A bonding curve contract is a smart contract that defines a mathematical relationship between the price of a token and its supply. As more tokens are bought, the price increases according to a predetermined curve, and as tokens are sold back, the price decreases. This creates an automatic pricing mechanism for the tokens based on demand.When a user buys tokens, their purchase moves along the curve, raising the price for subsequent buyers. Conversely, when tokens are sold, the price drops, allowing sellers to receive back less than the purchase price if they bought in earlier. The model encourages early investment, as early buyers can profit as token prices rise. Additionally, bonding curves can provide liquidity by allowing users to buy or sell tokens at any time, without relying on external exchanges. This mechanism is often used in decentralized projects for fundraising or governance, enabling participants to engage with the token’s ecosystem and influence its development.