What Is the Difference between an Elastic Supply and a Fractional Reserve Stablecoin?
An elastic supply stablecoin adjusts its token supply automatically via an algorithm (rebasing) to maintain its peg, often without direct collateral. A fractional reserve stablecoin is backed by a mix of high-quality collateral (like fiat or crypto) and a secondary, volatile asset, where the collateral only covers a fraction of the stablecoin's total supply.
