VI Bonding Curve

The Bonding Curve represents a distinctive mathematical model where the supply of Non-Fungible Tokens (NFTs) is directly correlated with their price through a one-to-one function relationship. This model is operationalized via a Bonding Curve contract, which facilitates the issuance of NFTs through predefined buy and sell functions.

To acquire NFTs under this system, purchasers are required to transfer a specified quantity of anchor tokens to the contract's buy function [11]. This function then calculates the prevailing average price of the NFTs in terms of the anchor tokens and dispenses an appropriate quantity of NFTs to the buyer. Additionally, the model allows for the redemption of anchor tokens at any given time by returning the NFTs to the contract. This flexibility ensures a dynamic and responsive relationship between the supply of NFTs and their market value, governed by the principles of the Bonding Curve.

In content copyright governance NFT distribution for niche audiences, addressing liquidity, stability, and NFT price growth is vital. Traditional NFT issuance methods, in small-audience contexts, often face liquidity issues and diminishing floor prices. The Bonding Curve model effectively resolves these challenges, providing a more stable issuance mechanism for long-tail NFT collections.

Considering the diverse market values of creators' works, a singular buy and sell function curve could lead to market inconsistencies. Allowing creators to initially mint a limited number of NFTs at a higher price, followed by a subsequent increase in price for all users, can maintain market balance. This approach tailors the issuance process to the unique value of each creator's work, ensuring market fairness and sustainability.

In the Bonding Curve model, within the same collection, the demand for anchor tokens increases as more NFTs are minted later on. This mechanism ensures the liquidity and price growth of NFTs. However, if the goal is not just to release a single collection but to create an infinite number of content works, the shortage of anchor tokens may become a problem. To address this issue, different collections can have different buy and sell function initial prices, taking into account the price of anchor tokens.

Suppose the buy and sell function for the required amount of anchor tokens for minting copyright governance NFTs for a content work is denoted as f(x). In that case, you can simply introduce a price p for anchor tokens at the time of the work's release, so that the buy and sell function for the required amount of anchor tokens becomes g(x) = f(x)/p.

In this case, different works will have different initial prices. If the protocol gains widespread acceptance and the price of anchor tokens continues to rise, this approach can ensure the market price of NFTs for new content works. It can also encourage users to redeem early-invested anchor tokens for older works as their prices follow the rise of anchor tokens, thereby diverting support to new works and maintaining the protocol's attractiveness. If the protocol is not well-received and the price of anchor tokens falls, this approach can attract new works by offering a higher quantity of anchor tokens, ensuring the protocol's appeal to new works.

When this whitepaper is released, a new NFT issuance standard called ERC404 emerges on the market. Based on the currently available information, this standard possesses the uniqueness of tokens under the ERC721 standard, as well as the divisibility of tokens under the ERC20 standard. It allows for enhanced transactional liquidity while retaining functionality and collectible value of tokens. These new issuance standards can all be utilized within this protocol. The protocol is entirely open in its selection of NFT issuance standards, catering to the diverse needs of different creators.

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