Define the Term “Rebase” and Its Function in Some Stablecoin Designs

A rebase is a mechanism that automatically adjusts the supply of a stablecoin in users' wallets to maintain a target price, typically $1. If the price is above $1, the supply increases (positive rebase).

If below $1, the supply decreases (negative rebase). The goal is to correct the price without user intervention, but negative rebases can trigger panic selling.