🎈 Elastic Supply Tokens Rebase Tokens
A token whose total supply automatically expands or contracts to push its price toward a target. The number of tokens in your wallet changes on its own, not just the price per token.
🍕 The simple version — same pizza, more slices
Most coins have a supply that only changes slowly or never. An elastic supply token does the opposite: it changes the supply on purpose to steer its price. Think of a pizza. If you cut it into more slices, you don't have more pizza — each slice is just smaller. A positive rebase hands everyone more slices; a negative rebase takes slices away. Either way, your share of the whole pie is the same. That's why these tokens are also called rebase tokens.
⚙️ How a rebase actually works
Rebases run on a schedule. The canonical example, Ampleforth (AMPL), rebases about once every 24 hours. At each rebase the protocol compares the market price to a target price and reacts:
| Situation | What the protocol does |
|---|---|
| 📈 Price above target | Positive rebase: supply expands, new tokens are added to every wallet, which pushes the price back down toward target |
| 📉 Price below target | Negative rebase: supply contracts, tokens are removed from every wallet, which pushes the price back up toward target |
📌 Rebases hit all wallets at the same time and in proportion. If you held 1% of the supply before a rebase, you still hold about 1% after, no matter how your raw token count changed.
🧪 Why it exists — moving volatility into the supply
Elastic supply tokens are an early DeFi and algorithmic-stablecoin experiment. The idea is to soften wild price swings by pushing the volatility into the supply instead of the price. In practice that goal is hard to reach: even with a price target, these tokens have stayed highly volatile, and elastic does not mean stable.
📊 Why the price chart can fool you
Because your wallet balance moves on its own, a plain per-token price chart can be misleading. The count under the price keeps shifting. A better gauge is market capitalization, which looks at the whole supply at once. This is also a core idea in a token's tokenomics.
🚨 Things beginners should know
- 😮 Surprise balance changes are normal — Your count can change with no transaction from you; that's the rebase, not a hack
- 🎁 More tokens ≠ more value — A positive rebase only splits the same value into more units
- 📉 You can still lose — If the price or market cap keeps falling, holding more tokens won't save you
- 🧭 Watch market cap, not just price — The per-token price hides what the changing supply is doing
❓ FAQ
- My wallet balance changed and I never made a transaction. Did I get hacked?
- Probably not. If you hold an elastic supply (rebase) token, the protocol adds or removes tokens in every wallet at each scheduled rebase. The count changing on its own is the normal behavior of these tokens, not a sign of a hack.
- I received more tokens in a positive rebase. Is that free profit?
- No. A positive rebase splits the same total value into more units, like cutting a pizza into more slices. Your ownership share stays the same, and if the price or market cap keeps falling you can hold more tokens and still be worth less.
- Why does the price chart look strange for these tokens?
- Because the per-token count keeps changing, the per-token price can mislead. Market capitalization, which counts the whole supply, is a more meaningful gauge of how an elastic supply token is doing.