How a coin's price works

4 min read✓

The bonding curve, market cap, graduation to a pool and locked liquidity, explained step by step.

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When a coin launches on 2hour.fun there's no order book and no one setting a price. Instead, its price follows a simple rule called a bonding curve.

The bonding curve

Every new coin starts with its tokens held by a smart contract (the curve). When someone buys, they get tokens from the curve and the price goes up a little. When someone sells, tokens go back to the curve and the price comes down. The more that has been bought, the higher the price.

Price rises as more of the curve is bought. When the curve fills, the coin graduates to a pool.

Example (made-up numbers)

Imagine a curve where the first buys get tokens at a fraction of a cent each. After lots of buying, the next buyer pays more per token. If many holders then sell, the price falls back down the same curve.

Market cap

Market cap (MC) is the price of one token multiplied by the total supply. Since every coin here has a fixed supply, market cap is an easy way to compare coins whose per-token prices look very different.

Example (made-up numbers)

A coin with 1,000,000,000 tokens at $0.00001 each has a market cap of $10,000.

Graduation

Each curve has a set size. When it has been bought out (watch the progress bar on each coin), the coin graduates: its liquidity moves into a pool on a decentralised exchange - Uniswap on Robinhood Chain, Raydium on Solana - in the same transaction. From then on the price is set by that pool, and the coin can be traded from other apps as well as from 2hour.fun.

Locked liquidity

At graduation the pool's liquidity is locked for good. Nobody - not the creator, not 2hour.fun - can pull it out. That removes one common way a coin is "rugged". It doesn't stop holders, including the creator, from selling their own tokens, so the price can still fall a long way.

Why prices move so fast

New coins usually have little money in them, so one big buy or sell moves the price a lot.
A few large holders selling can bring the price down quickly - the safety badges show how concentrated a coin is.
Past moves don't tell you what happens next.

Learn how to read a coin's badges in Safety badges & holder tags.

Key points

Before graduating, a coin's price follows its bonding curve: buys push it up, sells bring it down.
Market cap = price × total supply.
When the curve fills, the coin graduates to a DEX pool and its liquidity is locked for good.
Locked liquidity can't be pulled, but holders can still sell - prices can still fall a long way.

Educational only - not financial advice. Crypto is risky; only use what you can afford to lose.