Bonding curve tokens are, unlike ICO, not driven by the market, but priced by a smart contract.

They are based on the following two main properties :

  • Limitless supply : Tokens are minted as the demand progresses.

  • Deterministic price : Price is determined by the token smart contract and increases with the supply. Basically, the more holders there are the higher is the price. Conversely, when holders sell back the token to the contract, price decreases.

Here is my question : Can we compare this kind of token to a ponzi scheme ? Why ?

  • Bonding curve is driven by the market by definition. Unlike stock markets where a single conversion can spike a stock arbitrarily higher or lower than its current price, BC is purely automated by the current state of 'supply & demand'. Instead of having traders specifying the prices at which they are willing to convert, BC allows traders only to state their desired conversion amounts, and then determines the price accordingly. Sep 21 '20 at 10:11
  • You can't get more "market driven" than that! Sep 21 '20 at 10:16
  • As to your question about Ponzi - all the major events that you are currently seeing in the Ethereum ecosystem (liquidity-mining, farming, those free UNI tokens being airdropped on thousands of users and so on) - all of these are indeed outright Ponzi, like in big capital letters. They may have fancy names attached to them, but all of them rely on "free money" being printed, and whenever you see that, you can trust that it's gonna blow big. BTW, this has been true throughout the financial history of mankind, long before anyone had even thought of blockchain. Sep 21 '20 at 10:20
  • If you're planning to join in on this new gold-rush (by UniSwap, MooniSwap, SushiSwap, BullshitSwap, etc), just bare in mind that there will be very few lucky ones to come out with the upper hand here. Sep 21 '20 at 10:29
  • Thanks for the answer.
    – clement
    Sep 21 '20 at 15:14

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