Turning off the GHST Bonding Curve

Okay okay, calm down. There’s no need to panic. This post is NOT a proposal to shut down the Curve right now, it is NOT a proposal to send GHST to 0, and it is NOT a proposal to shift our community’s core values of frenliness to pure speculation. I merely want to take a sober look at the mid- to long-term future of GHST with the Bonding Curve and potential alternatives.

The Bonding Curve: A volatility reduction mechanism

So, let’s first have a quick look at what the Bonding Curve is, how it works, and the effects on the Aavegotchi ecosystem.

“Bonding Curves use a pricing algorithm to serve as an automated market maker and provide an always available source of liquidity. Users can interact with a Bonding Curve by staking tokens into the Bonding Curve’s reserve pool. When they do so, the Bonding Curve mints the corresponding tokens for the user based on the pricing algorithm. The newly minted tokens can have specific utility and even be traded among users, but can always be exchanged back through the Bonding Curve for tokens in the Bonding Curve’s reserve pool.” - Our good ol’ wiki

Explained in very simple terms, the Bonding Curve simulates the market pricing process by minting/burning new tokens based on supply & demand. In uptrends, DAI gets locked up into the Curve and new GHST gets minted while the price is adjusted upwards, while downtrends result in GHST getting burned and redeemed for the DAI inside of the Curve. With the current specification of the GHST Bonding Curve this results in a volatility reduction of around 40% (more info on the wiki) - both on the up- and downside.

For an early-stage project with its own eco-governance token used as a medium of exchange, this can be great. It allows assets to be priced in a relatively stable currency, without having to worry too much about broader market environments. As a result, GHST is “only” down ~55% from ATHs, while even BTC & ETH took bigger hits (~65-70%), and a lot of altcoins are approaching -90%+. Meanwhile most of the ecosystem assets continue being somewhat of a leveraged bet on GHST, going up in GHST terms during uptrends and down in GHST during downtrends (as long as there aren’t any exogenous forces such as auctions/raffles). So at the moment this all sounds great, and honestly we could probably keep this mechanism alive and be fairly successful on a long timeframe. But as always in crypto, we should zoom out.

Operating in parabolic markets

Crypto is a rapidly growing space with hundreds of new projects being created & abandoned each week, so it has naturally created an extremely reflexive market where aggressive price trends drive the narrative & demand. In my opinion the primary driver of success is, contrary to what a lot of people believe, rising market share / capitalization and not something abstract as “utility”. Market outperformance is what the majority of crypto participants are after, so obviously one of the main considerations when entering a protocol / buying a token is “will this investment outperform the market benchmark?” - whether that be BTC, ETH, or something else.

Underperformance on the other hand is commonly seen as a sign of weakness / uncertainty surrounding a protocol and is therefore a huge turn-off for potential investors. After all, what is the point of risking capital on an early stage project when you could simply go all in the benchmark without any considerations of liquidity / price impact, etc. and still outperform?

Price drives demand

Looking at Aavegotchi from a potential investor’s point of view, you immediately ask yourself why GHST (the eco-governance token supporting the entire ecosystem) has underperformed the majority of the market on a longer timeframe DESPITE being a much higher-risk investment than let’s say ETH. As most (90%+) of all market participants are looking for relative outperformance & scan through dozens of projects at a time, they’ll immediately move on writing off Aavegotchi as a “maybe cute / fun project, but not worthwhile an investment”.

This doesn’t just decrease the potential demand for GHST (pumping my bags blabla), it is harmful for the entire ecosystem imo. No project can survive without capital & new community members, or are we all supposed to be a small circle of 500 friends shuffling our money around and hoping noone leaves? This has become painfully obvious for all of us who have joined the Aavegotchi ecosystem very early on, during an emerging bull market and 5-10x’s being relatively normal even on major protocols. There have been times of large interest even from prominent actors in the space, but pretty much all of them left after seeing everything else in the Metaverse/GameFi segment significantly outperform.

Efficient use of capital

I think it’s fair to say that all of us are long-term bullish on crypto as a space. In terms of asset prices this equates to a multi-year upward trajectory with occasional bear markets to cool off for the next rally. In this kind of environment volatility is something desirable for investors, as it allows for a lot of upside if you can stomach the drawdowns and survive. The Curve is inherently incompatible with this line of thinking & prevents GHST from thriving in bull markets, as it reduces volatility on both the up- and downside; on a multi-year timeframe that’s not really what you want if you think crypto will continue growing.

As of right now, the Curve contract (and by extension the AavegotchiDAO) owns 28 million DAI (this used to be more than 80 million DAI) that could be put to use more efficiently. Even something simple as a buyback & burn of GHST every week / month would simulate something Curve-esque to the downside while keeping the potential upside intact. On top of that, the development of both Aavegotchi as a protocol as well as dApps or games built on top of it could be aggressively supported with funds without the need of any liquidation of GHST. On a longer time horizon I believe this to be a more efficient use of capital than keeping the Curve turned on & capping the growth potential of the project we all love.

If the Curve is gone, won’t Aavegotchi NFTs be impacted negatively?

Currently our ecosystem assets are priced in GHST - this was the main reason for the Curve design after all. If GHST stopped being a quasi-stablecoin it’s very likely that our NFTs would start being priced (either mentally or through the addition of a stablecoin on the Baazaar) in dollars instead of GHST. For people primarily exposed to ecosystem assets this can be scary, as they’ll potentially surrender GHST upside in a bull market. Our NFTs would likely start decoupling from GHST which isn’t something every Gotchi/Wearable/Land investor wants, the expectation of most people was assets being a leveraged bet on the success of GHST (which, looking at the market today, turned out to be a flawed hypothesis imo).

But there’s another side to the coin that has to be considered. If investors aren’t interested in buying GHST (“I’ll just buy some ETH & AXS to bet on the GameFi narrative instead”), they will never enter the broader Aavegotchi ecosystem either - no Gotchis, no Wearables, no Land, nothing. This means that the Curve doesn’t just decrease potential demand for GHST as a token, but the broader ecosystem as a whole. Very few people are willing to dive deeper into the Gotchiverse if GHST is unworthy of an investment anyways, the attention span of the average market participant is lower than that of a TikToker…

A sustainable way forward

First of all, thanks to everyone who has read this far without bombarding the comments with “THE CURVE IS FOREVAAAR”. It should have become evident that I believe a future without the Curve to be more beneficial to Aavegotchi - IF PLANNED & EXECUTED WELL. This would mean a long-term capital allocation plan for the funds inside of the Bonding Curve. This should include a large buyback & burn to support GHST price during this bear market, can include a compensation for asset holders through an RF subsidy in DAI and a payout of the Curve Tap to Pixelcraft Studios. Again, this process would take AT LEAST 6-9 months and the Curve actually being turned off should absolutely be timed together with a major Aavegotchi release to prevent a single candle down to 0.

Looking forward to a constructive discussion frens! I’m sure there are things that I haven’t thought about, so let’s keep this as civil as possible. :ghost:


Wow. Glad I was up… see you at the meeting?


Really enlightening stuff ser Moon. This is an experiment that really gets me excited. if orchestrated properly, it could be a win-win for OG’s and new entrants into the ecosystem.


What I really like about this discussion, is, that it entices us to think about the long-term!
Have to read it a second time to grasp the details.


The Curve is an alternative for market making and a solution to lower liquidity. But it’s a very inefficient and expensive alternative. In addition to locked liquidity, we’ve started paying guys like Wintermute that extract millions arbitraging Curve<>CEX<>DEX. The Curve became a liability because it’s on the Ethereum chain and has a KYC wall.

The DAO should start managing its resources efficiently. The Curve is an inefficient service that we are paying for a lot. Thanks, @Moon, for raising this topic. We need to deal with this bloodsucker eventually.


Is it possible to turn off the reactive downforce and leave the upward inertia alone? Like, say… by staking the curve funds in our own four homebrew 4 way LP?(dai/usdc/gst/ghst)

If we sort that… then next you do that with alchemica and glitter.

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What happens after we go through all the DAI sitting in the bonding curve on GHST buybacks and burns or other distributions? Wouldn’t this push the price of GHST down from that point on and increase the volatility substantially?

Without the bonding curve, GHST is more likely to free-fall to 0 I think.

I think the way to get more investors is to give more value to the Aavegotchi NFTs. This means more fun gameplay, reducing NFT dilution, more games/protocols/defi dapps/other partners integrating with us. Many of these the devs and the DAO is already working on. We do have a large pool of funds in the DAO treasury that integration partners building on top of Aavegotchi could pull from instead of giving them the stablecoins.


Thanks, Moon, for a wonderfully written post.

To try and poorly summarise:

  • You think the relative price stability provided by the Bonding Curve is a turn off for bull market investors looking for coins about to moon.

  • You think a better system would be to manually make decisions on burns/funds management via the DAO to manage price.

I agree it could be a bit of a turn off for speculators wanting a mooning alt coin project to show off on Twitter.

But the opposite is true in bearish times where stability becomes a haven. The GHST-BTC chart shows investors would have done better holding GHST than BTC over the past 15mths, acknowledging that to date, it’s more likely gameplay and NFT launches that have driven that action, and you’re talking more about a future state.

That speaks to the type of investor we’d prefer to attract. Someone who’s done their research and believes in longer term strength and security, or people looking for a 100x pump and dump meme, not making judgements either way (and possibly exaggerating the pump and dump scenario)

Despite my limited understanding of the curve, I’ve developed great confidence in the GHST token (famous last words :stuck_out_tongue:). Taking the levers of price manipulation away from an algorithm and putting them in the hands of the community feels quite dangerous to me, not least in light of current discussions about majority voting power and delegation.

It seems there’s a question: can the machine outperform the DAO?
According to me:
Clearly yes in terms of responsiveness
Clearly no in terms of nuanced, guided action

Actually, a more fundamental question is what do we want the GHST token for, and what was its intention?
Speculation? Asset trading? Governance? Store of Value? Marketing? Yield?

It’s more or less all the above at the moment, and doing an awesome job imo, but maybe it could be even better?

  • I think the 5 other ecosystem tokens are more ripe for speculation
  • I like the fact I’ve forgotten what GHST is worth and use it as the base currency for valuations as it makes the game feel more self contained
  • The price makes less of a difference for governance other than making it easier/harder to buy VP
  • Store of value seems best suited to a stable coin
  • I expect for marketing purposes we should be able to attract the masses through the strength of gameplay and community rather than a mooning token (no guarantee though)
  • The yield has been great so far imo but in theory rewards would have to be pumped up further if extra volatility was in play, no?

Machines are dumb, consistent and predictable
Humans are smart, volatile and impressionable

Lastly I’m curious for more explanation on why the curve is considered expensive and inefficient. Is this from an opportunity cost perspective? Are we tying up millions of DAI to support stability rather than actively looking to make greater returns? And would the beneficiary of more productively invested funds be mainly the DAO (core) or the whole community (crust!)?


We already have great games. The next step is how to let more people join us. Just being cool is not enough.

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I dont see why we should focus on something as, making it more likely for GHST to go up so we attract investors that simply want to outperform the market.

I think we should focus on how we can provide a stable economy, as the back end of a fun game, so we attract gamers. After all this is the mission dan mentioned a few times, more gotchi holders. More holders that want to actually play the game is probably a better goal to have than to attract investors that simply want to increase their portfolios.

Maybe i miss something here but i think there is plenty of opportunity to grow portfolio in this ecosystem, and after all the gotchiverse is aavegotchi’s flagship product, which is supposed to be fun, and I believe that when this game is more fun, these new ‘investors’ (i like to call them as gamers) will come in naturally:)


If it’s just fun and playability, you can buy a lot of fun games on steam for $100. The vast majority of people who play gotchis are more eager to play the game and earn money at the same time. This is also the reason for the combination of gotchis and defi NFT.


So all gamers who wanna have fun should just go and buy steam is essentially what you are saying xD

The whole difference of a metaverse in comparison to a regular game is not topic of this discussion and i hope all participants in the discussion know the difference :+1:

Reply to @kill_er


And on top of that. The gotchiverse (like I already mentioned) is the flagship product of this whole project. Seems like its just as, if not more prominent and important than the defi aspect of it all.


Agree 100%. I’ve thought about this in the past, but when the market is going down, obviously the curve can feel comforting… but…

…if the curve never existed, would it have been possible that GHST did a 50X in the bull last year? Followed, of course, (well, perhaps) by the 90% drop… but if that were the case then the mkt cap would still be significantly higher than what we have today, despite the added volatility. It’s impossible, of course, to know if that would have happened or not, but it’s a very strong possibility IMO.

And please note that this is not just about short term thinking getting ready for the next pump, but thinking long term. You need eyes on a project to get more people involved. Sharp price rises bring that attention, and the project gets exponentially more exposure and free marketting. This will bring in 90% pure speculators, of course, whom don’t really do much for the long term success of the project either way… but you will still get a big cohort of players/builders/community that come for the short term pump but hang around because they fall down the Gotchi rabbit hole and get interested in all the different facets of the product, and this can help the flywheel effect, etc.

I would also guess there are very, very few pure “Web 3 Gamers” at this stage. There may be in future, but catering to a currently non-existing cohort, by going for ‘less volatilty’ in the base unit of exchange, is not a good strategy IMO. Maybe in a decade :man_shrugging: it could have merits, but for now the vast majority of people who play Web3 games are also Crypto investors, so the volatility doesn’t really bother them, and they expect it and want it.

Crypto folk are used to volatility, in fact, most are drawn to it. Less volatility is not a hot selling point. Also to point out that it’s Aavegotchi (GHST) on the token tracker websites. Whilst all of us know that GHST is only one component of the rich ecosystem, and there are much more leveraged investments one can make, at first glance they may likely look at the chart and it looks like it must be boring/dull ecosystem.

Anyway I think this should be done and I personally don’t necessarily think it needs to be done too slowly if it can be done.


Great write up Moon. My concerns with getting rid of the CURVE is what does that do as GHST being a collateralized asset on AAVE? Will the volatility of GHST without the CURVE have it becoming a risk and be eliminated on AAVE? Besides this concern, I do agree with Moon that in a bear market GHST will not be accumulated for the next upcoming cycle over ETH as I am accumulating ETH as well for the next cycle just b/c I feel you can 3x your networth on ETH and keep it in cold storage. Where as Ghst doesn’t seem that attractive as ETH b/c of the CURVE unless you are looking for stability and have a longertime frame to see returns. As long as yields are decent in aavegotchi ecosystem I don’t think having the Curve as a liability just yet but if yields go significantly down later, then it likely would be better to take off the Curve. Just let me accumulate more GHST first, lol. Still would like to hear people’s concerns, pros and cons on this matter.


Hi everyone, So just for clarification, by making GHST volatile might bring more investors and gamers? And do we want speculative traders as the target market we want to attract?


Excellent write-up Moon with many thought provoking statements.

Ultimately what we are faced with, in my opinion, is the friction caused by video game economies vs real life ones. This is the greatest hurdle Web 3 games have yet to overcome.

Legacy video game economies call more for stability, non-scarce assets, and a typical “path of progression.” A beginner player joins the game and can grind for gold, get equipment, and grow into an all-powerful being.

Real-life economies do not want inflation. They want value appreciation of their assets. This directly conflicts with a gaming model in that if the assets appreciate too much in value, new players are immediately priced out.

Web 3 gaming is a call to rethink everything. It cannot be approached only as a video game nor only as an investment vehicle.

The curve appeals more to the legacy gaming model. It’s predictable and semi-stable. The challenge, as @aaron555 eloquently said, is there are not yet many (or any?) pure Web 3 gamers.

The aavegotchi vision is beautiful and in my opinion has the best working product on the market right now. Where we fall short however is in user base and new investors jumping into the project. As @CryptoGreen pointed out, there isn’t much purpose in investing in GHST token during a bull market. The upside in other projects (even “safe” ones like ETH) is much greater.

We all know the depth of the aavegotchi ecosystem and many of us have made very nice returns. Unfortunately though our flagship token is not enticing and many potential investors take one moment to look at the price chart, don’t like what they see, and move on. Attention spans (highly recommend this article by Cobie) are incredibly short in crypto and the GameFi market is extremely crowded with new entrants daily.

Like it or not, the way to capture attention in Web 3 gaming is with green candles. Did Axie Infinity grow into the success it was because the video game was just so addicting people couldn’t put it down? Or did it garner so much attention because people were making a lot of money? Success begets success.

People saw the potential profits with Axie and jumped on board. Of course, their token has since tanked 90%. This is where the enticing product mentioned above comes into play. Even still, with their token down in the gutter, their community is alive and thriving.

Can you imagine what would happen with a project that had both enticing tokenomics as well as a solid product behind it? The green candles attract the crowds. The solid product hooks them and keeps them coming back for more. I believe aavegotchi has that potential.

For those in the community who want more haunts and more wearables, the fastest track to getting there is with heaps more users eager to buy. How to get more users? See above :stuck_out_tongue:

Let us also appreciate how much more funding would be brought in for both PC and the DAO. Moar money in can propel the project to new heights. Did someone say golden saddle chair?

In all seriousness, I believe there are ultimately more advantages to turning the Curve off. As mentioned above, this is not something to be done quickly and would need to be timed with a major gameplay release (and preferably right at the onset of the next bull market :smiley: )


Howabout we plan it with the halving as the outside fence with an early start if btc hits 10k.

edit: It needs to be said that GHST did a 36x and is still at 13x - the gotchi I bought at 500 ghst with 65 cent ghst is worth 700 ghst today. that’s almost 300% in 2 years of a non presale asset that currently pays me 2 ghst a day. The rock solid nature of a gotchi is our biggest selling point. Everything else is chaotic and speculative, but the gotchi is a gold standard for reliable asset.


Appreciate all the answers guys, this is what a healthy discussion should look like in my opinion! I’d like to address 2 points that I’ve seen a few times now (and expectedly so):

  1. “Our target audience is gamers, not speculators”
  2. “Stability is good / GHST doesn’t need to go up / Without the Curve we’ll dump to 0”

“Speculation bad”

So let’s start with argument 1, and I say this with all due respect, speculation lies at the core of every financial market - especially in crypto. I don’t know why so many people are scared to admit this, it’s not a bad thing per se. The amazing thing about tokens is partial ownership of a protocol and subsequent financial success if the protocol gains adoption. This is what makes speculating on companies (stonks) interesting, and it’s no different with crypto projects.

By taking away the financial upside if the protocol succeeds, you lose a much bigger audience than purely “speculators”. As @notorious_BTC said, most successful crypto projects were only able to make that leap from niche to mainstream through a booming token price. So I’ll ask you a simple question: During the next 5 years, do you think GHST or ETH will be a better investment? If you even hesitated a bit, why would you expect anyone to invest their funds into a much higher risk investment if the upside is relatively small while the downside is huge (probability of Ethereum succeeding/failing vs probability of Aavegotchi succeeding/failing).

“Stability good”

Okay, I agree that stability for a medium of exchange is good. So why are we using an asset that changes in price at all? Wouldn’t the use of a stablecoin be far superior? In my opinion we need to decide what we want GHST to be: a crypto asset to bet on the future of the Aavegotchi ecosystem or a stable medium of exchange. With the Curve we just have the bad of both worlds - little upside during bull markets and still significant downside during bear markets.

On a second note, why would you expect GHST to go to 0 if we turned the Curve off? Do you think a valuation of $60M for GHST is too high if it weren’t for a stabilization mechanism? I certainly don’t - it’s probably too low if we look at our amazing ecosystem. Besides, using the DAI in the curve to market buy & burn GHST probably supports the price much better than the Curve mechanism. Remember that the DAO and PC are diamond handing a big % of the supply:

The much more likely outcome is true FOMO into GHST - publicly announcing that you’re gonna market buy $12M of a coin is a pretty strong narrative, don’t ya think? This does have one major downside though, and I’ve already mentioned that in my main post: Ecosystem assets decoupling from GHST and not capturing any upside. I think that’s a pretty serious concern, which is why we’d need a plan on how to support the entire Aavegotchi ecosystem instead of having everyone insta dump their shit to go all in GHST.


Firstly, thank you for starting this thread. I think this is highly productive conversation, and something I’ve also felt has been worth considering.

The idea of trading off upside for stability is clearly inherent in the curve’s mechanics – I mean quite literally, if u look at how $GHST functions with the curve it works backwards from typical supply/demand. But do we want this trade-off?

You make great points that $GHST should act as a point of speculation because it represents partial ownership of the protocol. I would take this a step further and say the security of the protocol hinges on high prices so that VP cannot just be bought up on a whim. The curve presents a governance security risk in some sense that a VP attack wouldn’t be as costly to conduct than without it.

I think the Curve was AMAZING at seeding the Aavegotchi protocol. We probably have a more sensible valuation because of it, and it truly enabled a stellar crowdfunding effort that successfully financed this protocol so that we didn’t need to give away precious equity to potentially harmful VCs and other institutional entities. This does not mean that we need to keep the mechanism now that the DAO is becoming more mature, and I almost see getting rid of the Curve as akin to removing training wheels. We can and will continue to build out a successful protocol and have proven that funding isn’t really an issue.