Rebase Mechanism

GLP holders deposit their GLP tokens to mint mUSD. GLP tokens earn WETH yield, which is converted to mUSD and airdropped as yield to mUSD holders via rebasing mechanism.

Anyone can become a rebase provider. Rebase provider calls excessIncomeDistribution function. This burn their WETH reward equivalent mUSD shares minus the rebase incentives. Burning of mUSD shares distribute the total dollar value of WETH reward across all mUSD holders in proportion to their mUSD holdings.

Rebase provider earns a 0.5% incentive for every dollar worth of WETH reward distributed by them to the mUSD community. This incentive is offered to offset their cost of reconverting WETH to mUSD and to cover for on-chain gas cost.

The incentive value can be updated by Governance and can be set between 0% to 0.5%.

As a fallback mechanism, protocol has deployed keep3r bots which rebase at least once in 24 hour period. Anyone can trigger rebasing to avoid predictable front-running by bad actors.

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