cOrg Token Bonding Curve Model
Continuous Securities Offering (CSO)
A Continuous Securities Offering (CSO) is a novel way for organizations to receive financing without releasing any equity or any governance rights. A CSO uses an organization's realized revenues (i.e. revenues for which a payment has been made) as a collateral to back fully digital securities that anyone can buy or sell to speculate on the organization's future revenues.
To create a Continuous Securities Offering, an organization would agree to build a collateral of value using a fixed percentage of its realized revenues during a pre-defined minimum period of time. This is done concretely by funneling the fixed percentage of revenues into a Decentralized Autonomous Trust (DAT). A DAT is a smart-contract that automatically issues and buys back Continuous Tokens (COTs) to meet market demand from investors using a token bonding curve contract with sponsored burning.
Core Concept: Bonding Curves
Unlike traditional fundraising methods like venture capital or ICOs (Initial Coin Offerings), cOrgs rely on bonding curves.
Key Features:
Dynamic Pricing: The price of the token is not fixed. It typically increases as more tokens are purchased (bought) and decreases as more tokens are sold (burned). This incentivizes early adopters who get tokens at a lower price.
Continuous Liquidity: Bonding curves create a continuous market for the organization's token. Anyone can buy or sell tokens at any time, promoting greater liquidity compared to traditional fundraising models.
Community-Driven Funding: Anyone can participate in the bonding curve, allowing the organization to raise funds from a global community rather than relying on a select group of
Mechanics
The model uses smart contracts with separate "Buy" and "Sell" functions. When users buy tokens, the contract calculates the average price based on the current supply and issues tokens at that price. Conversely, selling tokens follows a similar process, with the contract determining the selling price based on supply and returning reserve tokens.
Additionally token bonding curve model in Continuous Organizationsfeatures a limitless supply and deterministic price calculation. The bonding curve contract serves as the counterparty of the transaction, ensuring that it always holds enough in reserves to buy tokens back. This mechanism provides guaranteed and immediate liquidity to participants. The price of tokens fluctuates with the number of tokens minted, resulting in a continuous price that reflects market demand and supply dynamics.
Variations of the Model:
While the basic concept remains the same, there are different variations of the bonding curve model used by cOrgs:
Linear Bonding Curve: This is the simplest form, where the price increases linearly with each additional token purchased.
Revenue-Based Bonding Curve: has two Bonding Curves; one for Minting tokens, and one for Retiring/Burning/Liquidating tokens. Price of minting (Pโแตขโโ) is always larger than or equal to liquidation returns (Pแตฃโโแตขแตฃโ). The difference between the total deposit (from minting) and the collateral reserve (for liquidating) is the Revenue.
The cost to purchase the initial tokens can be represented mathematically as the integral between the Buy and Sell curves
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