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TEA Project documents
  • TEA Project Intro
    • Litepaper
    • TEA Project Example Use Cases
    • TEA Project's Technical Principles
    • Profitability of TEA Ecosystem Participants
  • User's manual
    • Tea AppStore - Account
    • Tea AppStore-TApps list
    • Tea AppStore - Investments
    • Harberger auction
    • Seeds auction
    • TEA Fluencer
    • Miner's portal
    • Developer's portal
    • Leader board
    • TEA Party
    • Togar3 Game
    • Credit token
    • Metamask connect
    • TApp authorizations
  • Tokens
    • FAQ - Tokens
    • Bonding Curve Tokens
      • Bonding Curve Theta
      • CML Miner Tokens
      • TApp Token Supply & Demand
      • TApp and CML Tokens
      • TApp Tokens
    • CML Tokens
      • CML Transfers
      • CML Seed Auctions
    • TEA Tokens
      • Billing-system-between-layer1-layer2
  • Mining
    • FAQ - Mining
    • Mining: Required Open Ports
    • Mining With AWS Nitro
    • Mining with own hardware is not available on the mainnet (Q1, 2024)
    • Hosting Profitability
    • Remote Attestation
    • State Maintainer Nodes
  • TApps
    • Developers
    • FAQ - TApps
    • Core TApps
    • TApp Creation & Theta
    • TEA Billing
    • TEA Fluencer TApp
  • Mainnet and test net (Epochs)
    • Epoch 2
    • Epoch 3
    • Epoch 4
    • Epoch 5
    • Epoch 6
    • Epoch 7
    • Epoch 8
    • Epoch 9
    • Epoch 10
    • Epoch 11
    • Epoch 12
  • FAQs
    • FAQ - Links
    • FAQ - Technical
    • TEA Governance Structure
    • TEA Security
    • TEA Social Media
    • The TEA Project Core Team
  • Appendix
    • The Future and Innovation of Layer2
    • What Makes a Web3 Application
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  • Theta as TApp / CML Creator
  • Theta determines spread between a TApp / CML token's buy and sell price
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  1. Tokens
  2. Bonding Curve Tokens

Bonding Curve Theta

Theta is the percent of every token buy or consume event that's used to fund the development of the TApp. If theta is set at .2 (20%), then 1 - .20 = .8 is used to fund the sell side of the bonding curve (80%). The smaller the number for theta, the closer the buy and sell prices are on the bonding curve. For example, a theta value of .05 (5%) would mean the sell price is always at 95% of the buy price. But a small theta has drawbacks to the creator as they will get less of every buy and consume event.

Theta as TApp / CML Creator

Note that the TApp or CML creator receive the theta percentage of whatever funds enter into the bonding curve. When a user creating a TApp or CML token spends TEA for the initial funding, they'll receive theta % back in their wallet (e.g. if theta is 30% and the initial funding is quoted as 1000T, the user will receive 300T back in your wallet for a net cost of 700T. You will still need to have the entire quoted amount available in your wallet, and you'll receive the theta % back as part of the transaction.

A large theta of, for example, .4 (40%) may seem like a good deal for the creator. They'll receive a large share of every bonding curve buy/consume event directly into their wallet. But a large theta makes it less attractive for token holders as they'll get proportionally less tokens as a dividend on buy and consume events. Additionally, the sell curve will always be below the buy price by 40%, resulting in a possible scenario where nobody wants to invest in the TApp's token. Such a large theta value will force investors to wait a long time to ever be profitable.

Theta determines spread between a TApp / CML token's buy and sell price

An investor buys at a TApp or CML token's buy price and sells at its sell price. An investor who buys 100T worth of a TApp (or CML) token with a theta of .2 (20%) has 80T go to fund the bonding curve and 20T going to the developer (or miner) Mathematically, the sell price is always (1 - theta) * (buy price) anywhere along the bonding curve.

Last updated 1 year ago