Rebase Tokens Explained: What They Are and How They Work

Rebase tokens introduce an elastic supply model where token balances in users’ wallets automatically expand or contract to align the market price with a predetermined target—no collateral needed. This unique mechanism makes them a fascinating experiment in on-chain monetary policy.

How They Work

Positive Rebase: Increases token balances when price is below target .
Negative Rebase: Decreases balances when price is above target.
The goal: Adjust supply not price, creating indirect price pressure.

Given the historical challenges with rebase tokens the goal is to focus on adapting the "elastic supply" concept to enhance existing product categories rather than creating new speculative assets. For instance, the dynamic tokenomics could be used in loyalty programs where the value or quantity of loyalty points adjusts based on user engagement or platform success, offering a novel way to manage rewards and maintain long-term user interest provided clear communication to avoid user confusion. Although at the moment the adoption remains limited and developers are actively exploring hybrid models that combine rebase logic with utility-driven incentives, which may open the door to more sustainable use cases in decentralized finance and beyond.