Bonding Curves Explained Simply

The Simple Explanation

A bonding curve is a math formula that sets the price of a token based on supply. More tokens sold = higher price. Tokens bought back = lower price.

No exchange needed. The curve itself is the market maker.

How It Works

Imagine a curve going up from left to right:

• X-axis: How many tokens exist
• Y-axis: Price per token

When supply is low (left side), price is low. As more people buy and supply increases (moving right), price goes up.

Why Use a Bonding Curve?

Instant liquidity. You can always buy or sell. The curve is always ready to trade.

Fair price discovery. Early supporters get lower prices. Later buyers pay more. No insiders getting unfair deals.

No market makers needed. Traditional markets need someone providing liquidity. The curve does it mathematically.

The Math (Simplified)

A common formula is:

price = supply²

If 100 tokens exist: price = 10,000 If 200 tokens exist: price = 40,000

The curve gets steeper as supply grows.

Buying on a Bonding Curve

You send money to the curve contract. It calculates how many tokens you get at the current price. Tokens are minted for you. Price moves up for the next buyer.

Selling on a Bonding Curve

You send tokens back to the curve. It calculates payment based on current price. Tokens are burned. Price moves down for the next buyer.

Risks to Understand

Early buyers have advantage. The math favors people who buy early and sell later. That's by design, but be aware.

Price can drop fast. If many people sell, price slides down the curve quickly.

Curve can be manipulated. Large buys or sells move the price. Whales have outsized impact.

On Spawned

When you launch a token, it starts on a bonding curve. Early supporters can buy in. As the project grows and price rises, the token eventually "graduates" to a regular exchange (Raydium). At that point, normal market dynamics take over.