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What is a bonding curve?
Pricing a token from how much of it has been sold, what happens when the curve completes, and why a reel launch opens a pool instead.
Supply sets the price
A bonding curve is a pricing rule tied to supply. The first tokens sell cheaply, and each sale moves the price up the curve; selling back moves it down. The curve's program holds the quote that buyers paid in and pays it out to sellers.
There is no order book and, at the start, no separate liquidity provider: the curve itself is the market. That is why many launchpads use one to open a token with nothing but a formula.
Steps and thresholds
Curves come in several shapes. Some rise smoothly; others sell the supply in tranches, each at a fixed higher price, which makes the steps easy to read. Many Solana launchpads run a curve only until it has raised a set amount of quote, then move the raised quote and the remaining tokens into an ordinary AMM pool. This hand-over is often called graduation or migration.
When the curve completes
Graduation changes the market under the token's holders:
- The pricing rule changes from the curve to the AMM's formula, and depth changes with it.
- The fees, locks and permissions of the new pool apply from then on, and they are set by whatever venue the token migrates to.
- On some venues, a Token-2022 transfer hook the token had during the curve is switched off at migration, so any rule it enforced ends there.
- A migration is a transaction someone has to send; until it lands, trading can pause.
None of this is wrong, but a buyer has to read two sets of terms: the curve's and the pool's.
How a reel launch opens instead
A reel launch skips the curve and opens its pools directly:
- The launch creates the token with a fixed supply and mints all of it into an escrow the program controls. The mint authority is then removed, and the token never had a freeze authority.
- Each pool is seeded from the escrow: the token, plus any quote the creator adds, plus a virtual quote that sets the opening price.
- The pools go live together at finalize, with the Hook Blocks the creator chose frozen into each one.
Virtual quote does what a curve's starting price does: it lets a pool open with only the token at a chosen price. It can never be withdrawn, and sells can only take real quote out, so the pool stays solvent. From the first trade, the token trades on the same constant-product pool, under the same frozen rules, with no graduation step later.
Side by side
| Bonding curve, then a pool | reel launch | |
|---|---|---|
| Opening price | Set by the curve's formula | Set by the virtual quote at seed |
| Market at the start | The curve's program | A constant-product pool |
| Rules over time | The curve's, then the new pool's | One set, frozen at PoolInit |
| Hand-over | Graduation transaction | None |
| Launch protections | Depends on the launchpad | Hook Blocks such as Anti-Snipe and Wallet Cap |
| Where tokens wait | In the curve | In the launch escrow until seeded; the rest returns to the creator |
A curve lets a market discover its price as it fills; a reel launch commits to an opening price up front and relies on its blocks to make the first minutes fair.
Related
- What is a token launchpad?
- Multi-pool launch: one token in up to 8 pools
- Launch-day blocks
- What is an AMM?
- Architecture: the launch escrow and
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