What is a Bonding Curve?

A bonding curve is a mathematical curve that defines the relationship between the price of a token and its supply within a specific market. The curve allows tokens to be minted or burned based on the demand, with the price dynamically adjusting as supply changes. In many cases, the price increases as more tokens are minted, incentivizing early investors and contributors to purchase tokens before the price increases. Bonding curves are often used in decentralized finance (DeFi) applications and token economies to manage token issuance, price discovery, and market dynamics in a controlled manner.