Rebase Tokens News

Rebase tokens are a type of cryptocurrency that resorts to rebalancing the tokens in circulation in response to the token’s price fluctuations. Although similar to stablecoins, this rebalancing mechanism in rebase tokens is algorithmically pegged to a specific price rather than a fiat currency or other traditional asset class. Effected by burning or minting additional tokens, rebase or elastic tokens are relatively new to the crypto space and have an underlying monetary policy called rebase mechanism that defines how and when the rebalancing or rebasing is conducted. In fact, they can effectively solve the liquidity problem many decentralized finance (DeFi) projects face by representing the collateralized asset in a 1:1 ratio, without token supply dilution and managing incentivization through yield-generating protocols.

With the entire mechanism being handled by smart contracts, the periodic token supply adjustments are known as rebases and are intended to maintain every investor’s proportional ownership of the overall token value. Along with stablecoins, rebase tokens are being increasingly used to execute financial agreements or contracts with crypto assets rather than fiat money without having to deal with the high volatility that is common across most cryptocurrencies.