Bonding Curve Explained

Bonding curve is the contract that governs the price dynamics of any ERC20 TOKEN via a dual bonding curve mechanism. There are two bonding curves that make up the tokenomics of $CVGX.

Bonding Curve 1) A fixed-price curve that y = c, where the CVGX price is invariant at 1 CVGX/ETH (the floor price).

- CVGXs are minted from floor reserves by exercising oCVGX call options equivalent to the ETH amount.

- CVGXs can be consistently redeemed from floor reserves at the floor price using oCVGX.

Bonding Curve 2) A variable-price curve that employs the xy=k formula for CVGX price discovery. An initial CVGX supply is created by using virtual assets.

- Virtual tokens are minted into market reserves, balanced by a corresponding quantity of virtual ETH. CVGX pricing on the market reserves spans a range of 1 ETH/CVGX (lower bound) to infinity ETH/CVGX (upper bound). The market reserve facilitates the buying and selling of CVGXs.

- The integration of these reserves forms the comprehensive bonding curve for the CVGX.

- The constructs of floor reserves and market reserves underpin this contract.

- Floor reserves are ETH pools allowing CVGX redemption at a static floor price.

- CVGXs are exclusively minted from floor reserves via exercising oCVGX call options using ETH. So the transaction would look like: 1 oCVGX + 1 wETH = 1 CVGX.

- Market reserves incorporate variable amounts of ETH and CVGX subjected to market-driven pricing derived from a virtual xy=k invariant. An initial CVGX supply is minted into the market reserves with an equal virtual ETH reserve amount. CVGX pricing in the market reserves varies from a minimum of 1 ETH/CVGX (floor price) to an upper limit of infinity ETH/CVGX.

- The contract is designed to interact with external contracts including: oCVGX, vCVGX, and a FEES contract.

- It is also equipped to levy protocol and UI hosting provider fees. CVGX's initial supply is minted to the bonding curve balanced by an equal amount of virtual ETH. On ConvergeX, the virtual ETH supply would be 500, therefore the $CVGX supply at the bonding curve would also be 500.