Onchain Atlas

Augmented Bonding Curve

A token-issuance formula that splits every purchase between a price-setting reserve and a separate community treasury, so buying tokens automatically funds the project.

Also called: ABC · continuous token model with reserve and funding pool

What it is

An augmented bonding curve is a variant of a standard bonding curve — a formula where a token's price rises as more of it is minted and falls as it's redeemed — with an extra twist: a portion of every purchase is diverted away from the price-backing reserve into a separate funding pool the community or project can spend. This "augments" a plain bonding curve so token sales double as an ongoing fundraising mechanism, not just a pricing mechanism.

How it works

  1. A smart contract defines a mathematical curve relating token supply to token price (commonly using a formula tied to a "reserve ratio").
  2. A buyer sends a reserve asset (e.g., a stablecoin or ETH) to the contract to mint new project tokens.
  3. Instead of routing 100% of that payment into the reserve backing the token's redemption price, the contract splits it: most goes into the reserve (backing the token's ability to be sold back later), and a slice — the "augmentation" — is routed into a separate funding pool.
  4. The funding pool is typically controlled by the project's treasury or DAO and can be spent on development, grants, or operations, independent of the bonding curve's price mechanics.
  5. As more tokens are bought, the price along the curve rises (since the reserve backing per token increases with typical curve shapes); as tokens are sold back (redeemed, burned), the reserve pays the seller out and the price falls.
  6. Because only part of each purchase backs the redemption price, the effective "sell-back" price is lower than a naive read of the curve might suggest — there's a built-in spread between buying and redeeming that funds the project.
  7. Some designs add a time delay or "hatch" period at launch, and use a different curve shape before and after a funding threshold is met, to prevent early speculators from front-running the community.
  8. The result is a continuous, permissionless fundraising instrument: instead of a one-time token sale, the project keeps raising (and its treasury keeps growing) as long as people keep buying tokens.

Why designers use it

  • Turns ordinary token buying and selling into an ongoing, automatic funding stream for a project's treasury, rather than requiring a single fundraising event.
  • Keeps a liquid, algorithmic market for the token at all times — anyone can buy or sell against the curve without needing a counterparty.
  • Aligns token holders' financial upside with project funding, since the same purchases that raise the price also fund the project's ability to deliver on its mission.
  • Offers more flexible fundraising than a fixed-price sale, since price naturally adjusts to demand.

Failure modes

  • Reflexive death spiral: if confidence drops and people start redeeming, the falling price and shrinking reserve can trigger further selling, especially if the reserve-to-supply ratio was thin to begin with.
  • Front-running the hatch: sophisticated actors can pile in right at launch to capture the steepest part of the price curve before slower or more cautious buyers arrive.
  • Treasury migration risk: funds diverted into a separately-controlled funding pool are only as safe and well-governed as whatever entity controls that pool — a compromised or poorly-governed treasury undermines the whole design.
  • Complexity and mispricing: the math behind reserve ratios and curve shapes is unintuitive to most participants, and misconfigured parameters (too low a reserve ratio, wrong curve shape) can make the token unexpectedly volatile or illiquid.
  • Regulatory ambiguity: a continuously-issued token whose price is set by an on-chain formula and that funds an active treasury can resemble a securities offering in some jurisdictions, more so than a simple fixed-supply token.

What to check before using it

  • Model the reserve ratio and curve shape against realistic buy/sell scenarios, including stress tests for mass redemption events.
  • Decide how the funding pool (the augmented portion) is governed and spent, and make that governance process as transparent and accountable as the curve itself.
  • Consider anti-front-running protections for the launch phase (e.g., a hatch period with price caps or personal contribution limits).
  • Clarify redemption mechanics for holders: can tokens always be sold back to the curve, or only during certain phases?
  • Get legal review on how continuous issuance tied to a funding pool might be classified in the jurisdictions your users are in.

Experiments that used it · 3

Shown oldest first, so you can watch the design evolve.

Commons Stack
A toolkit-and-culture project (Augmented Bonding Curve, Conviction Voting, Trusted Seed) for funding and governing 'commons' microeconomies, best known through its flagship instantiation, the Token Engineering Commons.
2019 partial success
Aragon Fundraising (ABC)
Aragon Black's DAICO-style continuous-fundraising suite for Aragon DAOs — a batched Bancor bonding curve plus a governable 'tap' — that was deprecated as a product but powered Aavegotchi's $30M+ GHST token sale for 2.5 years.
2019 technically successful commercially unsuccessful
Token Engineering Commons
A community-launched 'commons economy' for funding token-engineering public goods, run on an augmented bonding curve and conviction voting from 2021 until its deliberate sunset in December 2025.
2021 partial success