Rebasing refers to the practice of increasing or reducing the circulating token supply, based on the price directions.
A Rebase Token is one whose circulating supply expands or contracts due to changes in the token price. When a rebase occurs, the supply of the token is increased or decreased algorithmically, based on the current price of each token.
YieldLock's Autostaking Protocol takes advantage of a positive rebase formula which increases the token supply allowing YieldLock holders to keep growing their tokens, like in a traditional staking protocol. However our use of a rebasing token eliminates the need to approve and traditionally stake your tokens.
As mentioned, the rebasing mechanism adjusts the token circulating supply periodically. What does this mean from a practical standpoint? The amount of tokens in user wallet changes if a rebase occurs. But your proportional holdings of total supply do not change.
If you had 2% of the supply before the rebase, you should still have 2% after it, even if the number of coins in your wallet has changed. You retain your share of the network no matter what the price is.
The positive rebase is backed by the YieldLock Security Fund (YSF which is supported by the token’s buy and sell fees.)