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Elasticity Supply Tokens Explained

BitForex Editor
Jan 19, 2021

The multidimensional feature of Blockchain technology has created a wealth of opportunities for Cryptocurrency to thrive. Asides, the obvious secured transactions luxury it affords Bitcoin, Ethereum, and other coins, Blockchain offers a whole new depth to the word “supply”. Decentralized finances have benefitted from the abundance of possibilities available to the system of cryptocurrency that the elasticity supply token was birthed. This new product was shot into the limelight and since then has captivated many in the crypto economy. So how does the Elasticity supply token work in the digital world we live in today?

What is Elasticity Supply Token?

The elasticity supply token has a unique process as the circulating supply increase and reduces based on the volatility in the token price on the market. The circulating supply here means the number of coins that are accessible to the general public without being misinterpreted as part of the total supply. Elasticity supply token entails the supply works in such a way that the supply is not fixed but adopts a process called rebasing that helps to adjust the distribution process. The rebasing process occurs in such a way that the original balance in holders’ wallets is not diluted but adjusted till they hit their target price. The same goes for stable coins as well, but elasticity supply tokens are commodities with altering values based on the price that eventually stabilizes over time.

The path through which elasticity supply token threads it can be argued is the same way other cryptocurrencies are tending towards. Both coins are influenced by the change in price so why are they different. Many traders and crypto analysts have argued this area since the discourse of elasticity supply token came into being. People will say as the halving session of BTC continues with then next propose halving to take place in 2024, the coin will reduce in circulation. Therefore, 3.125 BTC will be mined per block as opposed to the 6.25 that was done in the period prior to the halving – the time we are in now.

However, the rebase is totally different, for there to a balance in the supply of the token there will be some adjustments. If the price falls below 1USD - whatever FIAT currency we choose, the rebase mechanism will reduce the supply and make the value of each coin worth more. The reverse is the opposite if the price is above, the mechanism increases the supply but reduces the value of each token. In essence, you still have the same share regardless of the value in your wallet. So, if by any chance you had 100 elasticity supply coins before the rebase and the price goes below 1USD, you will have less. However, each token will be worth more in proportion than before the rebase.

There are some coins that have worked effectively with the elasticity supply methods, so it is not an alien subject but very much practicable in the global scope of cryptocurrency. Below we will examine some of the coins that have formed a synergized relationship with elasticity supply.

Ampleforth

This coin goes by the code name AMPL, it aims to a synthetic commodity that targets the 1USD price and subsequently releases every 24 hours. It is dubbed the largest price elasticity token to date as it surpassed the $1 mark making it to $3.79 in July 2020. It is also geared towards providing returns to holders through methods that are uncorrelated to cryptocurrency for the next 10 years. One of the major reasons for the token’s uptrend was the liquidity mining campaign started by Geyser. The duration is one of the features that caught the eyes of investors and crypto analysts.  

Yam

This is another token that has gained massive traction in recent times based on the adaptive properties it possesses. It also seeks to achieve a price of 1USD as everyone was given an even opportunity to get the token. One of the similarities between the yam and the AMPL is in the liquidity mining, for YAM holders, the liquidity mining made it possible for the distribution of the token to every one of them. The holders would have been particularly happy as YAM attained the 600 million dollars’ worth of value locked in two days. However, the numbers came to futility when there was a bug discovered in the rebasing framework used to adjust the supply of YAM.

REB

Rebased is very new to the market as it was launched in August 2020. REB follows the aforementioned tokens with a target of $1USD consequently it releases every 12 hours. It performed fairly well, achieving the $250,000 of liquidity in its first week. Currently, there are more than 2.25 million REB tokens in the crypto economy.

In conclusion, the elasticity supply token discourse is a little bit complex for many people in the crypto economy. As much as it can increase your profit, it can accelerate the speed of your losses. Also, it will leave you with each time a rebase happens. Now imagine if the rebase happens every 12 hours, that will be a tragic story. Thus, the only green light for investing in the token is if you are completely sure of what you are doing.

Cryptocurrency has the ability to turn people into millionaires overnight but it is also capable of downing your profits in a shorter amount of time. A lot of people rush into cryptocurrency because of the thrill and the opportunities just like the ones these tokens offer. But without understanding the techniques and the driving factors, you will not be in control. Understanding the elasticity supply token goes beyond reading the chart on the market and making predictions, it has to deal with patience and consistency in all areas.

As much as we see the compound gains as gold in the jewelry store, they can be detrimental to your capital and overall trading career. So, tread wisely, read and gather enough information before taking any decision.

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