> For the complete documentation index, see [llms.txt](https://docs.coinfactory.app/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.coinfactory.app/launchpad/how-it-works.md). # How It Works CoinFactory tokens move through three main stages: creation, bonding curve trading, and migration to a decentralized exchange. ### Token Lifecycle {% stepper %} {% step %} #### Creation The creator deploys a new ERC-20 token smart contract on the selected network. CoinFactory currently supports Base and Robinhood Chain. During creation, the creator can make an initial purchase of up to 5% of the maximum token supply. These tokens are minted during deployment and transferred directly to the creator’s wallet. {% endstep %} {% step %} #### Trading After launch, users can buy and sell the token through the CoinFactory bonding curve. Buying mints new tokens, while selling burns the tokens being sold. The bonding curve remains active until the circulating supply reaches 800 million tokens, or 80% of the maximum supply. During this stage, all collected liquidity remains locked in the CoinFactory launchpad smart contract. {% endstep %} {% step %} #### Migration to DEX Once the bonding curve reaches 800 million tokens, trading through the launchpad stops and the token graduates to Uniswap V2. The launchpad mints the remaining 20% of the supply and combines it with all liquidity collected during the bonding curve phase to create a Uniswap liquidity pool. The pool’s LP tokens are permanently burned, preventing anyone from withdrawing the initial liquidity. {% endstep %} {% endstepper %} *** ### Token Creation Creating a token means deploying a separate ERC-20 smart contract on the selected blockchain network. Each token has its own contract address and exists independently on-chain. Token names and symbols are not unique within CoinFactory. Different creators can launch tokens with the same name or symbol. Users should always verify the token’s contract address before buying or sharing it. The maximum supply of every CoinFactory launchpad token is fixed by the protocol at: **1,000,000,000 tokens** The maximum supply cannot be increased after the token has been created. During the launch transaction, the creator can optionally make an initial purchase of up to 5% of the maximum supply: **50,000,000 tokens** The purchased tokens are minted during deployment and sent directly to the creator’s wallet. Any tokens not purchased at launch remain unminted until users buy them through the bonding curve. *** ### Bonding Curve Trading CoinFactory tokens do not begin with their full supply in circulation. New tokens are created gradually as users buy them. A purchase mints new tokens and sends them to the buyer’s wallet. A sale burns the sold tokens and returns the corresponding amount of liquidity to the seller. This means that: * buying increases the circulating supply; * selling decreases the circulating supply; * the token price is determined automatically by the bonding curve; * tokens are only minted when they are purchased. The bonding curve has a target supply of: **800,000,000 tokens** This represents 80% of the maximum supply. Once this amount has been minted, the bonding curve is finalized and trading through the launchpad is no longer available. While the bonding curve is active, every token holder can sell their tokens back through the launchpad. The liquidity collected from purchases remains locked in the launchpad smart contract and is used to process sales. #### Trading Currency WETH is currently used as the reserve asset behind the bonding curve. Users do not need to hold WETH manually. They only need the network’s native ETH in their wallet. CoinFactory automatically wraps ETH into WETH when buying and unwraps WETH back into ETH when selling. ETH and WETH are converted at a 1:1 ratio without an additional swap fee. Standard blockchain gas fees and CoinFactory trading fees still apply. *** ### Graduation and DEX Migration Graduation happens when the bonding curve reaches its target supply of 800 million tokens. With the current bonding curve configuration, approximately **4.5 ETH** in liquidity is required to reach graduation. The exact amount may differ slightly because of transaction rounding and trading activity. After graduation: 1. Bonding curve trading is finalized. 2. The remaining 200 million tokens are minted. 3. All liquidity collected by the launchpad is paired with these tokens. 4. A new liquidity pool is created on Uniswap. 5. The liquidity pool’s LP tokens are permanently burned. The remaining 200 million tokens represent 20% of the maximum token supply and are used exclusively for the initial DEX liquidity pool. Once migration is complete, the token moves from bonding curve trading to public trading on Uniswap. Users can then buy and sell it directly through the decentralized exchange. Because the LP tokens are burned, no creator, administrator, or third party can withdraw the initial liquidity from the pool.