# How Does a Rebase Mechanism Concretely Adjust the Token Supply in User Wallets? ⎊ Path

**Published:** 2025-12-04
**Author:** Greeks.live
**Categories:** Path

---

## 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.

- [Are There Any Strategies for Trading Rebase Tokens around Rebase Events?](https://learn.greeks.live/path/are-there-any-strategies-for-trading-rebase-tokens-around-rebase-events/)

- [Can the Target Price of a Rebase Token Change over Time?](https://learn.greeks.live/path/can-the-target-price-of-a-rebase-token-change-over-time/)

- [Are There Any Rebase Tokens That Do Not Have a Target Price?](https://learn.greeks.live/path/are-there-any-rebase-tokens-that-do-not-have-a-target-price/)

- [Are There Any Rebase Tokens That Have a Continuous Rebase Mechanism?](https://learn.greeks.live/path/are-there-any-rebase-tokens-that-have-a-continuous-rebase-mechanism/)

- [How Does the Rebase Frequency Affect the User Experience of Holding a Rebase Token?](https://learn.greeks.live/path/how-does-the-rebase-frequency-affect-the-user-experience-of-holding-a-rebase-token/)

- [What Happens If a Rebase Token Consistently Fails to Meet Its Target Price?](https://learn.greeks.live/path/what-happens-if-a-rebase-token-consistently-fails-to-meet-its-target-price/)

- [How Does the Taxation of Rebase Tokens Differ from Other Cryptocurrencies?](https://learn.greeks.live/path/how-does-the-taxation-of-rebase-tokens-differ-from-other-cryptocurrencies/)

- [Can the Rebase Frequency Be Changed by the Community?](https://learn.greeks.live/path/can-the-rebase-frequency-be-changed-by-the-community/)

## Glossar

### [Rebase](https://learn.greeks.live/area/rebase/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

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](https://learn.greeks.live/area/rebase-tokens/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

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](https://learn.greeks.live/area/smart-contract-function/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

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](https://learn.greeks.live/area/tax-implications/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Taxation ⎊ The evolving landscape of cryptocurrency, options, and derivatives necessitates a nuanced understanding of taxation, particularly concerning sustainability initiatives.

### [Rebase Mechanism](https://learn.greeks.live/area/rebase-mechanism/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

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](https://learn.greeks.live/area/token-supply/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

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.

## Discover More

### [How Does a "Hard Cap" Limit Influence Token Supply?](https://learn.greeks.live/path/how-does-a-hard-cap-limit-influence-token-supply/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does a "Hard Cap" Limit Influence Token Supply?](https://learn.greeks.live/wp-content/uploads/2025/10/Interlocking-Cross-Structures-Visualizing-Cryptocurrency-Volatility-Surface-Delta-Hedging-Mechanics.webp)

The hard cap is the maximum fundraising goal, which sets a limit on the initial token supply sold during the offering.

### [What Is the "Exchange Rate" between the Wrapped and the Original Rebase Token?](https://learn.greeks.live/path/what-is-the-exchange-rate-between-the-wrapped-and-the-original-rebase-token/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the "Exchange Rate" between the Wrapped and the Original Rebase Token?](https://learn.greeks.live/wp-content/uploads/2025/10/Asymmetric-Illumination-of-Digital-Asset-Volatility-Surface-Overlays-Financial-Horizon.webp)

It is a continuously adjusting rate (not 1:1) that reflects the total underlying rebase tokens in the vault divided by the static supply of the wrapped token.

### [How Do Traders Adjust the Black-Scholes Model to Account for Its Unrealistic Assumptions?](https://learn.greeks.live/path/how-do-traders-adjust-the-black-scholes-model-to-account-for-its-unrealistic-assumptions/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Do Traders Adjust the Black-Scholes Model to Account for Its Unrealistic Assumptions?](https://learn.greeks.live/wp-content/uploads/2025/10/Spherical-Cryogenic-Futures-Contract-Mechanism-with-Pointed-Implied-Volatility-Vector-Display.webp)

Traders use implied volatility, derived from current market prices, to adjust the model for real-world conditions and expectations.

### [What Is "Slippage Tolerance" and How Does a Low Setting Make a User Vulnerable to Sandwich Attacks?](https://learn.greeks.live/path/what-is-slippage-tolerance-and-how-does-a-low-setting-make-a-user-vulnerable-to-sandwich-attacks/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is "Slippage Tolerance" and How Does a Low Setting Make a User Vulnerable to Sandwich Attacks?](https://learn.greeks.live/wp-content/uploads/2025/10/Precision-Machined-Component-Reflecting-Advanced-DeFi-Infrastructure-Protocol-Execution-Lenses.webp)

Slippage tolerance is the max acceptable price difference; a high setting allows attackers to profit from price manipulation.

### [Are There Any Rebase Tokens That Do Not Have a Target Price?](https://learn.greeks.live/path/are-there-any-rebase-tokens-that-do-not-have-a-target-price/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Are There Any Rebase Tokens That Do Not Have a Target Price?](https://learn.greeks.live/wp-content/uploads/2025/10/Aerodynamic-Control-Surface-Configuration-Representing-Decentralized-Autonomous-Organization-Governance-Structures.webp)

Yes, some "free-floating" rebase tokens, like Olympus DAO's OHM, use the rebase mechanism to control volatility rather than to maintain a peg.

### [What Is the Difference between a Token's "Circulating Supply" and Its "Total Supply"?](https://learn.greeks.live/path/what-is-the-difference-between-a-tokens-circulating-supply-and-its-total-supply/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Difference between a Token's "Circulating Supply" and Its "Total Supply"?](https://learn.greeks.live/wp-content/uploads/2025/10/Stochastic-Volatility-Surface-Calibration-on-Degenerate-Leveraged-Token-Structures-Utilizing-Gamma-Hedging.webp)

Circulating supply is tradable; total supply is created minus burned, including locked tokens.

### [What Happens to My Investment If a Rebase Token's Smart Contract Is Exploited?](https://learn.greeks.live/path/what-happens-to-my-investment-if-a-rebase-tokens-smart-contract-is-exploited/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Happens to My Investment If a Rebase Token's Smart Contract Is Exploited?](https://learn.greeks.live/wp-content/uploads/2025/10/Decentralized-Exchange-Mechanism-Structural-Integrity-Cross-Sectional-Derivative-Collateralization-Analysis.webp)

A smart contract exploit can lead to a complete loss of your investment, as an attacker could drain funds or crash the price.

### [How Frequently Do Rebase Events Typically Occur?](https://learn.greeks.live/path/how-frequently-do-rebase-events-typically-occur/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Frequently Do Rebase Events Typically Occur?](https://learn.greeks.live/wp-content/uploads/2025/10/Asymmetric-Digital-Asset-Structure-Illuminating-Complex-Option-Hedging-Strategies-Across-Market-Quanta.webp)

Rebase frequency varies by token, with some rebasing on a fixed schedule (e.g. daily) and others based on market conditions.

### [How Do Wallets Help Users Estimate Fees?](https://learn.greeks.live/path/how-do-wallets-help-users-estimate-fees/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Do Wallets Help Users Estimate Fees?](https://learn.greeks.live/wp-content/uploads/2025/10/Geometric-Abstraction-of-a-Quantum-Leap-in-Decentralized-Finance-Options-Hedging-Strategy-Execution.webp)

Wallets use real-time blockchain data (base fee, recent tips) to recommend optimal Maximum Fee Per Gas and Priority Fee for timely confirmation.

---

## Raw Schema Data

```json
{
    "@context": "https://schema.org",
    "@type": "BreadcrumbList",
    "itemListElement": [
        {
            "@type": "ListItem",
            "position": 1,
            "name": "Home",
            "item": "https://learn.greeks.live"
        },
        {
            "@type": "ListItem",
            "position": 2,
            "name": "Path",
            "item": "https://learn.greeks.live/path/"
        },
        {
            "@type": "ListItem",
            "position": 3,
            "name": "How Does a Rebase Mechanism Concretely Adjust the Token Supply in User Wallets?",
            "item": "https://learn.greeks.live/path/how-does-a-rebase-mechanism-concretely-adjust-the-token-supply-in-user-wallets/"
        }
    ]
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "Article",
    "mainEntityOfPage": {
        "@type": "WebPage",
        "@id": "https://learn.greeks.live/learn/how-does-a-rebase-mechanism-concretely-adjust-the-token-supply-in-user-wallets/"
    },
    "headline": "How Does a Rebase Mechanism Concretely Adjust the Token Supply in User Wallets? \u238a Path",
    "description": "A smart contract periodically alters the token balance in all wallets simultaneously to align the market price with the target peg. \u238a Path",
    "url": "https://learn.greeks.live/learn/how-does-a-rebase-mechanism-concretely-adjust-the-token-supply-in-user-wallets/",
    "author": {
        "@type": "Person",
        "name": "Greeks.live",
        "url": "https://learn.greeks.live/author/greeks-live/"
    },
    "datePublished": "2025-12-04T07:21:01+00:00",
    "dateModified": "2025-12-04T07:21:01+00:00",
    "publisher": {
        "@type": "Organization",
        "name": "Greeks.live"
    },
    "articleSection": [
        "Path"
    ],
    "image": {
        "@type": "ImageObject",
        "url": "https://learn.greeks.live/wp-content/uploads/2025/10/Decentralized-Exchange-Structure-Visualizing-Collateralized-Non-Deliverable-Forward-Contract-Mechanics.jpg",
        "caption": "Two geometrically complex, layered annular structures intersect a mottled teal cylindrical core, all dramatically illuminated against a pure black background suggesting deep space or digital isolation. This visual metaphor strongly resonates with the architecture required for robust, immutable smart contract frameworks underpinning decentralized finance derivatives platforms, particularly concerning collateralization mechanisms. The layered rings evoke the structure of a complex options payoff diagram, illustrating multiple potential risk profiles simultaneously managed within a single protocol vault. Expertly framing this visual implies the sophisticated integration required for Automated Market Maker slippage mitigation during high-volume settlement of collateralized debt positions or managing escrow requirements for non-fungible token options. Such structures are essential for transparent price discovery in exotic derivatives where off-chain reference rates are securely bridged, highlighting the imperative for robust oracle integration within permissionless yield farming strategies and synthetic asset creation platforms operating on Layer 2 scaling solutions."
    }
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "WebSite",
    "url": "https://learn.greeks.live/",
    "potentialAction": {
        "@type": "SearchAction",
        "target": "https://learn.greeks.live/?s=search_term_string",
        "query-input": "required name=search_term_string"
    }
}
```

```json
{
    "@context": "https://schema.org",
    "@type": "WebPage",
    "@id": "https://learn.greeks.live/path/how-does-a-rebase-mechanism-concretely-adjust-the-token-supply-in-user-wallets/",
    "mentions": [
        {
            "@type": "DefinedTerm",
            "name": "Rebase",
            "url": "https://learn.greeks.live/area/rebase/",
            "description": "Mechanism \u238a Rebase operations, within cryptocurrency and derivatives, represent a revision of the blockchain\u2019s history, altering the base from which future blocks are built; this differs fundamentally from a hard fork, maintaining chain continuity while rewriting commit history."
        },
        {
            "@type": "DefinedTerm",
            "name": "Rebase Tokens",
            "url": "https://learn.greeks.live/area/rebase-tokens/",
            "description": "Tokenomics \u238a Rebase tokens represent a novel approach to token supply dynamics, intrinsically linking token price to the circulating supply through an algorithmic adjustment mechanism."
        },
        {
            "@type": "DefinedTerm",
            "name": "Smart Contract Function",
            "url": "https://learn.greeks.live/area/smart-contract-function/",
            "description": "Execution \u238a Smart contract functions represent deterministic, automated code triggered by predefined conditions within a blockchain environment, facilitating trustless interactions and eliminating intermediary reliance."
        },
        {
            "@type": "DefinedTerm",
            "name": "Tax Implications",
            "url": "https://learn.greeks.live/area/tax-implications/",
            "description": "Taxation \u238a The evolving landscape of cryptocurrency, options, and derivatives necessitates a nuanced understanding of taxation, particularly concerning sustainability initiatives."
        },
        {
            "@type": "DefinedTerm",
            "name": "Rebase Mechanism",
            "url": "https://learn.greeks.live/area/rebase-mechanism/",
            "description": "Algorithm \u238a 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\u2014typically price fluctuations relative to a target value."
        },
        {
            "@type": "DefinedTerm",
            "name": "Token Supply",
            "url": "https://learn.greeks.live/area/token-supply/",
            "description": "Circulation \u238a 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."
        }
    ]
}
```


---

**Original URL:** https://learn.greeks.live/learn/how-does-a-rebase-mechanism-concretely-adjust-the-token-supply-in-user-wallets/
