How Bonding Curves Work
Streamlock uses an automated market maker (AMM) with a constant-product bonding curve to determine token prices.
What is a Bonding Curve?
A bonding curve is a mathematical formula that automatically sets the price of a token based on its supply. Instead of relying on order books or market makers, the price is determined algorithmically.
Key principle: As more tokens are bought, the price goes up. As tokens are sold, the price goes down.
The Constant Product Formula
Streamlock uses the x * y = k formula (also known as constant-product):
SOL_reserves × Token_reserves = constantThis means:
When you buy tokens, you add SOL to the pool and remove tokens
The constant (k) must stay the same
This automatically increases the price per token
Example
Imagine a pool starts with:
100 SOL
1,000,000 tokens
k = 100 × 1,000,000 = 100,000,000
You buy tokens with 10 SOL:
Pool now has 110 SOL
To maintain k: 110 × new_tokens = 100,000,000
New token amount: 909,091 tokens
You receive: 1,000,000 - 909,091 = 90,909 tokens
The price per token increased because the same constant (k) now applies to more SOL and fewer tokens.
Why This Matters for You
Predictable Pricing
No waiting for someone to fill your order
Price is determined instantly by the formula
Large buys/sells have more price impact (slippage)
Always Liquid
The pool always has both SOL and tokens
You can always buy or sell (within limits)
No need for counterparties
Price Discovery
The market naturally finds equilibrium
High demand → price rises
Low demand → price falls
Slippage
When you trade, the price changes during your transaction. This difference between expected and actual price is called slippage.
Small trades: Minimal slippage
Large trades: Significant slippage
Streamlock shows you expected slippage before you confirm any trade.
Throughput Caps
To prevent single actors from manipulating prices, Streamlock has epoch-based throughput caps:
Buying
2% of total token supply
Selling
Configurable per pool (e.g. % of initial SOL liquidity)
If you exceed the cap, your transaction will be split or require waiting for the next epoch.
How This Connects to Price Targets
The bonding curve determines the current market price. Your tokens unlock based on how this price compares to your target price.
Learn more in Target Price & Unlocks.
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