Elastic Supply Assets
Learning materials about elastic supply assets, and the ButtonToken and UnButtonToken wrappers
Last updated
Learning materials about elastic supply assets, and the ButtonToken and UnButtonToken wrappers
Last updated
Elastic supply assets, or “rebasing” assets, were originally constructed by Ampleforth as a mechanism to provide stable price, without losing exposure to value gains. Rebasing assets transfer volatility of an asset from price to supply.
This mechanism has a very nice quality in that it allows for stable contracts. For example (taken from the AMPL website):
Imagine Evan and Micah enter into a bet: "If the Lakers make it to the 2022 NBA conference finals, Micah will pay Evan 10 coins. Otherwise, Evan will pay Micah 10 coins."
We would not want to denominate this bet using Bitcoin, because Bitcoin's price volatility makes for an unstable contract obligation.
Rebasing assets' price stability make them great assets for contract denomination.
Another very important benefit of rebasing assets is that they naturally abstract price information away from integrations.
For example, a traditional DeFi lending platform like Aave needs a complex oracle system to calculate collateralization and relative values of assets. This adds extra complexity and risk to the system - If the oracle goes wrong, users could be wrongfully liquidated and pools could be drained.
Lending applications built with rebasing assets don't actually need price data - they only need access to the balances of the asset. Value is expressed directly in the contract's changing balance - the price can always be assumed to be stable and around $1.
Buttonwood extends this concept with the ButtonToken - creating the ability to turn any crypto-asset (BTC, ETH, etc.) into a rebasing asset, as long as it has a solid price-feed oracle.
Buttonwood also created the UnbuttonToken - the inverse of the ButtonToken. It turns elastic supply assets into fixed-supply assets.