# Elastic Supply & Rebasing

## Elastic Supply - Towards Stability

In traditional yield aggregators, deposit tokens will change in value with accrued interest, making them inherently not stable in value and thus not suited to be a medium of exchange.

**The Flurry Protocol’s rhoTokens are unique** since they are **stable** and **fungible**, and the exchange rate of a rhoToken to its backing stablecoin will remain **1:1** through a process of **Rebasing**. When the rate goes up and the value of rhoToken increases, the supply of rhoToken is adjusted and the quantity of rhoToken in holders' wallets increases automatically in proportion, and vice versa. 

![The value of rhoTokens are pegged 1:1 to the corresponding stablecoins through rebasing!](/files/uWEh7GoJHaAy2c857hvK)

Therefore, the yield generated by the Flurry Protocol is distributed to the holders by increasing the supply, and the Returns are passed on by rebasing to reflect yields being earned by holders.

> **For example, if a user owns 1000 rhoUSDC, and assuming APY is 12%, they will see their wallet balance grow from 1000 rhoUSDC to \~1010 rhoUSDC after a month.** 

## **Rebasing**

{% hint style="success" %}
**Rebasing** happens in schedule on supporting networks at: 

* **8:00 AM UTC daily** on **BNB Chain**
* **Every 8 hours** on **Polygon** (MATIC)
  {% endhint %}

Rebasing occurs on a regular basis, meaning users can access their yield rewards regularly \
(at least daily). The rebasing mechanism on the Flurry Protocol smart contract needs to be called via an on-chain transaction in order to execute.

Once the rebasing mechanism is triggered, rhoTokens are minted and distributed as earned yield to users. Rebasing the USDT vault, USDC vault, and BUSD vault will occur all at the same time. If users redeem their rhoTokens before rebasing is completed, the total supply of rhoTokens will be reduced accordingly through a secure burning mechanism. That said, whether or not the total supply increases or decreases is rather irrelevant to users — the earned yield would still be added to the remaining rhoTokens supply, ensuring they are always backed 1:1 by the original stablecoin deposits.

![Flurry Rebasing Mechanism.](/files/DXSXrbAOXJsuX5R1V9Rm)

### Opting-In

By default, rhoTokens held on smart contracts **WILL NOT** participate in rebasing and will forfeit any yield unless the smart contract explicitly **opts-in**. This is due to the nature that many DeFi protocols weren't designed to account for changing deposit token balances. 

Multisig wallets and other smart contracts that are able to participate in rebasing must explicitly opt-in to receiving yield via the rebasing mechanism. 

{% hint style="warning" %}

#### Default addresses are automatically set to opt-in.

{% endhint %}

{% hint style="info" %}
Users will be able to access the **Opt-In / Opt-out** option on the[ Flurry DApp](https://app.flurry.finance/).
{% endhint %}

{% hint style="info" %}
Smart contracts can access the functions via instructions on the [API](/flurry-finance/governance/api.md) page.
{% endhint %}


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