STKRP Bonding Curve 🥨

The StarkPlay Bonding Curve will be the initial mechanisms through which our community purchases STKRP. This document aims to provide an easy-to-understand explanation of this crucial aspect.

What is a Bonding Curve?

A bonding curve is a mathematical concept that describes the relationship between two or more assets. Bonding curves serve as the foundation for two types of Automated Market Makers (AMMs) we will discuss: Primary AMMs (PAMMs) and Secondary AMMs (SAMMs).

• PAMMs facilitate the issuance and redemption (i.e., minting and burning) of tokens in exchange for deposited assets (ex: Eth).

• SAMMs facilitate the exchange of tokens already in existence (think Uniswap AMM).

Both of these tools use an algorithmic invariant, called a bonding curve, to determine the appropriate pricing of their tokenized assets relative to each other.

Bonding Curve in StarkPlay

Our primary goal with the bonding curve is to create an environment that allows for reduced volatility and encourages natural price discovery. This is particularly important for our community to engage with the StarkPlay platform and play CafeCosmos before major speculation begins.

Primary AMM (PAMM)

We intend to launch a PAMM for our native token, STKRP, in the form of Eth/STKRP. A PAMM allows for a new token to launch with no prior market, ensuring reduced volatility in the early stages.

Secondary AMM (SAMM)

In the future, we plan to introduce a SAMM (like a Uniswap or Balancer pool). The transition to a SAMM will likely be a decision made by the DAO, and it will allow for greater market-driven pricing of the STKRP token.

Bonding Curve Features

Exit Tax

When someone redeems their token for capital from the bonding curve reserve, an exit tax is applied. This tax can be redirected as determined by the community or project developers, converting market volatility into a continuous funding source for community treasuries and serving as a counterbalance against "bank run" scenarios.

Tap Mechanism

A tap mechanism will be implemented to supply a small monthly dividend from the reserve pool. This will support the active development of the StarkPlay ecosystem.

Roadmap

The exact formula and design parameters of the bonding curve will be released by Q4 2023. Stay tuned for more details!

We hope this document provides a clear understanding of our bonding curve mechanism. We believe in the power of community and transparency, and we're excited for the journey ahead with StarkPlay!