Metale Tutorial #9: Bonding Curve

This guide is one of the three most important because it delves into the first available NFT economic model on the Metale platform: Bonding Curve. It covers two major paths: for creator and for merchant. This way, every Metale stakeholder can understand how simple it is to manage their content NFT collection on the platform and share the revenue from its trading.

Bonding Curve: Basics

The Bonding Curve represents a distinctive mathematical model where the supply of NFTs is directly correlated with their price through a one-to-one function relationship. This model is operationalized via a Bonding Curve smart contract, which facilitates the issuance of NFTs through predefined buy (mint) and sell functions.

To acquire NFTs under this system, purchasers are required to transfer a specified quantity of Metale's utility token $RCM to the contract’s buy function. This function then calculates the prevailing average price of the NFTs in terms of $RCM token and dispenses an appropriate quantity of NFTs to the buyer. Additionally, the model allows for the redemption of $RCM token at any given time by returning the NFTs to the contract. This flexibility ensures a dynamic and responsive relationship between the supply of NFTs and their market value, governed by the principles of the Bonding Curve.

In the Bonding Curve model, within the same collection, the demand for $RCM token increases as more NFTs are minted later on. This mechanism ensures the liquidity and price growth of NFTs. However, if the goal is not just to release a single collection but to create an infinite number of content works, the shortage of $RCM token may become a problem. To address this issue, different collections can have different buy and sell function initial prices, taking into account the price of $RCM token.

Suppose the buy and sell function for the required amount of $RCM token for minting copyright governance NFTs for a content work is denoted as f(x). In that case, you can simply introduce a price p for $RCM token at the time of the work’s release, so that the buy and sell function for the required amount of $RCM token becomes g(x) = f(x)/p.

In this case, different works will have different initial prices. If the Metale platform gains widespread acceptance and the price of $RCM token continues to rise, this approach can ensure the market price of NFTs for new content works. It can also encourage users to redeem early-invested $RCM token for older works as their prices follow the rise of $RCM token, thereby diverting support to new works and maintaining the platform's attractiveness. If the platform is not well-received and the price of $RCM token falls, this approach can attract new works by offering a higher quantity of $RCM token, ensuring the platform's appeal to new works.

📜 Read more about Bonding Curve in Metale Protocol Whitepaper.

Bonding Curve: Creator

Now, let's make things simple for creators of all types of content on Metale platform. Below is a step-by-step guide from issuing a content NFT collection to sharing the first revenue by trading your NFTs (interacting with the smart contract of your NFT collection). Note the hyperlinks that redirect to other basic tutorials.

1. Connect Wallet on Metale platform:

2. Check the pop-up profile dashboard on the top right (there are no tokens/points if the account is new):

3. Make sure you have a small amount of $BNB to cover the on-chain transactions gas fee. When creator publishes the content on-chain or does other interactions on the blockchain, paying the gas fee is a mandatory step. However, since Metale platform supports opBNB as of June 22, the gas fee per transaction is ultra-low and reaches 0.000002 $BNB ($0.001). There are different ways to get $BNB on opBNB chain:

A. Simply use the direct BNB/opBNB cross-chain bridge on Metale platform.

B. Send $BNB using opBNB chain from external platforms such as Binance.

C. Use official opBNB bridge.

4. Now you can operate and release your content NFT collection by clicking on CREATE:

5. After you read Metale Tutorial #3: Create Overview and submit your work & upload your content, select the total amount of NFT supply of your content collection and submit application:

Important note: the total supply of NFTs may decrease if the creator destroys unsold NFTs, but it cannot increase. The creator can increase the copyright ownership ratio of each NFT through this mechanism but cannot decrease it. The community and users can also achieve this by repurchasing and destroying NFTs.

6. After signing the on-chain transaction, your content NFT collection will be issued on the Metale platform. However, you need to activate your collection by minting the FIRST FREE NFT. This will enable other merchants to see your NFT collection in the global search and mint/sell NFTs. Without the first free mint by the creator, the collection will be view-only and locked. Click on Mint:

7. Click on "Buy 1 videobox":

Important note: the first NFT minted by the creator is FREE, but the creator still needs to confirm the on-chain transaction, which requires a small gas fee in $BNB.

8. Now, with 1 NFT minted in your collection, it is unlocked, allowing other merchants and your fans to mint and sell NFTs from your collection freely:

On the screenshot, you can see that the next mint price is 0.07 $RCM. Please read the Bonding Curve: Merchant section below to understand the trading mechanics.

9. Check your content NFT collection on your profile to manage it and learn about the NFT collection page features:

Bonding Curve: Merchant

Now, let's make things even simpler for merchants who want to invest in copyrights by acquiring NFTs of content collections or just own their favorite content as NFT for a pleasant benefit in the form of revenue sharing. Below is a step-by-step guide for trading NFTs of content collections in the Bonding Curve economic model with detailed example. Note the hyperlinks that redirect to other basic tutorials.

1. Connect Wallet on Metale platform (there are no tokens/points if the account is new):

2. Check the pop-up profile dashboard on the top right:

3. Make sure you have a small amount of $BNB to cover the on-chain transactions gas fee. When merchant trades NFTs on-chain or does other interactions on the blockchain, paying the gas fee is a mandatory step. However, since Metale platform supports opBNB as of June 22, the gas fee per transaction is ultra-low and reaches 0.000002 $BNB ($0.001). There are different ways to get $BNB on opBNB chain:

A. Simply use the direct BNB/opBNB cross-chain bridge on Metale platform.

B. Send $BNB using opBNB chain from external platforms such as Binance.

C. Use official opBNB bridge.

4. To trade NFTs in the Bonding Curve economic model, you will need $RCM. Here are the ways to obtain it:

A. If you already have $RCM on BNB Chain: Simply use the direct BNB/opBNB cross-chain bridge on Metale platform.

B. If you don't have $RCM at all: Get $RCM on other DEX/external wallet platforms by using the following official contracts:

$RCM on BNB Chain: 0x7102f5bb8cb3c6e7d085626e7a1347aafdf001f6
🌟 $RCM on opBNB Chain (now main on Metale platform): 0xaFC1C35ae28d6A20E837a7bBbFF2807095281fcf

The simplest way to obtain $RCM is to connect your wallet, which you use on Metale platform, to Pancake Swap and paste the $RCM contract address there. Once you purchase $RCM on Pancake Swap, it will be displayed in your Metale profile dashboard, ready to operate:

5. You are all set to go. Let's use the same "The Dark Dragon" short drama NFT collection which we used in the Bonding Curve: Creator section above. Assume that you are the first user who wants to buy NFT of this short drama after the creator's free NFT mint. The second NFT mint has the price 0.07 $RCM, so we firstly mint this second NFT:

Important note: everyone can freely trade all available content NFT collections in Bonding Curve standard on TRADE page (Metale Tutorial #5: Trade Overview) and search for all available works on EXPLORE page (Metale Tutorial #6: Explore Overview).

6. After you purchase the second NFT, you can see:

A. Now 2/5000 for minted NFTs with 1 FREE NFT minted by creator to activate this collection and 1 NFT minted by your just now.

B. The third NFT mint price is already 0.28 $RCM.

C. You own 1 NFT (videobox) and can sell it for 0.06 $RCM. Please note that a 10% fee was deducted when you purchased the second NFT. For detailed information on fees and revenue sharing, please refer to the end of this article.

D. Total value locked and Total value have been updated in the Information section. For more details about these metrics, read Metale Tutorial #4: Collection Page.

7. Let's repeat this step again and buy the third NFT for 0.28 $RCM:

8. Now, you own 2 NFT, and the price for 4th NFT is already 0.62 $RCM:

9. Let's purchase 10 more NFTs to check the price for the next batch. If you wish to buy the next 10 NFTs, the increasing price of each from the 4th to the 13th NFT will be added to the total and presented to you. We buy these 10 NFTs for 44.34 $RCM:

10. We now have 12 NFTs, let's buy the last 10 to check the price for this batch. The price to mint 10 NFTs together from the 14th to the 23th NFT is already 216.22 $RCM:

11. After all the purchases above, from your point of view, the NFT collection page will display the following information:

23 minted NFTs: 1 FREE from creator, 22 minted by you.
The price to mint the 24th NFT is 36.37 $RCM.
The value of your 23 NFTs is 237.19 $RCM if you sell it now.

12. Let's now sell all 22 NFT we bought above. The sell price for the batch from the 23th to the 2d NFTs with the decreasing price behaviour per NFT is 237.19 $RCM:

13. As we sold all NFTs with $RCM value, the content NFT page will now have the following information:

1 minted NFT: only the FREE NFT from creator is left which can't be sold for 0 $RCM physically, but creator can sell it anytime if it's not the only one minted NFT in the collection.
The price to mint the 2d NFT is again 0.07 $RCM.
We have 0 NFTs (videoboxes).
Total value locked is 0 $RCM since the liquidity pool of this NFT collection is empty (only 1 FREE NFT is left) and the Total value is 498.09 $RCM after all trading activity.

14. In the Activity section, you can clearly track the history of purchases and final sale, as well as the creator's first FREE NFT MINT. Since all content NFT collections are on the blockchain, they will be stored there forever. You can explore and check out the test NFT collection yourself for educational purposes, which has been used above, here. However, please do not use it as speculation ([Disclaimer]: NFA, DYOR).

After all the buys and sales in the Bonding Curve: Merchant section above, the creator who published this collection for free has already earned 14.23 $RCM (which is equivalent to 30% of the total 10% transaction fee after 498.09 $RCM Total value = Trade volume):

As of June 22, there are the following income mechanics across the whole ecosystem:

1. Main: Paid content consumption revenue (monetization, coming soon).

2. Secondary: NFT trading on Metale platform with 10% transaction fee;

30% of fee goes to the copyright holder (creator).
30% of fee goes to Metale platform.
40% of fee goes to NFT holders (distributed among all NFT holders depending on their number).

Therefore, these two revenue streams can and should work in parallel, allowing creators the freedom to publish, distribute, and monetize their work on the blockchain, and enabling merchants to invest in copyrights and share in the revenue through NFT ownership.

Additional Information

In this tutorial, we purchased and sold NFTs from a single account without considering real market conditions. In a scenario of high demand, the speed of NFT minting by other users may outpace your transactions. For instance, if you started minting the 2nd NFT for 0.07 $RCM and there are 100 users simultaneously minting, you might encounter errors or delays. Upon refreshing the page, you might find that 50 NFTs have already been minted in the collection, and the price for the 51st NFT is significantly higher.

The Bonding Curve economic model rewards early adopters, providing economic benefits to merchants who acquired NFTs of the content collection early. However, during the initial minting phase that unlocks the collection, creator has the option to mint not only 1 FREE NFT but also the first 100 NFTs or any other number. This allows the creator to invest $RCM and lock it into their NFT collection, setting a high initial floor price for their NFTs to establish the initial market value.

Moreover, the creator retains the flexibility to sell NFTs in any quantity and at any time they choose, further influencing the market dynamics of their collection.

Therefore, we encourage everyone, both creators and merchants, to be fully informed and understand the principles of a decentralized content ecosystem. Neither the platform, its official team, nor anyone else is responsible for market activity involving any content NFT collection or NFT. Everything depends solely on the consensus mechanism and the value of the content. The Metale platform serves solely as a technical tool for on-chain transactions, granting complete freedom of action to all its participants.

[Disclaimer] Not financial advice, always do your own research (DYOR).

About Metale Protocol

A new-era global content distribution protocol that provides on-chain services for content subscription, transparent profit-sharing, and asset transactions.

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