Bonding Curve

Definition and Purpose

A bonding curve is a mathematical function that determines the price of tokens based on the current supply. On Mammoth, separate bonding curves are used for YES and NO tokens in each market, whether it's a cryptocurrency prediction or a world event outcome.

How it Affects Token Price

As more tokens are bought, the price increases along the curve. Conversely, as tokens are sold, the price decreases. This mechanism ensures that there's always liquidity and that prices reflect market sentiment, crucial for both crypto market predictions and world event outcomes.

YES and NO Token Curves

Each market has two separate but interconnected bonding curves:

• YES token curve: Price increases as more YES tokens are bought

• NO token curve: Price increases as more NO tokens are bought

The interplay between these curves helps maintain market equilibrium.

Application in Mammoth Markets

• In cryptocurrency markets: The curves reflect changing sentiment about a crypto asset's future price or market cap.

• In world event markets: The curves indicate shifting probabilities of different event outcomes.

Relationship to Market Liquidity

The bonding curve mechanism ensures continuous liquidity in all Mammoth markets, allowing users to trade at any time without needing to match with a counterparty.