- Treating one launchpad's curve as if every curve is identical.