Mechanism Design

Understand The Mechanism Design Behind OnlyBags

OnlyBags protocol allows users to create a token without initial seeding liquidity. After creation, minted tokens are deposited in a pool where they can be instantly traded following a bonding curve (pool price function) and liquidity is transfered to Raydium when the market capitalization of the token reaches a certain threshold. OnlyBags uses a fully smart contract based and permissionless approach throughout token creation, trading in the pool, and liquidity transfer - your keys, your coins!

When new tokens are created they are all instantly deposited in the pool contract. This token launch design helps prevent rugpulls of tokens created on the platform where each coin is a fair-launch with no presale and no team allocation. The pool uses a bonding curve which is a mathematical curve that determines the price of a token based on its supply where the price typically increases as more tokens are purchased. Our pools use different bonding curve designs that are optimized towards specific goals of the creator (see below). The benefits of the pool model include immediate liquidity and transparent pricing reflecting real-time demand-supply in the market. When enough users have bought the token and its market capitalization reaches a certain threshold, the liquidity is deposited to Raydium - which is a more established token exchange within the Solana ecosystem - so the token can be more broadly distributed and exchanged.

How the Protocol Works in 3 Steps

Token Creation:

• Users select core parameters (name, ticker, image, supporting text, creator tax...) and 1 billion corresponding tokens are minted on Solana. This is a fair launch with no presale, and no dev or team allocation.

Seeding of AMM:

• Minted tokens are instantly deposited in the OnlyBags pool where users can instantly trade the minted tokens with the pool which prices the tokens based on a bonding curve. As more tokens are purchased, the price increases in accordance with the curve, reflecting supply and demand dynamics.

Liquidity Transfer to Raydium:

• When enough users have bought the token and its market capitalization reaches a certain threshold all the liquidity is deposited to Raydium. To encourage good meme creation and reduce the likelihood of rug pulls, 2 SOL is rewarded to the token creator. The remaining SOL is deposited into the liquidity pool on Raydium.

Different Pools

Standard Curve:

This is a similar bonding curve that has been used in existing platforms such as pumpdotfun. The bonding curve has a convex curve. When enough users have bought the token and its market capitalization reaches 89.9 SOL, the liquidity is deposited to Raydium where 2 SOL is transfered to the creator and the remaining 87.9 SOL is deposited into a pool on Raydium.

Anti-Rug Curve:

This is a novel bonding curve design. The bonding curve has a linear curve that helps to disincentivize rug pulls in the early stages until the token has gathered enough community support. Also there the curve takes longer to complete so there is more SOL in the pool when the token hits Raydium which helps the token to grow further after the Raydium transition. When enough users have bought the token and its market capitalization reaches 248.4 SOL, the liquidity is deposited to Raydium where 2 SOL is transfered to the creator and the remaining 246.4 SOL is deposited into a pool on Raydium.

Mystery Curve:

Coming soon to OnlyBags - Stay Tuned!