How does the rebase mechanism work in the context of digital currencies?

1 answers

• May 02, 2022 · 3 years ago
  In the context of digital currencies, the rebase mechanism is a way to stabilize the value of a token by adjusting its supply. It's like a thermostat that regulates the temperature in a room. When the value of the token deviates from its target price, the rebase mechanism kicks in and adjusts the supply accordingly. If the value is too high, the mechanism increases the supply, and if the value is too low, it decreases the supply. This helps to maintain a relatively stable value for the token and ensures that it can be used as a reliable store of value and medium of exchange. The rebase mechanism is an important tool in the world of digital currencies and plays a crucial role in maintaining their stability and usefulness.
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