Rebasing: The Basics of Elastic Supply Tokens

When working with Rebasing, a mechanism that automatically changes a token's total supply to keep its price stable or target a specific value. Also known as supply adjustment, it triggers on-chain recalculations that affect every holder’s balance proportionally. Two common cousins are elastic supply token, a digital asset whose circulating supply expands or contracts algorithmically and algorithmic stablecoin, a coin that relies on code‑driven supply changes rather than collateral to maintain a peg. The idea is simple: if price drifts away from the target, the protocol adds or removes tokens so the market‑cap stays aligned. This core concept rebasing encompasses supply adjustment, price targeting, and automated tokenomics.

How Supply Adjustment Works in Practice

The supply adjustment mechanism, the set of rules that dictate when and how many tokens are minted or burned usually runs at a fixed interval—daily, hourly, or per block. It monitors market price via oracles, then calculates a percentage change needed to bring the price back to its goal. That percentage is applied to the total supply, and every wallet’s balance shifts accordingly. Because the change is proportional, no individual holder gains an advantage; everyone sees the same relative increase or decrease. The attributes you’ll spot in most rebasing projects are: trigger source (price oracle), frequency (once per day, per epoch), and cap limits (max expansion or contraction). Values vary: some tokens cap daily growth at 10 %, others allow only 1 % swings to avoid volatility.

Understanding rebase tokenomics, the economic model that combines supply changes with incentives, fees, or staking rewards is key to judging whether a project is viable. Typical designs reward long‑term holders with higher absolute balances after a positive rebase, while penalizing short‑term traders who sell before the next adjustment. Some protocols layer additional features like liquidity‑providing bonuses or governance rights tied to rebased balances. Risks include sudden large expansions that dilute value, or contract bugs that miscalculate the rebase factor. Real‑world examples range from classic experimental tokens to newer projects that blend NFT utilities with elastic supply, showing how versatile the model can be.

Below you’ll find a curated set of articles that dive deeper into these ideas. We cover token profiles that use rebasing, step‑by‑step guides on how the mechanics work, tax implications of supply changes, and market outlooks for elastic supply assets. Whether you’re a trader looking for arbitrage angles or an investor assessing long‑term risk, the collection gives you practical insight and actionable tips to navigate the rebasing landscape.