Rebase
An automatic adjustment to every holder's token balance, proportionally expanding or contracting supply without changing individual ownership percentages.
A rebase mechanism adjusts token balances across all wallets simultaneously by changing a global conversion factor between the token's internal shares and displayed balance. No individual transfer transactions occur — the adjustment is instantaneous at the smart contract level. A 2× positive rebase doubles every wallet's displayed balance while halving the price per token; total portfolio value is unchanged in theory.
Ampleforth (AMPL) pioneered elastic supply rebasing to target a $1 price: if AMPL trades above $1, supply expands daily; if below, it contracts. Lido's stETH uses a positive-only rebase to pass through Ethereum staking rewards — stETH balances increase daily as rewards accrue, making claims automatic without requiring withdraw transactions.
Rebasing tokens create composability problems in DeFi: protocols that snapshot balances at a point in time (Uniswap v2 pools, some lending markets) cannot handle balances changing outside of normal transactions. This is why Lido also offers wstETH — a non-rebasing 'wrapped' version where balance stays constant but exchange rate appreciates — for use in DeFi protocols that can't handle rebases.