Ensuring liquidity is essential for the success of modern financial systems. To address this, innovative mechanisms like Undergirding Bonding Curves have been developed. These mechanisms adapt to market conditions, continuously build liquidity, reduce downside risk, and ensure a stable price floor, making financial instruments more attractive for long-term investment. This approach builds upon foundational research, including: - From Curved Bonding to Configuration Spaces by Michael Zargham, Jamsheed Shorish, and Krzysztof [Kris] Paruch, which generalizes bonding curves to formalize the relationship between enforced mechanisms and their associated configuration spaces. - Alpha Bonds: Risk-adjusted Bonding Curves for Financing Impact, a collaboration introducing dynamic bonding curves that integrate real-world risk signals into decentralized finance. - Exploring Bonding Curves: Differentiating Primary and Secondary Automated Market Makers, which compares applications of bonding curves in financial ecosystems, highlighting their role in dynamic supply and exchange mechanisms. These developments represent significant strides toward more sustainable and self-sovereign economic systems. #ComplexSystems #MarketDesign #SystemsThinking #EconomicResilience #Innovation
When it comes to exchanging and issuing tokens, liquidity is crucial for the success of cryptoeconomic systems – but how can we achieve high liquidity while maintaining self-sovereignty? To accomplish this, we introduce Undergirding Bonding Curves, a novel type of Supply-sovereign Automated Market Maker that helps to create more sustainable and self-sovereign cryptoeconomic systems. In our latest article published in ACM DLT, we delve into?the?technical details of?the undergirding bonding curve design. ? Supporting our claims, we provide a formal model and analysis based on?well-established market microstructure?research that?shows:?? 1?? How undergirding bonding curves adapt to market conditions and continuously build liquidity. 2?? How undergirding bonding curves reduce downside risk and ensure a stable token price floor, making the tokens attractive for long-term investment. 3?? How undergirding bonding curves offer a sustainable alternative to conventional market structures models. ? Read the full article:?https://lnkd.in/erpmZzSP Kudos to Alexander Poddey | Ali Sunyaev