Stablecoin Glossary
Supply Adjustment
Supply adjustment is a change in the number of stablecoin units outstanding that occurs through issuance, redemption, rebasing, burning, or protocol rules intended to respond to demand or price conditions.
Explanation
In issuer-backed stablecoins, supply generally expands when new tokens are issued and contracts when tokens are redeemed and destroyed or returned to issuer inventory. Algorithmic systems can use additional mechanisms, including automatic rebasing or linked-token exchanges, to alter effective supply. A supply change can be part of peg maintenance, but its effect depends on demand, redemption access, market liquidity, and the design of the adjustment mechanism.
Why it matters
Supply behavior helps explain how stablecoin systems respond to inflows, redemptions, and peg deviations.
Example
An issuer can mint new tokens after receiving eligible customer funds and burn tokens after redemption, increasing and decreasing outstanding supply.
Related terms
Last reviewed: September 2026