# Rebase Mechanics

## What Is Rebase?

Rebase is a mechanism that adjusts token balances automatically. Instead of sending you reward tokens separately, the protocol increases everyone's balance proportionally.

## How It Works

{% stepper %}
{% step %}

### Protocol calculates total rewards to distribute

The system determines the total amount of rewards to add for the rebase period.
{% endstep %}

{% step %}

### Adjusts all staked balances proportionally

All staked balances are increased by the same percentage so each holder's share of total supply remains unchanged.
{% endstep %}

{% step %}

### Your wallet shows increased PRO balance

Balances update without sending tokens — your displayed balance increases to reflect the rebase.
{% endstep %}

{% step %}

### No transaction needed, no gas paid

Because balances are adjusted by the protocol, you receive rewards without any on-chain transaction or gas cost.
{% endstep %}
{% endstepper %}

***

## Example

| Time  | Starting Balance | Rebase Rate | New Balance  |
| ----- | ---------------- | ----------- | ------------ |
| Day 0 | 1,000 PRO        | —           | 1,000 PRO    |
| +12h  | 1,000 PRO        | 0.5%        | 1,005 PRO    |
| +24h  | 1,005 PRO        | 0.5%        | 1,010.03 PRO |
| +36h  | 1,010.03 PRO     | 0.5%        | 1,015.08 PRO |

Your balance grows. Each rebase compounds on the previous one.

## Why Rebase Instead of Claiming?

| Traditional Staking                  | Rebase                            |
| ------------------------------------ | --------------------------------- |
| Rewards accumulate in separate pool  | Rewards added directly to balance |
| Must claim manually                  | Automatic, no action needed       |
| Pay gas each claim                   | No gas for receiving rewards      |
| Rewards don't compound until claimed | Compounds automatically           |

## Rebase Frequency

Crypto DAO rebases every **12 hours** (twice daily).

More frequent rebasing = more compounding events = higher effective APY.

## What Determines Rebase Rate?

The base rate (0.5%–0.9% daily) adjusts based on:

* **Network debt ratio** — Higher debt = lower rate to maintain sustainability
* **Treasury reserves** — Sufficient backing required for minting

This ensures the protocol doesn't over-mint during stress.

## Important Notes

{% hint style="info" %}
**Your percentage of total supply stays the same.** Everyone's balance increases proportionally. Rebase doesn't dilute — it distributes new supply evenly to stakers.
{% endhint %}

{% hint style="warning" %}
**You must stake to receive rebase.** Simply holding PRO in your wallet does not earn rebase rewards.
{% endhint %}

## Related

* [APY Calculation](broken://pages/05503232025c887441b286c7a4fd92fd39762233)
* [Staking Periods](broken://pages/c81270220ec33b1a46518d21b78503fe67bace99)


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