How Does a Rebase Mechanism Concretely Adjust the Token Supply in User Wallets?
A rebase mechanism works through a smart contract function that is called periodically, typically daily. This function checks the current market price of the stablecoin against its target peg (e.g.
$1). If the price is above the peg, the smart contract automatically increases the token balance in every holder’s wallet.
If the price is below the peg, it decreases the balance. This supply adjustment happens universally and proportionally, so each holder’s share of the total supply remains constant, even as the number of tokens they hold changes.
Glossar
Rebase
Mechanism ⎊ Rebase operations, within cryptocurrency and derivatives, represent a revision of the blockchain’s history, altering the base from which future blocks are built; this differs fundamentally from a hard fork, maintaining chain continuity while rewriting commit history.
Rebase Tokens
Tokenomics ⎊ Rebase tokens represent a novel approach to token supply dynamics, intrinsically linking token price to the circulating supply through an algorithmic adjustment mechanism.
Smart Contract Function
Execution ⎊ Smart contract functions represent deterministic, automated code triggered by predefined conditions within a blockchain environment, facilitating trustless interactions and eliminating intermediary reliance.
Tax Implications
Taxation ⎊ The evolving landscape of cryptocurrency, options, and derivatives necessitates a nuanced understanding of taxation, particularly concerning sustainability initiatives.
Rebase Mechanism
Algorithm ⎊ The rebase mechanism, within cryptocurrency and derivative markets, functions as a dynamic supply adjustment protocol, altering the total circulating supply of a token based on pre-defined conditions ⎊ typically price fluctuations relative to a target value.
Token Supply
Circulation ⎊ The token supply, within the context of cryptocurrency and derivatives, fundamentally represents the total number of tokens existing or potentially available across all networks and exchanges.