Elastic supply tokens are an innovative concept in the world of Decentralized Finance (DeFi), aiming to create more stable digital assets by adjusting the circulating supply to maintain a target price.
This mechanism differs from traditional cryptocurrencies, which have a fixed supply schedule. In contrast, elastic supply tokens use algorithmic adjustments to increase or decrease the supply based on market conditions.
One of the key benefits of elastic supply tokens is their ability to reduce price volatility. By adjusting the supply, they can help maintain a stable price, making them more suitable for use as a medium of exchange or store of value.