Charm Spiral "Rebase"
Editor's Note: This article comes fromBlocklike（ID：iblocklike）, reprinted by Odaily with authorization.
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Following the slogan of "One day for DeFi, one year for the currency circle", the community shouted "One day for BASE, one year for DeFi".
After a 10-fold increase in two days, BASE quickly entered a death spiral and experienced a -50% deflation.
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In just a few days, BASE almost replicated the three-month journey of AMPL. In the rhythm of rapid market changes, DeFi is once again divided into "classical DeFi" and "new DeFi", and a new concept of ReFi - RebaseFi has emerged.
BASE may be a bolder "social experiment" after AMPL.
secondary title
"Crypto S&P 500"
Algorithmic stablecoins and their respective rebase mechanisms are once again attracting the attention of the market.
I believe the market still remembers the AMPL that was born in July:
In July this year, AMPL started crazy inflation, and its monthly income was as high as 510%. After a month or so of skyrocketing, the market value of AMPL suddenly began to plummet, falling by 90% at one point;
From August to October this year, AMPL has been in a state of no one for a long time. Around November, its market value began to grow with low inflation, and steadily entered a positive cycle;
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(AMPL trend displayed by chartex)
To understand algorithmic stablecoins, most people start with AMPL. In AMPL's white paper, its main logic is to adjust the price of stablecoins through market supply and demand to keep it around $1.
Through the oracle, AMPL updates the coefficient every 24 hours, which is automatically executed by the smart contract. This process is called "Rebase".
Under this mechanism, when AMPL is higher than the benchmark price, the supply will increase, and if it is lower than the benchmark price, the circulation will be reduced. Simply put:
If AMPL>$1, additional issuance will be issued;
If AMPL<1 USD, tighten;
Maintain AMPL ≈ USD 1
The process is like this: when the price of AMPL is higher than $1, the price rises, the number of coins increases, and the coins in investors' wallets will increase.
If the price of AMPL has doubled in the past 24 hours, according to the smart contract, the system will reduce the price of AMPL by increasing the market supply, and the coins in the investor's wallet will automatically double.
At this point, investors are faced with two choices: the first is to sell the newly issued coins to recover the principal; the second is to buy more coins in the face of rising coin prices and increasing coin volume. At this time, a large number of currency holders will spontaneously recommend this currency, forming a strong Fomo sentiment.
A blockchain application developer from the community made a more understandable explanation: "This principle is the common split and merger of stocks in the stock market. If one share is worth 2 yuan, and each If one share is given away as a gift, the stock price will return to 1 yuan. On the contrary, if the stock price is 0.1 yuan and is about to be delisted because the stock price is too low, it can be merged into 1 share for every 10 shares, then the stock price will return to 1 yuan. And AMPL this This kind of splitting and merging is carried out almost every day, so it is expected that the price of a single currency will stabilize by 1 dollar based on the change of the total amount.”
In the past month, the market value of AMPL has been slowly recovering, and the increase has exceeded 100%. Some time ago, it has remained above $1 for more than 40 consecutive days.
If crypto market cap is $450B, BASE is $0.45
If crypto market cap is $800B, BASE is $0.80
In this context, the good appearance of the algorithmic stable currency sector has made the market look forward to BASE. After understanding the concept of AMPL, the concept of BASE is clearer.
BASE is called "a wilder AMPL". In BASE, the process of rebase is not set in dollars, but the total market value of the entire encryption market (all tokens are equally weighted), and the object of rebase is A fixed percentage of the total market capitalization of the crypto market. It can be simply understood as:
The author of Bihu, "Pocket Little Nezha", wrote: "For the cryptocurrency market, Base is like the S&P 500, a highly diversified market index."
According to the introduction, BASE adjusts the supply in an inflationary or deflationary manner through an elastic supply agreement to achieve a target price equilibrium. The function of the Base protocol is to ensure that the basic market price (mp) is equal to the target price (tp), namely:
Base is in equilibrium when market price (mp) = target price (tp) and price fully reflects cmc
mp>When the market price (mp) ≠ target price (tp), Base is in an interrupted state, and the price cannot fully reflect cmc
When BASE is in an interrupted state, it will use the Rebase mechanism to adjust, namely:
At tp, inflation (more coins)
mp
When mp=tp, neither inflation nor deflation
Under this special setting, once it falls into the collective price fomo sentiment, the rapid rise and fall of the currency will occur frequently. BASE quickly entered a death spiral after a tenfold increase in just two days. On the morning of December 7, BASE experienced a -50% deflation. Wanhui Dovey, founding partner of Primitive Ventures, said that she "walked the road that AMPL took in three months."
At present, the algorithmic stable currency sector of the rebase mechanism mainly includes AMPL, YAM, ESD, DSD, base, Basis Cash, Badger, etc., and a variety of innovative rebase methods attract more people to enter the market.
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The Charm of Rebase and Algorithmic Stablecoins
Although the algorithmic stable currency is considered by many people to be mixed with too much FOMO sentiment, its endless performance also makes many people want to find out.
Overseas digital currency investor @bill the investor divides the development of unsecured stablecoins into three stages:
1. Pure Rebase stage, such as AMPL/YAM
2. Simulate the US dollar bond mechanism stage, such as ESD/BASIS
3. Mixed stage, partial mortgage + partial bond market regulation
What stage is the current market in?
James, the co-founder of CryptoBridge Capital, analyzed Blocklike: "The essence of Rebase is a kind of synthetic asset. It uses algorithms to simulate and anchor certain valuable indicators (such as the price, market value and volatility of specific assets, etc.) to It is expected to achieve the goal of eventually synchronizing with the anchored valuable indicators. At present, the typical anchor asset is the US dollar, which will gradually spread to anchor more diversified asset prices in the later period, such as BTC and other public chain assets, indexes (marked S&P 500 or VIX, etc.) or even traditional assets such as US stocks.”
James reminded: "Therefore, the Rebase project will complete the cross-chain and on-chain of assets in terms of value indicators. However, this mechanism is quite experimental and has not really completed the transfer of value. During the participation process, it is necessary to be wary of large investors. Use the advantage of funds to devour other people’s share of the fund pool, so as to complete the harvest quietly under the cover of the Rebase mechanism.”
Facing the current algorithmic stablecoin market, the community generally maintains a rational view.
"AMPL has been developed until now. I don't think that AMPL is so good, but since September 4th, the entire DeFi has been dull, and a new wave of DeFi boom is needed, and it needs stimulation, and the Rebase currency is naturally This kind of ups and downs. AMPL is equivalent to a good social experiment. This mechanism is not necessarily the best for stablecoins, but it can be used in other fields. Rebase is not the best idea for stablecoins, but Other fields, such as BASE, benchmark the overall market value of cryptocurrencies, which is very good and relatively stable.” Exploring Mao, a self-media in the DeFi field, expressed his views on Blocklike.
