Rebasing vs Reward-Bearing Mechanism

Rebasing Tokens

Assuming you have 100 LiSTX, you would have approximately 110 LiSTX after a year if the average APR is 10%, which you can then unstack to get back 110 STX.

Today : 1 STX = 1 LiSTX

Tomorrow : 1 STX = 1 LiSTX

Mechanism: Rebasing tokens adjust their total supply to smooth out the value of each token over time. When the protocol's staking rewards increase the overall value, the rebase mechanism might increase the number of tokens in your wallet, or decrease them if the value goes down, to keep the token price relatively stable.

User Experience: You might hold 100 tokens today, but after a rebase, you could have 110 tokens (or fewer), but ideally, each token retains roughly the same proportionate value of the total supply. The idea is that the price per token remains more consistent, but your token count changes.

Purpose: This aims to reduce volatility by adjusting the supply dynamically.

Reward-bearing Tokens

Assuming you have 100 vLiSTX, you would still have 100 vLiSTX after a year, but if the average APR is 10%, you could then unstack them to receive 110 STX.

Today : 1 STX = 1 vLiSTX

Future : 1.1 STX = 1 vLiSTX

Mechanism: These tokens do not change in quantity in your wallet due to rebasing. Instead, the value of the token itself increases over time as rewards from staking are accrued. The number of tokens you have remains constant, but their inherent value goes up because they represent a share in a growing pool of staked assets.

User Experience: If you start with 100 tokens, you'll still have 100 tokens later, but each token might give you claim to a larger portion of the staked assets or the rewards accumulated.

Purpose: To provide a straightforward staking reward mechanism where the token count is stable, but the value of each token appreciates with staking rewards.