Understand rebase tokens – CoinTracker

Rebase tokens are cryptocurrencies that do not have a fixed balance in each holder’s wallet. Instead, they use a rebase mechanism to dynamically adjust balances. Common reasons for using rebase mechanism include:

Algorithmically adjusting supply to maintain price stability in response to demand.
Tracking interest earned or debt owed by a wallet.

Common examples of rebase tokens include:

stETH
aUSDC
variableDebtUSDC
sKLIMA
AMPL

Rebase tokens vs. fixed supply tokens

Many cryptocurrencies have fixed supplies, such as Bitcoin and traditional ERC-20 tokens like USDC and UNI. These tokens follow predetermined issuance schedules and may mint or burn tokens to adjust the supply. Wallet balances are only adjusted through explicit transfers between wallets.

In contrast, rebase tokens have dynamic supplies and wallet balances that change automatically through built-in rebase mechanisms, without explicit transfers. As a result, a wallet's balance on Etherscan may not match the net of its transactions.

Example: Fixed supply

A wallet with 100 USDC can only increase its balance by receiving a USDC transfer or interacting with a smart contract (e.g., a Uniswap transaction) that triggers a transfer.

From a tax perspective, this is straightforward, as all acquisitions and disposals are clearly recorded in the transaction history.

Example: Rebase token

A wallet that initially receives 897,202.2584 AMPL, transfers out 1.2 AMPL, and later transfers out 897,201.0584 AMPL should theoretically have a balance of 0 AMPL.

However, due to the rebase mechanism, the balance may instead display 4,796,035.6290 AMPL, reflecting an increase in token supply since the token was first received.

Rebase tokens and balance discrepancies

Rebase tokens can cause discrepancies between the balance shown in CoinTracker and the actual wallet balance. This may result in insufficient balance errors during sales or transfers, or a positive balance even after the tokens were fully sold or transferred.

To address this, add transactions to adjust balances based on tokens earned or lost through the rebase mechanism.

Troubleshooting rebase token errors

Balance increase and insufficient balance error

Scenario:

A wallet purchases 1000 AMPL.
After a few days, the rebase mechanism increases the balance to 1200 AMPL.
If the wallet swaps 1200 AMPL for another crypto, they may see an Insufficient Balance error due to the missing 200 AMPL. By default, the cost basis for the missing 200 AMPL is set to $0.00.

Solution:

To fix this, add Receive transactions to account for the missing 200 AMPL.
- Depending on the token’s rebase mechanism, these extra tokens may need to be categorized as income.

Balance decrease and balance difference error