What is Rebase?
Let's find out Rebase meaning, definition in crypto, what is Rebase, and all other detailed facts.
Circulating token supply automatically adjusts (increases or decreases) to rebase tokens (also known as price-elastic tokens) based on the token’s price swings. This process is called a rebase mechanism.
In a way rebase tokens are similar to stablecoins because they have price targets. Though the difference is that rebase tokens have a flexible circulating supply that adjusts without changing the token’s value in the wallets of users.
How Do Rebase Tokens work?
A rebase protocol happens regularly. To give you an example, Ampleforth's AMPL has a rebase planned every 24 hours with a $1 target price. The circulating supply expands during rebase if the price rises above $1, lowering the value of each AMPL token. If the price of AMPL falls below $1, the current supply contracts during the rebase, boosting the value of each token.
Thus, the number of tokens in each users’ wallet will rise or fall in proportion. Though the rebasing system ensures that the overall value of each wallet remains the same. To put it simply, if John holds 1 AMPL, which doubles in value to $2 during the rebase time, the supply will increase. This means John’s 1 AMPL will be reduced to 0,5 AMPL, but the value will remain the same at $1 because 1 AMPLE is now worth $2.
Other popular rebase tokens at the moment include OHM, BTRFLY, TIME, KLIMA, and so on.