📄Mint/Burn Overview
When tokens or NFTs are created using Mint Club, they come with an integrated price bonding curve and an automated liquidity pool backed by this curve. The token creator sets a specific price for each token supply level in advance.
Trading these bonding curve tokens/NFTs differs significantly from trading on AMM (Automated Market Maker) platforms like Uniswap:
Minting = Buying the Asset
Buying a bonding curve token involves the curve determining the base token amount to be paid, initiating a swap. The base tokens paid are stored in the bonding curve pool, and an equivalent amount of the bonding curve tokens is minted for the buyer.
❇️Minting (Buy)Burning = Selling the Asset
Selling a bonding curve token means the curve calculates the base tokens to be returned. These are given back to the seller, and the corresponding bonding curve tokens are burned.
🔥Burning (Sell)This mechanism ensures the total supply of the bonding curve asset adjusts with buying and selling activities, allowing the liquidity pool to function automatically based on market demand.
Bonding Curve Mechanism Benefits for Holders
Bonding tokens/NFTs holders on the Mint Club platform enjoy three key benefits stemming from the bonding curve mechanism:
Stabilized Liquidity Pool The bonding curve-based liquidity pool operates automatically through the contract, unlike manual liquidity providers in platforms like Uniswap. This setup prevents sudden withdrawals of liquidity, commonly seen in scenarios of rug-pulling, where token creators unexpectedly pull out, rendering the asset valueless.
Controlled Asset Minting The Mint Club contract exclusively manages the bonding curve pool, ensuring that neither asset creators nor core teams can access the minting function. This control mechanism restricts the creators from additional minting that might devalue the holders' assets.
Predictable Price Changes with Bonding Curve Model Unlike the order book or AMM-based models, the bonding curve method allows for more predictable price changes. This predictability stems from the set price-supply relationship established at the token's creation. With the bonding curve, anyone can accurately calculate the impact on prices when a specific amount of tokens is bought or sold, which is a level of foresight not typically available in the order book or AMM-based models.
For more information on the benefits for asset holders and traders on Mint Club, please refer to the following page.
😻Benefits for HoldersAbout Bonding Curve on Mint Club
The bonding curve is a key mathematical concept in digital asset issuance, where a token's price is determined by its supply through a set price-supply relationship. When these digital assets are bought or sold, a smart contract automatically calculates the required amount of base asset (payment tokens), minting new tokens for the buyer or burning the sold tokens and returning the base asset to the seller. This process ensures a dynamic yet predictable price adjustment in response to market activity.
Mint Club utilizes the Discrete Bonding Curve (DBC) model, marked by a step array that systematically increases prices along the curve. Price variation intervals within this model create distinct ranges where prices stay consistent across each step, denoted as BondStep[] { rangeTo, price}. This contrasts sharply with traditional liquidity pool-based protocols like Uniswap, where users swap tokens within liquidity pools managed by LPs (Liquidity Providers). Mint Club's approach, devoid of individual LPs, relies on an automated system that mints or burns tokens during trading, starkly different from the "Swap" mechanism in AMM systems. To understand more about Mint Club's Bonding Curve mechanism, refer to the linked article.
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