3 years is a long time in the crypto market and that’s approximately the time left for the Bonding Curve model before it goes out of fashion. With newer and innovative launch mechanisms set to take over, the Bonding Curve model seems to be nearing its end.
The Bonding Curve Journey
It all began with friend.tech, a model that demonstrated how tokens were just mathematical constructs where buying and selling are two key pillars controlling liquidity. It was a pioneer in introducing the concept of splitting based on key opinion leaders (KOLs). While innovative, the concept included scalability issues because of a cap on key distribution. This was one of the biggest challenges encountered by the bonding curve model.
Roadblocks Faced By The Bonding Curve Model
The aforementioned cap on key distribution leading to scalability challenge is one of the major challenges faced by the bonding curve model. The population cap leads to a stagnation in growth, which makes it impossible for the bonding curve model to maintain the upward price momentum.
The Emergence of Pump.fun
As friend.tech encountered the liquidity challenge, Pump.fun emerged to tackle the challenge by providing a pathway for liquidity from project inception through low-liquidity AMM markets to centralized exchanges.
Pump.fun and its forks continued to build on the innovation, aiming to eliminate the liquidity probel. But the bottom line is all these models use the bonding curve model, leading to the following challenges:
Poor Transition Success to DEXs: Only a small fraction (around 1%) of tokens launched on bonding curves manage to successfully integrate into decentralized exchanges. This often leads to significant user losses, amplified by the dominance of bot activity during trading.
Early Dumping Creates High Sell Pressure: Late investors often incur losses as early participants cash out, creating sharp selling pressure that destabilizes the token’s market cap.
Lack of Sustainable Incentives: Bonding curve models often fail to reward participants who actively contribute to price stability, leading to reduced community engagement and weaker price support mechanisms.
Honeypot Finance As An Alternative To Bonding Curve
Since the launch of the FTO (fair token offering) model in January 2024, Honeypot Finance has been positioned as Berachain’s PoL accelerator. It is this FTO model, that was tweaked to unveil the new meme launch model called pot2pump. Pot2pump is aimed at solving the bonding curve problems. Just like pot2pump, there are a few other protocols, including daos.fun, that takes the fair launch path followed by the addition to the DEX to tackle the liquidity challenge.
With models like pot2pump pioneering a meme launch environment with ample liquidity, pots seem to be in total control.
Key Reasons Pots Seem To Be In Control
Out of all the models seeking to solve bonding curve’s problems, pots seem to be having an edge. Here’s why:
- Innovative Incentive Framework: Pot2Pump enables the pots to allocate up to $4 million in rewards to their community, creating a robust incentivization structure for participants.
- Risk-Free Participation: If the launch fails to reach a threshold of $20,000, users can refund their contributions anytime, ensuring zero financial loss.
- Maximized Liquidity Opportunities: With 100% deep liquidity established in the pool and proof of liquidity, users can earn yields across multiple avenues by becoming liquidity providers (LPs).
- Pioneering Liquidity Management: In a first, liquidity is integrated into a concentrated liquidity pool, utilizing an advanced strategy for auto-liquidity management (an upcoming feature).
But how does pot2pump enables 100% liquidity? It does so by fairly establishing a 100% deep liquidity pool in HenloDex right after launch, making the participants liquidity providers naturally.
Also, the Pot2Pump model introduces an innovative approach by adding liquidity to concentrated liquidity pools and leveraging a vault-powered advanced on-chain strategy for automated price range management. This strategy not only holds the potential to generate over 500% returns in the long term but also offers an opportunity to earn BGT emissions, creating a sustainable and rewarding ecosystem for participants.
Making RWA Great Again
It is not very often that a memecoin launch model is associated with RWAs. But with increasing chatter about pot2pump being the goto launch mechanism for memes, a new perspective emerges – a good memecoin on Pot2Pump is the RWA of those real trend PFP and Pop culture, as it could be used for mapping the real world IP and generating long-term yields on-chain.
What’s fueling this perspective? So far, only big institutions like Sony and Disney own their IP, receive IP protection, and have the opportunity to unlock long term yield by owning this IP.
But with GenZ creators having the opportunity to produce and pump far more interesting “IP” and spread them out for free through platforms like TikTok, finding a way to monetize these IPs could be a game-changer.
How Can Pot2Pump Transform Memes Into Powerful RWAs?
The answer to this lies in the utilities of the pot2pump model as a meme launch environment. It can do so by:
- Heavily incentivizing someone who discovered the ticker
- Fair distribution of LP tokens and a full refund policy: During the Pot Phase, users receive LP tokens fairly, and a 100% deep liquidity pool is established when the market cap reaches $20k, marking a successful launch. If the $20k threshold isn’t met, users receive a full refund with zero losses. This approach ensures that liquidity is consistently directed towards strong token deployers, avoiding weak projects, and enables a faster and more efficient distribution of liquidity.
- Maximizing Returns with Dex Integration: Users receive LP positions that are seamlessly added into the concentrated liquidity pools. Through an advanced strategy to manage the price range, this setup optimizes transaction fee generation and unlocks opportunities for earning additional protocol yields. Furthermore, users also stand to benefit from the potential to earn BGT (Berachain’s governance token) emissions, enhancing overall profitability.
The third point is where the real deal is. The pot2pump model transforms early participants into liquidity providers, helping them generate a long-term yield. With each and every participant sharing the IP and unlocking long term yields, pot2pump becomes a natural mechanism for transforming memes into RWAs.
Gerd Altmann from Pixabay
