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This was a thought that came about when I first learned about rebase tokens, but it also applies to just regular staking in inflationary Proof of Stake coins. Rebase tokens such as $OHM, OlympusDAO, on Ethereum and $TIME, Wonderland, on Avalanche started this wave of OHM forks that spread across different blockchains. They got so much attention in the DeFi space to the point where people would call them part of DeFi 2.0. The trick to gain attention was the absurdly high yield figures anywhere from 4000% APY for OHM to millions of % APY on OHM-forks on other blockchains, this is accurate as of today but was even higher months ago.
Some would look at those figures and write them off as a scam, some others would jump in like true DeFi degenerates to farm that high yield. From what I’ve seen so far, not many people paused to consider why or how. Even if you aren’t interested in this part of DeFi, keep reading because it’s relevant if you’re staking your coins on any other blockchain too. (Jump to the section below if you want)
So, you stake your OHM, and you’re done, you just sit around and wait for staked OHM to accrue. Where does it come from though? The answer: Tokens are being minted and distributed to stakers. (There’s a more complex process as to how much is minted, but it isn’t relevant to the point of this article)
The currency in this case is being rebased, meaning for a fixed total market value, when we increase the token supply, we change the share of that market value each token represents. Just…
