What is a positive rebase token?
Elastic Supply Tokens Explained.
Positive rebase tokens have an ever increasing circulating supply. The idea is that instead of price volatility, what changes is the token supply through events called rebases.
When a rebase occurs, the supply of the token is increased algorithmically, based on the current supply of the token.
Wait, aren’t many cryptocurrencies operating with a changing supply? Yes, somewhat. Currently, 6.25 new BTC is minted with every block. After the 2024 halving, this is going to be reduced to 3.125 per block. It is a predictable rate, so we can estimate how much BTC will exist next year or after the next halving. Supply-elastic tokens work differently. As mentioned, the rebasing mechanism adjusts the token circulating supply periodically. What does this mean from a practical standpoint? The amount of tokens in user wallets changes if a rebase occurs. The idea is that your holdings proportional to the total supply haven’t changed with the rebase. If you had 1% of the supply before the rebase, you should still have 1% after it, even if the number of coins in your wallet has changed. In essence, you retain your share of the network no matter what the price is.