Rebasing Token
Definition pending verification.
A rebasing token, also known as a elastic supply token, is a cryptocurrency whose total supply adjusts algorithmically based on its price relative to a target price or peg. Unlike stablecoins that maintain a stable price through collateralization or algorithmic mechanisms, rebasing tokens change their supply directly in users' wallets. When the market price of the token is above the target price, the supply increases (positive rebase), distributing the new tokens proportionally to all holders. Conversely, when the market price falls below the target price, the supply decreases (negative rebase), proportionally reducing the number of tokens held by each wallet. This mechanism aims to maintain a stable price or to incentivize certain market behaviors by adjusting supply without explicit market buy/sell orders. The rebase event typically occurs at fixed intervals (e.g., every 8 hours). The challenge lies in maintaining the peg and ensuring that the rebase mechanism doesn't lead to unintended consequences, such as imperceptible wealth redistribution or susceptibility to price manipulation around rebase times. The value of each token remains the same, but the number of tokens changes.
graph LR
Center["Rebasing Token"]:::main
Pre_cryptography["cryptography"]:::pre --> Center
click Pre_cryptography "/terms/cryptography"
Rel_advanced_propulsion_systems["advanced-propulsion-systems"]:::related -.-> Center
click Rel_advanced_propulsion_systems "/terms/advanced-propulsion-systems"
Rel_von_neumann_architecture["von-neumann-architecture"]:::related -.-> Center
click Rel_von_neumann_architecture "/terms/von-neumann-architecture"
Rel_undercollateralized_lending["undercollateralized-lending"]:::related -.-> Center
click Rel_undercollateralized_lending "/terms/undercollateralized-lending"
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🧒 Explain Like I'm 5
Imagine your money in the bank magically increases or decreases in quantity every day, but the total value you have stays the same, like a rubber band stretching or shrinking.
🤓 Expert Deep Dive
Rebasing tokens employ smart contracts to execute supply adjustments based on price feeds, often derived from decentralized [oracles](/en/terms/decentralized-oracles). The core logic involves calculating a rebase ratio derived from the deviation of the token's market price from its target peg. This ratio is then applied to each wallet's balance. A common implementation uses a multiplier or divisor based on the price deviation. Potential vulnerabilities include [oracle manipulation](/en/terms/oracle-manipulation), where an attacker could influence the price feed to trigger favorable rebases, or front-running attacks where traders attempt to exploit the rebase event for profit. The economic sustainability of a rebasing token heavily relies on the effectiveness of its incentive mechanisms to guide the price towards the target peg. If the price consistently deviates significantly, the constant supply adjustments can erode user confidence and lead to hyperinflation or deflationary spirals. The user experience can also be challenging, as balances change unpredictably.