What is a Rebase, and why does CUAU rely on it?

A rebase is a mechanism that grows or shrinks the total supply of tokens in every wallet to maintain price stability relative to a target price.

Unlike traditional tokens with fixed supply, CUAU's supply expands or contracts by comparing current market price to the target price derived from our copper and gold index.

This ensures that the token's purchasing power remains consistent over time, regardless of market fluctuations.

Backing Index Composition

30% Copper
70% Gold

The rebase target is determined by the combined value of the copper-gold index(sourced via COMEX prices), as reported by an off-chain oracle daily at 5:00am UTC

Understanding the CUAU Simulation

  • Token price fluctuates based on market forces with mean reversion toward $1.00 (simulated index price for simplicity) target
  • Supply automatically adjusts when price exits the ±7% neutral band (0.93–1.07)
  • Your wallet balance changes proportionally during rebases to maintain consistent CUAU price
  • Portfolio value (bottom chart) shows price × balance of CUAU - remains relatively stable when mechanism works optimally
  • Daily supply changes are capped at ±10% to prevent extreme volatility
1

Price Deviation

When the token's market price deviates from the target price (based on copper-gold index) by more than 7%, the rebase mechanism activates.

2

Supply Adjustment

If price is above target, supply increases, resulting in more tokens in your wallet (positive rebase). If below, supply decreases, tokens in your wallet decrease (negative rebase). The maximum supply adjustment is capped at 10% per day.

3

Proportional Adjustment

Every wallet balance is adjusted proportionally - your percentage ownership remains unchanged.

Rebase Formula

New Balance = Old Balance + (Old Balance × Rebase Multiplier − Old Balance)

Where Rebase Multiplier = (Market Price) / Target Price

The Price Formula

CUAU maintains its price on DEXs based on a version of the Constant Product equation. Instead of maintaining a single pool size constant, the total pool size shifts upon a rebase, yielding a variable product

The VPMM formula

(CUAU) × Quote Currency = Pool Total

This formula guarantees that:

  • Liquidity is always available
  • Pricing is predictable
  • Rebases will not result in lost tokens like in a fixed constant CPMM
  • Supply adjustments maintain price stability by allowing the pool total to shift, accomodating rebases in DEXs like Uniswap

In the above graph, individual contour lines represent the price of an asset, whereas shifts in total product(z-axis) represent rebase events.