How Does a Rebase Mechanism Work in Practice?

A rebase mechanism works by increasing or decreasing the number of tokens in every holder's wallet. This is done through a smart contract that automatically adjusts the supply based on a predetermined formula.

The rebase can be triggered by a specific time interval or by a change in the token's price relative to a target price. The goal is to maintain a stable price peg.

The value of each token changes, but the total value of a user's holdings should remain proportional to their share of the total supply.