Bonding Curve
As mentioned before, the MetaSoccer universe will be based on a native token ($MSU), therefore the design of this token will directly affect the ecosystem growth and its reaction to external shocks. We believe that a successful Play-to-Earn metaverse must be sustainable, allow continuous adoption and capture long term value. To achieve this, it is really important to reduce or eliminate the potential impact of malicious actors that may target the ecosystem to make a personal profit by exploiting the true users.
After exploring the more “traditional” approach of a limited supply token, we found that it wasn’t the best solution to reach our goals, since the market will have full control of the MSU price. Big price jumps can be seen as desirable, but since all users entering the game will need to buy MSU we could easily reach a point where the token is too expensive or just unavailable for them, therefore limiting game adoption and long-term growth. The opposite is also dangerous since all game rewards are MSU-based: if the price drops, the value of the rewards will drop proportionally, potentially leading to a self-destructing loop where users want to exit the metaverse to look for more profitable games. In short, a fixed supply token isn’t suited to build a dynamic and sustainable metaverse.
However, dynamic supply tokens also have their own risks. Most of the time, the project owners can unilaterally mint new tokens, adding a source of uncertainty to the metaverse actors. Early investors can reasonably see risks of dilution, and users would worry that their potential rewards will have less value than they initially expected. In some extreme cases, disproportional token minting could even lead to the full destruction of the metaverse by flooding its economy and leading to “run-to-the-bank” situations.
To avoid the downsides of a fixed supply token and the uncertainty of project-controlled ones, we’ve decided to use a TBC (Token Bonding Curve). This state-of-the-art solution was made possible thanks to the evolution of SCs (Smart Contracts) and AMMs (Automated Market-Makers).
A Token Bonding Curve is essentially a SC that has control over the token supply, and continuously mints and burns tokens alongside a mathematical function “Price = F(Total Supply)” commonly known as “The Curve”. This SC consequently acts as an on-chain AMM that ensures liquidity for anyone willing to enter/exit the metaverse. Usually, the price increases when minting and decreases when burning.
The main advantage of TBCs is that they offer a dynamic token supply but in a predictable, controlled way that can be easily simulated and they provide a “reference price” for the token over time that follows demand. By using the formula behind the Curve, it’s possible to know the reference price for a given supply, therefore creating certain and healthy expectations for the whole ecosystem. This solves the uncertainty issue with the dynamic supply token discussed previously.
Furthermore, thanks to its AMM nature, the Curve will also stabilize the prize all over the network. Even if the community creates additional exchange solutions for the token like a DEX (Decentralized-Exchange) pool, sudden price fluctuations will lead to arbitrage opportunities between them and the Curve that can be exploited by anyone (probably bots will take care) therefore stabilizing the price no matter where the token is trading.
Another interesting advantage is that the MetaSoccer TBC is configured to react softly to big buys/sells, reducing the incentives for short-term speculators (“pump&dump” schemes) while ensuring new users will always be able to enter the ecosystem at a reasonable price. This supports continuous game adoption and hence the long-term growth of the ecosystem. While this can be seen as an “upside limitation”, it’s also a “safety” measure when demand shrinks. Not only the price will decrease along the Curve, limiting sudden price crashes, but also the burn feature will result in a greater decrease of the Market Cap thus making the project more attractive for new users.
To sum up, the TBC adapts the MSU supply to the metaverse demand expansions and contractions by minting and burning tokens respectively. By doing so on-chain, it also eliminates the uncertainty related to manually controlled dynamic supply tokens and allows users to have healthy price expectations for a given token demand. The TBC offers a solution to the problems discussed initially, and it also supports our goals of continuous adoption and long-term sustainability.
The MetaSoccer TBC will be available under Polygon network here. It’ll be the main source of $MSU liquidity and will serve as the reference price among all the DEXes and CEXes our token will be trading. Therefore, it’ll be the best place to Buy/Sell your $MSU, especially for big orders or if you’re concerned about potential bot exploits. By buying at the Curve you’ll be directly supporting the project and increasing the MSU liquidity at the same time.
Instead of directly funding the project with the public sale proceeds, those will be blocked as the initial liquidity for the TBC and only retrieved via a “tap” mechanism. This “tapering” allows the team to regularly take a fixed amount from the TBC reserve in order to pay the operational expenses of the project in a transparent way. The initial “tap” amount will be 30K DAI/month.
To mitigate front-running and similar attacks, the MetaSoccer TBC batches all the buy and sell orders received during a parametrizable period of time. All orders inside the same batch are matched and given a common price. Each batch will last approximately 10 seconds, and users will be able to claim their orders once it has ended. This measure also protects the TBC from all kinds of potential flash exploits.
Last modified 8mo ago