Bonding Curve

A bonding curve is a mathematical contract that automatically dictates the price of a token based entirely on its current supply, without requiring an underlying liquidity pool or an opposing buyer/seller.

As more people buy the token, the supply is minted (or released) and the price algorithmically increases. As people sell, the tokens are destroyed (or locked) and the price decreases.

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Why Bonding Curves Replaced Presales

Historically, launching a meme coin required a developer to deposit thousands of dollars of their own SOL or ETH into an AMM like Raydium alongside the new token to create an initial liquidity pool (x*y=k). This required upfront capital and opened the door to Rug Pulls.

Platforms like Pump.fun revolutionized launches by using a bonding curve:

1. The token launches with zero initial liquidity required.
2. The smart contract acts as the sole counterparty. When you buy, you send SOL to the contract, and the contract gives you tokens based on the curve’s price formula.
3. Because the price is hardcoded to the supply, every single buy pushes the price predictably higher.
4. If a token reaches a specific market cap threshold (e.g., $69,000 on Pump.fun), the bonding curve is “completed.”
5. The contract takes all the SOL it collected from buyers and permanently deposits it into a traditional AMM (like Raydium) as locked liquidity.

This mechanism entirely eliminates the developer’s ability to pull liquidity before the AMM migration, shifting the risk from smart contract scams to pure PvP (Player vs Player) trading momentum.

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Related Terms

• How Pump.fun Works — The platform that popularized bonding curves for meme coins.
• Price Impact — Similar to AMMs, large buys on a bonding curve suffer from price impact.
• Honeypot & Rug Pulls — What the bonding curve was designed to prevent.