Try   HackMD

Augmented Bonding Curves (ABCs)

Experimental

Description

An augmented bonding curve (ABC) is a type of smart contract that can be used to fund the development and maintenance of public goods. It is a hybrid of a bonding curve and a crowdfunding campaign, in which users can buy tokens that represent a claim on the value of the public good being funded.

The price of the tokens is determined by an exponential formula that only takes into account the supply of tokens. While creating an algorithm that has price automatically go up with supply may sound like a pyramid scheme, the price only goes up if the demand (supply) for the token actually goes up. If users sell/burn their tokens, then the token's price will come back down just as fast.

In this way, ABCs can be thought of as single-sided markets. The bonding formula determines the price for any given transaction. It doesn't require a counterparty on the other side of the transaction. This property makes it possible to kickstart a small marketplace that might traditionally be illiquid market because it doesn't have enough demand.

Unlike a typical bonding curve system, where tokens can be burned at any point in time, an ABC introduces further mechanisms that lock and vest a share of tokens at the time the pool is created. This vesting period combats any harmful early speculation/arbitrage that would affect the stability of the token pool.

Examples

Further reading

Acknowledgements

  • Research and writing by Abbey Titcomb and Commons Stack
  • Griff Green described ABCs on the Greenpill Episode on coordination mechanisms as an innovation that is "going to win a Nobel Prize in economics one day"
  • ChatGPT: "Can you describe an Augmented Bonding Curve and give two examples of organizations that are using them to fund public goods?"
Last changed by 
 
Carl Cervone
0
398

Read more

A Call for More Programmable Retro-Funding for Digital Public Goods

Public goods are taking new forms in our increasingly digital society.

Jun 26, 2023
A Call for More Programmable Retrospective Funding for Digital Public Goods

Sure, here’s the complete revised essay.

Jun 26, 2023
Arbitrum Grants Powered by Impact Evaluations

This proposal presents a novel funding model for Arbitrum Grants that aims to create a scalable, plural, and transparent system for grant distribution that fosters innovation and rewards hard work. Key Points Size funding rounds based on the L2’s economic activity; hold larger grant rounds during periods of lower TVL and transaction activity Divide each round into 3-5 funding pools for different prioritized ecosystem growth areas Require projects to submit structured data that facilitates permissionless observation of their activity and impact Incentivize impact evaluators to review structured project data and submit a recommended percentage of funding for each project Shift the role of delegates from voting on projects to voting on impact evaluators’ scoring of all eligible projects Round Sizing Formula

May 31, 2023
We Need More Retrospective Funding on Crypto Rails

Introduction Public goods take new forms in our increasingly digital society. Open source software (OSS) is a leading example of a critical digital public good, underpinning everything from core internet protocols like HTTP to fun contests like Joke Races. Despite the significant societal value they generate, open source software projects often wrestle with a universal challenge: acquiring sustainable funding. This post lays out a thesis for why open source software is uniquely positioned to benefit from a new flavor of grantmaking: retrospective funding on crypto rails. "Retrospective funding" means rewarding projects for work that's already been done, while "crypto rails" means building on the unique advantages that blockchain-based grantmaking and coordination technology offer.

May 24, 2023
Read more from Carl Cervone
Published on HackMD