Supply adjustment

Burn (reduce supply)

Burning means removing tokens from circulation.

There are two ways to do:

• Manually send them to an unowned ETH address.
• More efficient: create a contract that is incapable of spending them.

It's possible that we burn the tokens by accident. Checksum is one method to prevent it.

Why do we burn?

• redemption (e.g., sel the Equity token and get ETH)
• drive the token price upward
• penalize bad acting

Minting (increase supply)

Minting means increase tokens from circulation.

Minting helps people raise fund easier. We don't need to pass banking system anymore.

Why do we mint?

• acquiring corresponding ownership share
• drive the token price downward
• reward user behavior

Minting can act as an incentive mechanism.

Bonding curves

A bonding curve is the price relationship between the token supply and corresponding asset used to purchase the tokens.

Linear bonding curve

Suppose that we have a token, TKN. The simplest bonding curve can be:

TKN = 1

It means 1 TKN equals 1 ETH.

Next, consider a simple linear bonding curve:

y = mx + b

If m = 1 and b = 0, that means the first TKN equals 1 ETH, the second equals 2 ETH, etc..