What is BitClout : The Creator Coin Supply Curve

The Creator Coin Supply Curve

Creator coins are naturally scarce, with generally fewer than 100 to 1,500 coins in
existence for each profile. This is because as more people buy a profile’s creator coin, the
price of the coin goes up automatically at a faster and faster rate. This means that,
eventually, it would take billions of dollars to mint even one more coin.
The formula or “curve” for determining the price of a creator’s coin is as follows. Note
that creator coins are normally bought and sold with the BitClout cryptocurrency, but we
provide a dollar version of the formula for easy calculating:
Price in BitClout = .003 * creator_coins_in_circulation^2
Price in USD = .003 * creator_coins_in_circulation^2 * bitclout_price_in_usd
When you create a profile, there are initially zero coins in existence and thus the price is
zero. If you want to buy coins from the profile, it will happily mint them out of thin air and
sell them to you according to the price curve above, making it more and more expensive
as more coins are purchased. The money you use to buy the coins gets “locked” in the
profile in exchange for the coins. On the flipside, if you want to sell coins, the profile will
happily buy them from you according to the curve using the money locked from previous
buys. And so buying creates coins while pushing the price up and locking money into
the profile, while selling destroys coins while pushing the price down and unlocking
money from the profile. This is often referred to as an “automated market-maker,” and
it’s the same concept that powers protocols like Uniswap and Bancor.
Below is a graph of what the creator coin price curve looks like as a function of how many
creator coins are in circulation for a given profile. We also include a table that shows
some of these values. Both of these assume a BitClout price of $16. Note also that
“integrating” the price curve yields the amount of money “locked” in a profile, which is
equal to the “net” amount of money that has flowed into that particular creator coin
(included as the third column of the table). If you’d like to play with the numbers yourself,
you can do so using this sheet (make a copy to edit it). You can also learn more about
bonding curves here.

 

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