Cryptocurrency News

Elastic Supply Tokens How Do Stablecoins Work? Explanation


After all, there’s more to what you’re seeing on the chart as prices change daily. A 2020 innovation, elastic supply tokens offer you new ways to invest and help make crypto investments much better. Aiming to lessen the impact of the natural volatility of cryptocurrencies that potentially decrease the value of your investments, elastic supply tokens are there to keep your purchase valuable.


When discussing the https://coinbreakingnews.info/ of “rebasing” tokens — let’s first digg into the concepts of supply and demand. The average economist will tell you that the law of supply and demand is the very foundation upon which an asset’s price is determined. The law traditionally states that, if all other factors remain equal, the higher the price of a good rises, the less people will demand that good.

Welche Beispiele für Elastic Supply Token gibt es am Markt derzeit?

Once live, Yam Finance rapidly ballooned in size as users rushed in to farm YAM. Within a day, the protocol brought in more than $600 million in total value locked and the YAM price skyrocketed up to a peak of $167. Along with the recent spike of activity around DeFi in general, Ampleforth has seen an uptick in activity lately thanks to kicking off its “Geyser” liquidity mining campaign this summer. One of the more interesting aspects of this offering is its duration. While some recent DeFi projects have run liquidity mining campaigns that were weeks-long, Ampleforth’s Geyser is structured to distribute rewards to participants for the next 10 years. Moreover, the premise of Yam Protocol helped to raise the popularity of decentralized finance .


ApeSwap is a blend of a decentralized exchange, yield farming, staking, and an automated market maker . ApeSwap users are urged to partake in its liquidity pool offerings via yield farming to earn its native BANANA token. What’s more, these earned tokens can be used to stake and earn other tokens and unlock deluxe features. The same effect is seen in a downtrend; you lose price value and lose the amount of total holding as each rebase occurs setting a spiral of negative rebases.

While technically a elastic supply tokencoin, the AMPL price chart shows you how volatile elastic supply tokens get. Let’s say we have Rebase USD , a hypothetical token that targets a price of 1 USD. After the rebase occurs, you’ll have only 96 rUSD in your wallet, but at the same time, each will be worth proportionally more than before the rebase. The total supply of the project happens to be adjusted with its price increment, thereby making the supply increase accordingly.

The risks of elastic supply tokens

Ampleforth regulates the circulating supply in response to demand, increasing supply as demand increases and shrinking supply as demand decreases. On the other hand, AMPL is not backed by crypto or the dollar, and its goal is to reduce volatility rather than eradicate it. YAM is a completely community-owned experiment, as all tokens were distributed through liquidity mining. There was no premine, no founder allocation – the playing field to acquire these tokens was even for everyone through a yield farming scheme.

The project team has purchased this advertisement article for $1500. It is important to note that, although Olympus is decentralised and censorship-resistant reserve money, it is widely accepted across Web3 and is also extremely liquid and well-backed by assets. So to enjoy lucrative cryptocurrency benefits in the future, always stay educated on any of your crypto investments and ask experts to lessen any risks.

Symmetric and Asymmetric Rebases

To put it in layman’s terms, you will earn big if the prices go skyrocketing; however, the other side of the token price is not at all amicable. With the pool of money, flash loan borrowing also becomes relatively easy, without any collateral. Ultimately, the community came together to fix the issues and relaunch the project — which is working seamlessly — as of today. The Ampleforth team raised close to $5 million in less than 15 seconds during its initial token offering on Bitfinex’s Tokenix platform in summer of the same year.

  • A rebase was triggered to inflate the ELASTIC total supply by 20% .
  • Among all the rebase tokens, AMPL has the biggest market cap (over $232 M at the moment).
  • Every time a miner successfully validates transactions on the blockchain, new units of bitcoin are created (as of now, it is 6.25 bitcoin per block).
  • The reason to think so is that elastic supply tokens’ implementation is achieved via the algorithm and the supply altering option unlocks a number of options.
  • Parallel to this, if the price is higher — there will also be a higher quantity supplied — driving the price back down.

The pivot would entail an initial migration contract being set up that would allow users to convert their YAM to YAMv2. Once the underlying protocol’s audits are completed, then users could migrate their YAMv2 to YAMv3 using another smart contract. If all goes well, then the protocol’s builders will advocate that users who delegated YAM to defend against the rebase bug should be made whole with YAM rewards and bonuses.

However, if the TWAP price deviates too high or low, a Rebase will occur at its given interval. Until now, cryptocurrencies have had a one-way supply, meaning that the supply only goes up until it reaches a maximum point. But what if the supply of a coin could be adjusted up or down — utilizing the laws of supply and demand in order to maintain a stable price?

  • For some, these projects don’t provide meaningful or productive additions to the current landscape of digital money.
  • Users are urged to watch for all of this, as glitches and amusing acts are never in limited supply in the crypto world.
  • So, the token is non-custodial synthetic Bitcoin on Ethereum’s blockchain.
  • It has no hard cap to its supply, ownership rights to the underlying DAO vault, or guaranteed value of any kind.
  • The concept of stable coins highlights a fixed exchange rate principle.

With the help of smart contracts, elastic supply token’s supply algorithmically happens to be adjusted with another procedure known as rebases. On the contrary, elastic supply tokens also are recognized as rebase tokens. This article throws light on the concept of elastic supply tokens, their working principle, why are they needed, and others. So let’s jump into how a basic rebase works; for example, you bought a Rebase token. Let’s say you purchased 1000 worth of ELASTIC for $1000, a hypothetical rebase token with a target price of $1, a typical price target for many elastic supply tokens. Let’s assume buying pressure pushed the price of AAPL up 20% to $1.20.

A snag was hit on August 13th, when a flaw in the design of Pool 1 allowed a user to freeze it. While all user funds were ultimately safe, the project’s builders redeployed a separate Pool 1 to make good on the mistake. On August 17th, a migration plan was revealed that would entail users moving into a new BASEDv1.5 pool.

How do Elastic Supply Tokens work?

When he’s not Frantically trading, he’s enjoying live on a random Thai Beach. Yam Farms for different tokens$YAM’s distribution will only be made to Yield farmers – platform participants who stake YFI, LINK, AMPL, COMP, MKR, LEND or $WETH on the platform. This is a more fair method of distribution as there is no pre-sale of the token to early investors. The developers have stated that they were inspired by $YFI to adopt the staking model to distribute YAM.

On the Rise and Rise of Stablecoins – Lexology

On the Rise and Rise of Stablecoins.

Posted: Tue, 03 May 2022 07:00:00 GMT [source]

This means that there is little data available for people to delve into. The lack of information about elastic supply tokens can be a great risk for investors since they only have little data to base their decisions on. In a nutshell, the elastic supply token shines because of its highly volatile nature. Despite that, the rebasing process is what makes its price steady, which typically happens after 24 hours or depending on the Time-Weighted-Average-Price .

The reason to think so is that elastic supply tokens’ implementation is achieved via the algorithm and the supply altering option unlocks a number of options. So, the token is non-custodial synthetic Bitcoin on Ethereum’s blockchain. Stablecoins are described as semi-fixed supply currencies that are governed .

A rebase (or price-elastic) token is designed in a way that the circulating token supply adjusts automatically according to a token’s price fluctuations. This expansion and contraction is what we call a rebase mechanism. The Ampleforth protocol receives exchange rate information from trusted oracles and introduces inflation when the price is above the peg and deflation when below.