> For the complete documentation index, see [llms.txt](https://bonding-curve-research-group.gitbook.io/bonding-curve-research-group-library/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://bonding-curve-research-group.gitbook.io/bonding-curve-research-group-library/case-studies/aavegotchi/pricing-algorithm.md).

# Pricing Algorithm

The pricing algorithm utilized the [Bancor Formula.](https://billyrennekamp.medium.com/converting-between-bancor-and-bonding-curve-price-formulas-9c11309062f5) In this system, the Reserve Token refers to the reserve asset that users deposit into the bonding curve, while the[ Continuous Token](https://github.com/galtproject/continuous-token) is the GHST token that users receive in return for their deposited reserve asset. The Reserve Ratio was a fixed ratio between 0 and 100%, representing the value in the reserve pool divided by the value of the token supply multiplied by the price. A higher reserve ratio results in lower price sensitivity, meaning that each buy and sell transaction will have a relatively softer effect on price movement. Conversely, a lower reserve ratio results in higher price sensitivity, causing each buy and sell transaction to have a relatively stronger impact on the token price movement. This mechanism ensures that the token price adjusts appropriately with every transaction to maintain equilibrium.