The idea is that your holdings proportional to the total supply haven’t changed with the rebase. If you had 1% of the supply before the rebase, you should still have 1% after it, even if the number of coins in your wallet has changed. In essence, you retain your share of the network no matter what the price is.
Rebasing token examples
Ampleforth is one of the first coins to work with an elastic supply. Ampleforth aims to be an uncollateralized synthetic commodity, where 1 AMPL targets a price of 1 USD. Rebases occur once every 24 hours.
The project had relatively little traction until the introduction of a liquidity mining campaign called Geyser. What’s particularly interesting about this scheme is its duration. It distributes tokens for participants over a 10-year period. Geyser is a prime example of how liquidity incentives can create significant traction for a DeFi project.
While technically a stablecoin, the AMPL price chart shows you how volatile elastic supply tokens get.
Bear in mind that this price chart only shows the price of individual AMPL tokens, and doesn’t take into account the changes in supply. Even so, Ampleforth is highly volatile, making it a risky coin to play around with.
It might make more sense to chart elastic supply tokens in terms of market capitalization. Since the price of individual units doesn’t matter as much, the market cap can be a more accurate barometer of the network’s growth and traction.
AMPL market cap on a logarithmic scale.