Beradrome Bonding Curve

Beradrome’s token model is built on a novel bonding curve. The Beradrome Bonding Curve is a crucial component of the Beradrome ecosystem, responsible for maintaining the value of the BERO token and determining its market price through the Floor Reserves and the Market Reserves. The Beradrome Bonding Curve offers three significant features:

  • Single-sided liquidity provision: Allows liquidity provision for BERO without the risk of impermanent loss, leading to deeper liquidity pools and better price stability.

  • Emission of call options: Provides a sustainable emissions mechanism through oBERO call options.

  • Borrowing against hiBERO: Enables borrowing against hiBERO without risk of liquidation and no interest, creating a risk-free borrowing mechanism.

Floor Reserves

The Floor Reserves secure an unchanging price floor for the BERO token, ensuring that its valuation never descends beneath a predefined benchmark. This mechanism fosters stability and instills trust among participants in the system. The Floor Reserves permit the issuance of oBERO call options to gauges, which can be exercised by users to procure BERO tokens at the floor price.

oBERO (the token generated through farming) stands as a call option for BERO, featuring a strike price that equals the floor price (1 BGT/BERO) and displaying no expiration. Holders can activate oBERO by utilizing BGT to acquire BERO tokens from the floor reserves, potentially securing BERO at a price lower than the prevailing market rate. Moreover, users possess the ability to exchange BERO for the floor price (1 BGT/BERO), thereby establishing a guaranteed minimum valuation for all circulating BERO tokens.

Beradrome employs a constant-option bonding curve for the Floor Reserves. This bonding curve operates continuously, devoid of restrictions on the volume of reserves it can accommodate, thus facilitating an unlimited token supply.

Market Reserves

The Market Reserves dynamically adjust in response to market demand, effectively determining the market price of BERO without necessitating upfront capital. This curve operates to sustain the market price of BERO above or at par with the floor price, facilitating substantial liquidity and encouraging the process of price discovery.

Beradrome employs a virtual bonding curve to manage the Market Reserves, thus eliminating the requirement for upfront capital when configuring the floor price. This methodology not only engenders profound liquidity and minimal slippage for BERO from the outset but also eradicates the necessity for external liquidity incentives. Participants can conveniently purchase and sell BERO at the prevailing market price directly from the market reserves, unrestricted by time constraints. The virtual bonding curve establishes a price range spanning from the Floor Price to infinity (∞), anchoring to a finite supply of BERO tokens. The bonding curve originates with the complete BERO token supply and a designated amount of virtual BGT. The virtual BGT, essentially synthetic BGT, is utilized for accounting within the KY=K equation and is not obligated to back the BERO token. (Further details can be found in the "The Mathematics Behind The Virtual Assets" section.)

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