What is a Rebase Token?
A rebase token (sometimes called an elastic token) is a token whose supply is routinely adjusted via an algorithm to control its price. They are similar to stable coins, however, they are not backed by another asset. To control the price of the token, an algorithm will usually remove tokens (burn) or add tokens (mint) to the circulating supply. As such, the supply of a rebase token can be highly variable.
A Deeper Look at Rebase Tokens
As mentioned before, rebase tokens behave very similarly to stable coins in that the price is maintained at a steady value. Since their price is not as volatile as other crypto assets, they are a popular choice for yield farming.
Ampleforth (AMPL), for example, is a rebase token that has gained popularity among investors.
