A rebase token, also known as a price-elastic token, operates on the principle of automatically adjusting its circulating token supply in response to price fluctuations.
This dynamic expansion and contraction of the token supply is achieved through a mechanism known as rebase.
Elastic Supply and Price Targets
Rebase tokens share similarities with stablecoins in that they have price targets.
However, unlike stablecoins, rebase tokens possess an elastic supply, which means that the circulating supply adjusts based on supply and demand without altering the value of tokens held in users’ wallets.