Stablecoins and Rebase tokens differ in many ways.Stablecoins have an equivalent value to a single US dollar. Examples include USDTUSD , etc.
Rebase tokens, on the other handare different from stablecoins in many ways. For one, Rebase tokens are ones whose prices are controlled through algorithmic adjustments. In this article, we will discuss the main areas of differences as well as a few similarities that exist between Rebase tokens and stablecoins. So, here they are:
What is a stablecoin?
In a nutshell, stablecoins are digital crypto assets whose value is pegged to (real-world) assets like the United State dollars($). With the emergence of stablecoins, trading became easier and more interesting. Coins like Tether and USD coins are stablecoins, and they are the ones with the highest MC (market Capitalization) in the crypto market today.
Amid this recent war, stablecoins were one of the few cryptos that maintained stability as they are tied to real-world assets (US dollar). This goes to show that the nature of this coin is highly stable and it follows a steady trajectory.
In contrast, What is a Rebase Token?
Rebase Token, popularly known as elastic tokens, is a cryptoasset whose price is controlled by algorithmically adjusting the supply. These coins are mostly not pegged to any other assets and are inflationary in nature. To beat the inflation and increase scarcity, these tokens schedule token burns that automatically deplete their circulation. It is easy to detect an elastic coin by following the automatic supply adjustment process (AMPL) that occurs once each day.
Examples of rebase tokens are; YAM, RMPL, BASED, etc.
- The supply of Rebase tokens is highly volatileOwing to market sentiments, most of the rebase tokens have seen drastic price fluctuations over time.
- The price of a rebase token depends on the assets it is tracking. Due to regular burns and new tokens being created daily, the circulation of rebase coins is also changing rapidly.
How then is a Rebase Token different from a stablecoin?
Even though studies show that Rebase tokens are similar to Stablecoins. There are still major differences between them. Rebase tokens and stablecoins are digital currencies pegged to an asset. But, in rebase tokens, the prices are controlled through algorithmic adjustments. Let’s learn this in detail.
How does Rebase token work?
Rebase token automatically burns tokens that are in circulation. When the supply price is high, the wallet balance increases; consequently when the price is low, the wallet balance reduces because the increase or otherwise in price depends on factors such as Supply and demand. The token supply is adjusted with the motive of reaching a price level that is close to $1 every day.
How do Stablecoins work?
As mentioned earlier, stablecoins are tied to assets and are backed with fiat currency. For example, Tether can be redeemed later for an original currency. This is just one example of stablecoins work.
How is Rebase token used in the digital market?
- Rebase tokens are used for investment purposes, as a store of value, and to make purchases.
- Rebase token protocol owns its own liquidity, so you don’t rely on physically controlled liquidity providers to maintain deep and stable project liquidity.
How are stablecoins used in the digital market?
- The primary use of these coins is to facilitate trades on crypto exchanges.
- Beginners use stablecoin to mitigate trading fees as many exchanges don’t charge for exchanging US dollars for a stablecoin.
- Stablecoins manage the volatility of digital assets.
- It serves as a bridge between conventional system (financial) and DLT marketers.
Which is Better? Stablecoin vs, Rebase Token.
In order to judge which one is better between stablecoin and Rebase Token, certain things need to be addressed, for instance, market share, their nature, and much more.
|Market Share||1.4 $ Billion (approx.)||180 $ Billion (approx.)|
|Nature||Highly Volatile due to constant fluctuations||As the name suggests, stable in Nature|
|Number of Coins/Tokens||No limit as to how many rebase tokens can be created in the crypto-verse.||Its creation is limited to the number of stable assets available to be pegged against. Like FIAT currencies, precious metals, etc.|
|Benefits||Offer better flexibility to new tokens and are hard to manipulate.||Used across the crypto industry as a treasury or cash reserve. Offers more stability in the long run.|
|Vulnerability||Vulnerable to frauds and scams||No signs of Vulnerability|
|Flexibility of Use||Offers the highest level of flexibility||Holders will experience a low level of flexibility|
After continued analysis, we can easily conclude that Rebase Tokens are slowly picking up, as they up their game with many good projects entering the market while stablecoin continues to remain the crucial pillar of the crypto-verse.