About the Protocol

A deeper look into Rebase and its protocol

Intersecting Technology & Economics

Rebase is based on Ampleforth, which was created through drawing a connection between technology (cryptocurrencies) and economics (independent money).

Rebase propagates price-information into supply. The Rebase protocol seeks a price-supply equilibrium, and will enter a state of change until it finds one. As a result, the system alternates between two modes:

  • Dynamic: In which supply is changing

  • Equilibrium: In which supply remains static

The Rebase protocol seeks to reflect demand changes into the quantity of Rebase tokens rather than the price. Here’s a simple example:

  1. Alien purchases 1 Rebase for $1.

  2. Demand suddenly increases, and Alien now has 1 Rebase worth $2.

  3. In the case above, the system will seek a new price-supply equilibrium, such that Alien ends up with 2 Rebase tokens, each worth $1.

  4. And the opposite will is true when demand decreases.

Continuing from the example above:

  1. Imagine Alien has 2 Rebase tokens worth $1.

  2. Demand suddenly decreases, and Alien now has 2 Rebases each worth $0.50.

  3. In this scenario, the system will seek a price-supply equilibrium such that Alien ends up with 1 Ample worth $1.

To achieve price-supply equilibrium, the protocol expands and contracts supply in one of two ways.

The price target is CPI $1 USD in 2019.

  • Above the threshold $1.09 the protocol expands.

  • Below the threshold $0.91 the protocol contracts.

Supply Smoothing

To avoid unnecessary overcorrection, the protocol gradually adjusts supply based on a sigmoid curve. To learn more about these mechanics you can refer to Ampleforth’s AIP 5.

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