Rebasing Tokens
Web3 / cryptocurrency types
Rebasing tokens are cryptocurrencies with elastic supply mechanisms that automatically adjust the total token supply to maintain a target price or achieve other protocol objectives. The rebase function is triggered at regular intervals, and every wallet's balance is proportionally adjusted to preserve each holder's ownership percentage while changing the absolute token supply. This mechanism allows projects to target a specific price point without traditional market-making, creating a unique monetary policy experiment that distinguishes rebasing tokens from standard fixed-supply cryptocurrencies.
Example
Ampleforth (AMPL) is a prominent rebasing token that adjusts its supply daily based on whether the token price is above or below its $1 target. When AMPL trades above $1, the supply increases proportionally across all wallets; when below $1, the supply decreases, creating algorithmic price stabilization.
Why It Matters
Rebasing tokens challenge traditional tokenomics by using algorithmic supply adjustment instead of market mechanisms. They offer experimental approaches to price stability and monetary policy, though they require careful understanding of their complex mechanics by participants.
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