How do Rebase Tokens & Stable Tokens Differ?

How do Rebase Tokens & Stable Tokens Differ?


We are going to look into these 2 Tokens to see how they a different from each other. They are different but they operate in a similar way, so lets get into detail and see how they differ.

Rebase Tokens

Rebase Tokens are also known as elastic tokens, i am sure we have heard about elasticity of demand and how it works. Well for the benefit of those who do not know how it works, the price is determined by how elastic is the demand. If the demand is too low with too much supply then the price will fall and also if the demand is high with less supply then the price will rise.

9a597d9fa0c749b4c917909cc0ea773a84086237fcea0441a9acd37ca53279c4.png

On the issue of rebase tokens they try to maintain the price of an asset at a constant price so as to store its value, e.g AMPLEFORTH maintains that its target price is $1.04.

If you check the all-time high of AMPL its $4 but now its trading below $1, the reason being that when the price surpass $1 they flood the market with more AMPL so as to dilute the demand therefore the price will fall because demand will  be well met by the supply. So when the price is above normal target price they will apply negative rebase and the supply will increase and the price will fall.

Stable Coins

Stable coins are now more popular than ever because people tend to buy them when the market is bleeding so as to safe-keep the value of their portfolios. Unlike Rebase tokens, the prices of Stable coins are always pegged to a constant value which is $1. Stable coins have some backing so as to maintain the volatility.

3c3a947138b7ed4523b148167354aa4dc55675fd65e51221c310839530ae6400.png

Stable coins are not those type of crypto you buy expecting to make profit, remember they are just a store of value. So only sell your volatile alt-coins and buy stable coins when the markets are bleeding not when the markets are bullish.

Conclusion

These too works almost the same though with some differences, Stable coins are really stable and can be relied upon because you will have the number of your tokens and they do not decrease whereas in the rebase tokens when the price is going up they apply negative rebase and the wallet balance will reduce automatically.

Lets you bought 100 AMPL and there is negative rebase, your balance will be decreasing daily and you will be shocked seeing you balance now maybe 60AMPL. So that's how they differ from each other, they are not profitable tokens.

 

 

How do you rate this article?


23

1

Defiant Pathfinder
Defiant Pathfinder

I refuse to giveup


Defiant Pathfinder
Defiant Pathfinder

I am Unstoppable & Unpredictable

Send a $0.01 microtip in crypto to the author, and earn yourself as you read!

20% to author / 80% to me.
We pay the tips from our rewards pool.