Are rebase tokens profitable

are rebase tokens profitable

If the price of AMPL falls to USD$0.50, you would end up with 0.5 AMPLs worth $0.50 as the price of 1 AMPL reverts back to USD$1.00.

Rebase token ecosystems incentivize on-chain liquidity using staking and liquidity pools. For instance, Ampleforth’s Geyser program enables anyone to stake their LP tokens on Geyser and receive AMPL tokens as rewards. Early-stage projects have offered extremely high APYs to build liquidity, further stirring accusations of a Ponzi scheme.

Making Money with Rebase Tokens

Rebase tokens are similar to other cryptocurrencies in that their value increases or decreases. But unlike other tokens, the increase and decrease in value come from a changing supply rather than a changing price.

Are rebase tokens profitable


An elastic supply token is a special type of token that aims to maintain a stabile price denominated in a fiat currency (USD, EUR etc). This is achieved through a mechanism of increasing and decreasing the total circulating supply. We will from now on refer to this as rebase tokens.

Ampleforth was the first rebase token to gain major popularity and to become listed on major exchanges.
If hold Ampleforth on an exchange like FTX, you will notice that your AMPL amount will decrease or increase on a daily basis. This presents some challenges with regards to tracking your cost basis for accurate tax calculations which we will explain here.

Example

We bought 950 AMPL on FTX and received 8 AMPL the next day from the daily rebase.

Our holdings are now 958 AMPL after the rebase and the cost basis (acquisition cost) is still the same as originally – 1000 USD. After importing transactions from FTX using API, it will look like this:

As we can see above, the cost basis when disposing of 958 AMPL is calculated as 1007.01 USD instead of 1000 USD. To fix this, we need to do two changes:

  1. Create a manual Buy transaction for 1000 USD β†’ 958 AMPL

  2. Tag the original Buy transaction as Ignore

The cost basis will now be tracked accurately and the gain realized when disposing of AMPL is also calculated correctly:

The same principle applies also if you have a negative rebase.

The IRS has not clarified whether staking rewards are counted as income when received or when they’re redeemed. As a result, you must choose between a “conservative” or “aggressive” approach to paying taxes.

And third, you owe capital gains tax on any appreciation in these rewards between the time you receive it and sell it for another cryptocurrency or cash. If your rewards depreciate in value from the time you received them, you still owe ordinary income tax on the original amount, but you can write off the loss against your other capital gains or some income.

Finally, it’s worth noting that your capital gains tax rate depends on your tax bracket and the holding time.

If you hold a cryptocurrency for less than one year, you owe short-term capital gains taxes equivalent to your ordinary income tax bracket.

The mechanism used to adjust the supply is referred to as a rebase; these are carried out to inflate or deflate supply without diluting users’ percentage of tokens.

Rebases are utilized to peg a token to a specific price using economic laws of supply and demand. The idea is that the supply shift will push the nominal price towards its target price (equilibrium) over time. For example, say a target of $1 per token is targeted, supply will keep changing to realize the target.

This type of token model looks closely to stablecoins; however, stable coins aren’t created to be profitable or trade like indexes or commodities.

Elastic token supply models are created with profit in scope as the market cap continues to grow as users receive rebases.

Call(t.destination, t.data); if (!result) { emit TransactionFailed(t.destination, i, t.data); revert(“Transaction Failed”); } } } return _totalSupply; }

The code is similar to Ampleforth, and they implemented onlyOwner modifier

address private _owner; modifier onlyOwner() { require(isOwner()); _; } function isOwner() public view returns(bool) { return msg.sender == _owner; }

According to their RMPL roadmap

Once onchain random rebasing solution has been finalized, contract owner will be locked to ensure no party has control and the implementation is completely self governed.

Similar to TOB, Currently the rebase function are still being triggered off chain.

Owner key address: https://etherscan.io/address/0xd91cf98fdfc0f38c5b7c87510a414636fd3890b0

Final Thoughts

AntiAmple and Ampleforth had a rebase mechanism using an Oracle.

Fi, NFT, and GameFi projects. Through basic staking alone the treasury can Increase by 20%. In the current environment, the finance team hopes to achieve a 100% output.

About Rebase Finance

Rebase Finance is an innovative project that provides auto-staking and auto-compounding capabilities with a market fixed APY of 300,000%. By simply buying and holding $REBASE tokens in your wallet, users earn $REBASE rewards as interest payments directly into their wallet.
The amount of $REBASE reward tokens will increase every 30 minutes.

REBASE also aims to provide a long-term high intrinsic value to all users of the protocol.

Website | Telegram | Twitter | Discord | GitHub

Rebase Finance

[email protected]

Disclaimer:

The information provided in this release is not investment advice, financial advice or trading advice.

Indeed, there have already been several instances of crashes in rebase token ecosystems.

How Do Rebase Tokens Work?

Rebase tokens are similar to stablecoins in that they aim to maintain a peg to a certain value, such as USD$1.00. While algorithmic stablecoins buy and sell tokens using a reserve to maintain a peg, rebase tokens adjust supply levels by automatically burning tokens in circulation or minting new tokens. However, the overall value remains the same for token holders.

For instance, suppose that you purchase 1 AMPL for USD$1.00 and the price increases to USD$2.00.
The Ampleforth protocol will increase the supply of AMPLs and you’ll end up with 2 AMPLs worth USD$1.00 each.

Ampleforth (AMPL), Antiample (XAMP), Tokens of Babel (TOB) and RMPL (RMPL) will be the subject of interest for this research.

Ampleforth (AMPL)

Ampleforth is first token that started it all and made rebase popular enough that new tokens are now copying and innovating on top of it.

Let’s take a look in the Smart Contract of Ampleforth.

AMPL Contract: https://etherscan.io/address/0xd46ba6d942050d489dbd938a2c909a5d5039a161#code

Since the contract is a proxy, the real contract is here: https://etherscan.io/address/0xf9e6a96229140195777a1c3ab47c9bf16f055406#code

/** * @dev Notifies Fragments contract about a new rebase cycle. * @param supplyDelta The number of new fragment tokens to add into circulation via expansion. * @return The total number of fragments after the supply adjustment.

  • #### Elastic Supply this elasticity in supply may result in constant long term growth
  • Bonus tip πŸ₯³

    When you invest or tracking some Token based on rebase tokenomics, it’s like hell to do these calculations every time you wanted to know change in price

    So the tip is observing Market Cap(MC) ,note down the market cap initially then ,

    • When MC is ⬆️ above your last value πŸ”Ί you are in profits now πŸ₯³πŸ₯³πŸ’Έ
    • Market cap is ⬇️ below the noted level πŸ”» you have to wait to see the moon πŸŒ’πŸ˜…

    Downside

    For users, definitely there is a downside Here, as already seen above the tokens price may keep on increasing constantly but this % up in the token’s price is not at all your profit it may become profit but not all the times.

    But I was not quite satisfied and wished to know about it completely πŸ˜ƒ

    Digging deeper

    So I started research with a simple Google search (as always), found some articles and went through them, afterwards I started tracking the Upcake (URC) token as an example in addition to that also went through some interesting (not really 😁) responses given by the dev team to users queries in their community forum

    What did I find ???

    Spoiler Alert ❗

    A bonus tip is hidden πŸ˜‰ in the content down πŸ‘‡

    What is Rebase..?

    • Rebase is basically adjusting circulating capacity i.e decrease by burning out the tokens or increase by adding tokens to supply – including all holder’s and LP’s holding tokens count.

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