Bonding Curve Research Group
The Challenge:
Sustained bear markets have been a huge challenge for token valuations, with many DAOs and organizations seeing massive selloffs and price drops in the 90%+ range. When token price is a primary driver of the capacity to carry out work in a DAO ecosystem, volatile token prices are a hindrance to production in web3 organizations.
The Opportunity:
Using bonding curves as a continuous token issuance mechanism, organizations or communities can leverage algorithmic reserve and liquidity management strategies to provide volatility-damped token price fluctuations. The TEC ABC is a prime example of this, outperforming ETH through the bear market. This should be studied and exemplified in order to broaden education on these tools, and establish connections with orgs who need help designing and deploying them, which could also serve as revenue streams for further work and research.
Seizing the Opportunity:
This research group will provide 6+ educational media content pieces that communicate Token Engineering-grade bonding curve research in a digestible format to a diverse audience across web3. This research body and content deliverables will attract new talent and interest in the TEC, and it will additionally allow for a common understanding and language around bonding curves and their applications to DAOs, businesses, finance, and economics in general. This research could offer improvements for understanding the design and ongoing operation of these new economic mechanisms, benefiting the TEC directly through upgraded tools like dashboards and simulators, but also indirectly through networking and dealflow.
Bonding curves are an emergent, web3 native, economic primitive that redefine markets and liquidity. By determining price as proportional to supply, liquidity can be built into an economy, ending the era of market crunches, and enabling transparent and discoverable market prices for assets. Researching and promoting token economic primitives like bonding curves is an opportunity for the TEC to make a name for itself as a leader in cutting edge research with profound implications in the real world.
Overview of Bonding Curves:
Bonding curves are an interesting new tool in the web3 space, which can provide various automated dealer functions that tie 2 or more elements of a system together through mathematical relationships encoded into smart contracts. Also called automated market makers (AMMs), there are different types of bonding curves, including but not limited to constant product, constant function, concentrated liquidity, variable product, time weighted, and even order book-based bonding curves. Bonding curves have also been ‘augmented’ with the addition of common pool treasuries or even prediction markets, in order to improve the collective signaling capacity of these new tools for social and ecosystemic benefit. But this is just the beginning of their utility, and current tools have only taken the first steps to explore this design space. Bonding Curves are a gateway for engineered control systems to facilitate and improve the economic managemenx and value accrual systems of Web3.
Our mission is to drive forward the research, development, education, and application of Bonding Curves in their various forms.
The Purpose of this Research Group:
The goal of this proposal is to establish a foundation for continuous research, development, and education around bonding curves. Our aim is to establish a deeper understanding of bonding curves in general, and a more thorough analysis of their applications thus far, including the TEC Augmented Bonding Curve. We plan to create a content funnel about bonding curves that educates the wider public and motivates projects seeking bonding curve expertise to connect with our community. This, in turn, will fuel the growth and development of the bonding curve space while providing economic opportunities to those involved with developing bonding curves for projects.
Continuous Development and Research Methodology:
It is worth noting that research initiatives are fundamentally different from development processes, which is one reason we are proposing this as a research ‘marathon’ spanning three months of work, as opposed to more task-based ‘sprints’ commonly held on faster time cycles among development teams. Research is fundamentally an exploratory exercise, often without clear outcomes at the outset of the initiative. For that reason, we will set deliverables such as content production timelines and hours input into processes as they’ve been laid out, rather than trying to determine ahead of time the exact topics or outcomes produced by the end of this first research marathon.
Pending initial success in research and outputs, we foresee being able to continue this research group into future marathons on newly uncovered topics of further interest.
Planned Deliverables & Outcomes:
- We will create a series of digestible, shareable social media content on bonding curves, some of the topics including:
- Different types & structures (Constant Product, First Order, Second Order, Primary, Secondary, ARMMs, Stableswap, Curve)
- Bonding Curve use cases & benefits, how they solve problems
- Case Studies (Truebit, Aavegotchi DAO, TEC)
- The mathematics of different bonding curves
- Machination Simulations
- Python & cadCAD simulations of bonding curves, & benefits of simulation
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Provide deeper analysis of the TEC Augmented Bonding Curve, including suggestions for updated Dune Analytics dashboards and python integrations
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Aim to create a sustainable flywheel for further R&D on Bonding Curves through attracting deal flow and new grant opportunities for this research group and the TEC in general
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Structuring future research questions and further lines of inquiry to continue this research & education initiative.
Relevance to TEC mission, vision and values:
- The creation of digestible and relevant content on bonding curves, as well as developing a methodology for analyzing on chain data of the ABC aligns with the TEC’s mission to discover, develop and proliferate the best practices for engineering safe tokenized economies.
- Bonding Curves allow us to create markets where no prior liquidity existed, removing intermediaries and automating trust through code and math. It aligns with the TEC’s vision to enable the creation of ethical, safe, resilient and diverse economic systems to benefit societies around the world.
- By providing the Web3 community at large, with a deeper understanding of bonding curves, it will help to advance the ethical principles, standards, tools and methodologies that emerge as this nascent field advances.
Amount Requested & Use of Funds:
The original proposal was set for 34,000 DAI. We have split this proposal into 2 phases. The 1st phase will be submitted via Conviction Voting for 17,000 DAI and the 2nd Phase will be submitted via Tao Voting in 6-8 weeks time once that has been set up.
1st Phase: 17,000 DAI
2nd Phase: 17,000 DAI
Total: 34,000 DAI
Pro-Bono Factor: 37.5%
For further details, please refer to this LINK for the logic and reasoning behind our cost breakdown.
Timeline: (12 weeks)
Week 1:
- Establish research questions for this & subsequent research marathons.
- Establish classifications of various types of bonding curves, with case study examples and formalizations.
Week 2:
- Prioritize research questions and case studies for this research marathon.
- TEC Dune Analytics dashboard review & exploration of data integration with python.
Week 3:
- Begin live Bonding Curve case study research & data analysis.
- Update the TEC community forum with a post on the current state of work
Week 4:
- Suggest Dune dashboard updates & possible benefits of python integrations
- First round case study internal sharing & feedback
Week 5:
- Explore Machinations models, cadCAD simulations, or gamified UI visualizations that could better demonstrate the properties of bonding curves, and how community members can easily interact with them.
Week 6:
- Explore additional bonding curve operational modes & mechanisms
- Update the TEC community forum with a post on the current state of work
Week 7:
- Explore secondary market liquidity mechanisms to complement primary market issuance
- Explore emergency shutdown and safe liquidation procedures for bonding curves
- Social media content release
Week 8:
- Do the work
- Social media content release
Week 9:
- Do the work
- Update the TEC community forum with a post on the current state of work
- Social media content release
Week 10:
- Do the work
- Social media content release
Week 11:
- Do the work
- Social media content release
Week 12:
- Social media content release
- Update the TEC community forum with a post on the current state of work
- Open Q&A with the TEC community on marathon outcomes and results
What Success Looks Like:
- 6 social media content posts, digestible and thought provoking
- Posts have community traction, bringing in new leads and interest into the TEC
- Upgraded Dune analytics board for the TEC ABC
- Improved methodology for analyzing Bonding Curves on-chain data
- Other unanticipated positive externalities discovered through research
How We Will Share Progress:
- Transparent shared work processes (call notes, Miro board, call recordings as available)
- TEC forum announcements every third week, with links to posts & other work
- Scheduled interest group in the TEC Discord at the completion of the research marathon
- Deliverable outputs (videos, tweets, articles, etc) will be shared with the TEC community and beyond
Previous Forum Post:
To improve the readability of the proposal on Gardens we have created a new forum post for our Update Proposal on Bonding Curve Research Group. However the previous forum post with the adjacent advice process can be found here One Stop Shop Bonding Curve Course - #21 by curiousrabbit.eth
Collaborators in this @ygg_anderson @JeffEmmett @rex @JessicaZartler
