From Curved Bonding to Configuration Spaces

Abstract

Bonding curves are continuous liquidity mechanisms which are used in market design for cryptographically- supported token economies. Bonding curves are an example of an enforceable mechanism through which participating agents influence this state. By designing such mechanisms, an engineer may establish the topological structure of a token economy without presupposing the utilities or associated actions of the agents within that economy. This is accomplished by introducing configuration spaces, which are proper subsets of the global state space representing all achievable states under the designed mechanisms. This paper generalizes the notion of a bonding curve to formalize the relationship between cryptographically enforced mechanisms and their associated configuration spaces, using invariant properties of conservation functions.