About

Based Protocol is an Ethereum-based token project and supply rebasing system that aims to keep the value of one BASED token close to one sUSD, a synthetic version of the US Dollar. The project borrows its monetary policy from stablecoin project Ampleforth. Unlike Ampleforth, however, Based Money did not raise any outside funds and instead plans to distribute all BASED tokens through its liquidity mining program. The project describes its rebasing system as a "DeFi game of chicken" because it will contract or expand the BASED supply based on the price of its token.

History

Based.Money was one of the many DeFi (decentralized finance) forks to emerge during the sector's rise to prominence in 2020. DeFi’s potential to transform banking and finance has made it an area of high interest within the crypt industry. However, the DeFi frenzy in mid-2020 also led to some less than savory projects.

Based.Money somewhat resembles these lower-tier projects as it is a simple fork of Ampleforth that recreates a digital game on financial chicken. But the project did not offer any tokens to VCs or founders, and the keys that can control its token contract and rebasing mechanism were reportedly burned, making it less susceptible to manipulation. Based is a member of a growing list of DeFi projects that are driven more by memes and community than a potential utility.

Based uses a dynamic supply emission schedule defined by periodic rebases. These rebases either increase or decrease the supply to keep the value of one BASED token close to one sUSD, a synthetic version of the US Dollar. A rebase event occurs whenever the price difference between BASED and sUSD is more than 5% in either direction. If the difference is above the 5% threshold, the BASED supply expands. If below, the supply contracts. When a rebase is triggered, the Based.Money contract adjusts the BASED supply for all holders over a ten-day period to realign the price of BASED with one sUSD. There is a minimum buffer of 24 hours between rebase events.

On September 5th, 2020 the first Based rebase took place. Following the rebase, the private keys for the Oracle that activates the rebase were reportedly burned; therefore, any future rebases will take place automatically if the price varies outside of its sUSD peg by more than 5%.