Rebasing

What is rebasing and how does it work? How is it different than airdropping?

Rebasing is a mechanism through which the total supply of tokens is adjusted. Rebasing works by taking the “base” number of tokens, T, and multiplying it by some “rebasing factor”, RF, to get a new number of tokens. For example, let’s say there were a total of 100 tokens: 10 were held by Holder A (10% of the total) and 90 by Holder B (90% of the total). In a rebasing, we might want to double the total number of tokens (i.e. a rebasing factor of 2). We multiply each holder’s balance by the Rebasing Factor — 2 in this case — so after rebasing a total of 200 tokens are outstanding in which Holder A has 20 tokens (still 10% of the total) and Holder B has 180 tokens (still 90% of the total). Economically, Holder A and Holder B are in the same position both before and after rebasing. How can we do this? One way would be to mint and airdrop new tokens to each token holder. This would cost a lot of gas, however, because it requires updating each token contract storage location that represents a user’s balance. Rebasing allows us to adjust all token holder balances in a gas-efficient manner by introducing the concept of user “shares”. A “share” is similar to a share of a company’s stock - it can be thought of as a claim on a percentage of the total supply of rUSDY tokens (and, in fact, the concept of rebasing is similar to the concept of a share split – except rebasing is automatic). A user’s balance is then equal to the percentage of total shares they hold, multiplied by the total number of shares:

NumTokens_User = NumTokens_Total * (NumShares_User / NumShares_Total)

When we rebase, therefore, we only have to update one contract storage location: NumTokens_Total. As you can see from the formula above, that will increase the balance in your wallet while keeping your percentage of the total tokens the same. Here’s an example where we increase NumTokens_Total from 100 to 200:

And what number do we set the NumTokens_Total to be? We set it equal to the Total Value Locked (TVL) of rUSDY as of the latest price update. In other words, we set NumTokens_Total = TVL, thereby making TVL / NumTokens_Total equal to $1.00.

The rebasing factor RF, then, is calculated as RF = NumTokens_Total_New / NumTokens_Total_Old.

We can use a simple example to check this. Let’s say that on Monday the total number of tokens after rebase (NumTokens_Total_Old) was 2 (implying an rUSDY TVL of $2.00). Let’s also say that at the end of Monday, the price of USDY increased to $2, so the TVL of rUSDY at the end of the day (TVL) was now $4. This implies that the Reference Token Price - the ‘face value’ of the rUSDY token price - is 4 dollars / 2 tokens = $2 per token. To make the Reference Token price per rUSDY token equal to $1.00 after rebase on Tuesday, we need to double the number of tokens. In this case, the RF would be 2 ($4/$2 = 2). As a result, because the number of rUSDY tokens doubled for everyone, the Reference Token Price per rUSDY token would be reduced to $1.00 per token.

Finally, please note that when your rUSDY balance increases due to rebasing, you will see the balance increase in your wallet, but you will not see an accompanying transaction in your wallet’s activity or on a block explorer. This is because the tokens are simply being rebased rather than tokens being sent to the holder’s wallet.

How often do you rebase rUSDY?

rUSDY is rebased daily at the same time the USDY price is updated. You can learn more about how the price of USDY is determined here.

Yield is accrued to tokens at the time of the respective price update. As a result, holders of both rUSDY and USDY who submit a redemption request prior to the daily price update (and corresponding rebase) on a given day do not accrue yield on those tokens for that day. Please note that rUSDY and USDY holders are not ‘paid out’ yield, but rather that yield is reflected by the increased value of their existing USDY tokens or increased number of rUSDY tokens.

What is the difference between rebasing rUSDY and updating the USDY token price onchain?

When the USDY token price (aka the Reference Token Price) is updated each day, a rebase occurs in the same block, so you can think of a “price update” and a “rebase” as de facto being the same events, occuring at the same time.

How do I convert between USDY and rUSDY?

Use the Ondo Converter (opens in a new tab) on our website to easily convert between USDY and rUSDY

USDY Legal Disclaimer

USDY tokens have not been registered under the US Securities Act of 1933, as amended ("Act") or the securities or financial instrument laws of any other jurisdiction, and may not be offered or sold in the US or to US persons unless registered under the Act or an exemption from the registration requirements thereof is available. The Tokens are offered and sold in the European Economic Area and the United Kingdom solely to qualified investors, and in Switzerland solely to professional clients. Other jurisdiction-based prohibitions and restrictions apply. Ondo USDY LLC, the issuer of USDY, is not registered as an investment company under the US Investment Company Act of 1940, as amended, or as an Alternative Investment Fund or Undertaking for Collective Investment in Transferable Securities in the European Economic Area, or under the securities or financial instrument laws of any other jurisdiction. Nothing herein constitutes any offer to sell, or any solicitation of an offer to buy, USDY. Nothing herein constitutes investing advice. Acquiring USDY involves risks. A USDY holder may incur losses, including total loss of their purchase price. Past performance is not an indication of future results. Additional terms apply. See docs.ondo.finance/legal/terms-of-service, docs.ondo.finance/general-access-products/usdy and ondo.finance/usdy (opens in a new tab) for details.