What is a Bonding Curve Offering?
INTRODUCTION
The crypto ecosystem has brought countless innovations and disruptions to antiquated business models. The decentralized nature of blockchain has allowed new market participants to compete against incumbents in previously unexplored ways.
This has been achieved through innovative funding methods that have only become possible through advances in blockchain and the cryptocurrency space. One of the more recent and significant advancements in the blockchain space has taken shape in the automated pricing methodology of Bonding Curves.
Bonding Curves Offerings, or BCOs, allow projects to efficiently, fairly, and reliably distribute tokens to project adopters, who fund and speculate on new business ventures in a transparent way.
WHAT IS AN BCO (Bonding Curve offering)
Bonding curves are built upon one of the most fundamental concepts in economics: price being a function of supply and demand. This tried and tested economic law is the complex study of a more familiar adage: an asset is only worth what someone is willing to pay for it.
Every seller needs a counterparty to buy, and every buyer needs to be matched with someone willing to sell. As more participants look to purchase an asset, sellers want to be compensated at a higher rate for this asset that now has a greater demand from the market.
The inverse is also true regarding selling an asset. As more assets become available for sale, there will be a price decrease that reflects the lower demand seen in the market. At any point in time, the price of an asset is a reflection of the equilibrium that has been reached between market participants, those willing to sell and those willing to buy the asset.
Traditionally, the process is overseen by a centralized entity; someone who oversees incoming buy and sell orders while matching market participants and ensuring liquidity.
Bonding Curves offer an innovative solution because they do not require the oversight of a centralized entity to create, oversee, and enforce the market’s pursuit of this equilibrium. Instead of relying on a third-party entity to create the market and mediate the transaction, Bonding Curves rely on a mathematical function packaged within a Smart Contract called an Automatic Market Maker.
THE OPTIONBLITZ BCO
The OptionBlitz Bonding Curve ensures that each newly minted token (which is sold to buyers in the market), is more expensive than the previous token. The price of each token is defined by the curve / formula itself, every market participant knows exactly how much each token will cost at any given time.
**where (P) is the price and (T) is the number of tokens released.
As tokens have the lowest price at the lowest part of the curve, there is a price advantage for early adopters.
Early buyers have a considerable upside potential when compared with later entrants to market, as prices are lowest when supply is low as well.
The most fundamental advantage of Bonding Curves over traditional asset pricing mechanisms is that the pricing of assets is transparent, defined, and immutable at all stages. The market is able to reach the equilibrium of consensus through clearly defined rules, without third-party intervention.
Additionally, this fundraising method addresses many of the inefficiencies that have led to fraud and misappropriation within the Initial Coin Offering (ICO) model. Starting offer prices are not set arbitrarily by the project’s founders. All tokens are accounted for at all times. The token’s distribution is automatic and configurable.
OptionBlitz is running a Presale for early investors with a fixed price of 0.1 USDC / 1 BLX for the first 1m USDC raised.
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