Elastic tokens are tokens whose supply adjusts— expanding and contracting as demand and usage rise and fall, respectively. This would seem natural, while in the centralized world, the production of money is governed and reactive; typically, in an effort to avert or contend with crises. However, there are some similarities as economists have defined money by two outstanding traits: scarcity and use value. Naturally, as a supply would shrink it should theoretically create more relative demand in a forced reversion to a defined mean, or equilibrium. The pegged price i.e. the predetermined value is always restored but this is only for the token price. The collective value of all the tokens or capped value is the variable, not the token price and this has inspired much confusion. Nominal exchange rates allow for the propagation of price-information which in turn determines the adjustment of a total supply to adjust accordingly. Elastic tokens snap to a grid of a price-supply equilibrium and continually adjust.

Preceding its’ mainstream success, Bitcoin had decoupled itself from traditional assets: stocks, precious metals and currencies. This drew ire from the old-guard and inspired confusion among the masses. What elastics have done to date is not yet as impactful but just as novel. They appear to be decoupling themselves from cryptocurrencies on the whole. Historically, alternative coins have been highly correlated, if not captive to Bitcoin. With the emergence of decentralized finance, we are witnessing a Pangea splitting into continents. Can elastic tokens as synthetic commodities retain this low correlation and emerge as a separate and distinct asset class?

Their unique volatility deterrents and step-like functionality is compelling, creating a clear separation from other synthetics with use cases beginning to reveal themselves. The acronym EFi for Elastic Finance remains esoteric but for how long? As more is discovered, as seigniorage money systems emerge, as development continues at the speed of thought and as implementation increases, the appetite of speculators seeking the next “thing” will certainly grow.

Polylastic has set out to solve a problem and that is to demystify the world of elastic tokens, aggregate the very best and allow participants to essentially wager on their collective future.

Last updated