Rebase
is a token or a protocol that adjusts circulating supply automatically or periodically in response to price fluctuations.`
Short History
So...
Last week when I was skimming through some crypto news an article grabbed my attention which is about a new token project upcake(UPC) ( ofcourse we are witnessing hundreds of launches every single day 😅 ) & about it's trend in coinmarketcap and twitter
That one word which grabbed my attention is rebase (bcoz it was new for me ).So, I went through the project whitepaper in detail, and found simple explanation for that. But I was not quite satisfied and wished to know about it completely 😃
Digging deeper
So I started research with a simple Google search (as always), found some articles and went through them, afterwards I started tracking the Upcake (URC) token as an example in addition to that also went through some interesting (not really 😁) responses given by the dev team to users queries in their community forum
What did I find ???
Spoiler Alert ❗
A bonus tip is hidden 😉 in the content down 👇
What is Rebase..?
- Rebase is basically adjusting circulating capacity i.e decrease by burning out the tokens or increase by adding tokens to supply - including all holder's and LP's holding tokens count. This is done in order to adjust the token price, without affecting the value of anyone's share of coins. This increase or decrease in supply works with a mechanism that adjusts the supply algorithmically
Example Time
Let our brains grab the above definition with an example
Let's say at some time x , circulating Supply is 1,00,000 tokens And you hold 1000 tokens each of value 1$.
- Let us assume that negative rebase happened by 10%
- Now the supply will be 90,000 tokens and your holding count will be 900 with each token valuing to 1.12$ (expected ideal price but in reality it varies depending on various factors) $$ 1,000 X 1$ = 900 * 1.12$ $$
- But here, ration of your tokens to total supply will be remained constant
- holding/supply before rebase = holding/supply after rebase $$ 1,000 / 1,00,000 = 900/90,000 $$
Practical Ways
Expecting that the above said theoretical definition is clear
let's see two real world implemented definitions
- By Ampleforth (AMPL) > The automatic supply adjustment process known as a rebase occurs once each day, with a positive rebase if the price goes above $1.06, and a negative rebase if it is below $0.96. The overall goal of the system is to create incentives that drive the market price of AMPL back to ~$1.
- By UpCake(UPC) > On an hourly basis, the overall supply of our token will be reduced by a pre determined % impacting everyone in the ecosystem
Why Rebase?
Why many projects are now using rebase,
- #### The Marketing Benefit
As the supply been reducing towards an ideal figure, the price of the token keeps on increasing more and more when compared to normal coins, there are 2 advantages by this
- % increase in price of token is incredible and it makes price chart looking good which may attract people to buy
- Also bcoz of this, these coins may trend on platforms like CoinmarketCap which may grab attention of many users worldwide which intern increases exposure by people speaking about the token
- #### Elastic Supply this elasticity in supply may result in constant long term growth
Bonus tip 🥳
When you invest or tracking some Token based on rebase tokenomics, it's like hell to do these calculations every time you wanted to know change in price
So the tip is observing Market Cap(MC)
,note down the market cap initially then ,
- When MC is ⬆️ above your last value 🔺 you are in profits now 🥳🥳💸
- Market cap is ⬇️ below the noted level 🔻 you have to wait to see the moon 🌒😅
Downside
For users, definitely there is a downside
Here, as already seen above the tokens price may keep on increasing constantly but this % up in the token's price is not at all your profit it may become profit but not all the times.
Let us consider the same example as mentioned above
token's price is 12% up from 1$ to 1.12$ but there is no profit for you as no. of tokens decreased proportionally
You will be in profits, iff the % increase in price is more than enough to compensate the decreased tokens + give you profit
One have to mind this that MarketCap is correct indicator than the price change when tracking these type of tokens.
Inspiration
A friend of mine invested in a token built on rebase without knowing about this protocol and he got panic when he actually saw that the num of tokens he held decreased & also tokens value was slight down while token price increased by some % and he thought that he was scammed and blamed the dev team in their community forum😅
So I thought of writing this
Will rebase be the future ??
We can definitely witness many more projects using rebase technique, also they may trend asap after their launch bcoz of the above explained marketing technique but what we have to still know is Will users be able to make profits more than by believing standard coins
comment down 👇🏻👇🏻
Top comments (12)
If the coin is using the rebase technique, is there any reason why I would have to use a 3rd party app to update my coin count? In a telegram group, someone is saying to log into appendw.online which then asks for my wallet password which I'm very skeptical about.
The stock market as a whole is very unstable right now because of global instability. Consequently, there are certain fluctuations in cryptocurrencies. I have noticed this more than once, when one crisis or another occurs in the world. By the way, regarding cryptoindustry in general, here bitcointimesmedia.com/ you can read more about it and find out more about it. It helped me to understand it at first.
Don’t buy these they are scam buy normal cryto
Yup!!
Ok if rebase doesn't make profit then it should not make loss too. My coin is decreasing and now its 1500 from 101000 in my trust wallet. What is happening?
As per the actual theory it should not but in reality many rebase projects are getting failed and making severe losses for people because of many reasons
Oh my God. It all seems like a big scam, ultra cheap coins, rebase rules, etc.y coins have reduced to 500 now. Any idea how do we get back lost coins if we can?
Sadly, we can't get those coins back
And the only way to recover from losses is to sell when marketcap increased( which is not happening in case of many coins)
( the development team is gaining huge amount from heavy taxes on transactions and they are making profits there by.)
How can you know what coins are rebase projects?
We can refer their website for project whitepaper to get technical details or it may be mentioned in the about section in coinmarketcap
How do you calculate rebase loss? I had millions of coins in my wallet and now I have a little over one hundred
Amount you bought for - (No of coins you hold * current price)