An elastic supply token is a special token type that typically aims to maintain a stable price denominated in a fiat currency (USD, EUR, etc). This is achieved through a mechanism of increasing and decreasing the total circulating supply. We will refer to this as rebase tokens from now on.

Ampleforth was the first rebase token to gain major popularity and to become listed on major exchanges. If you hold Ampleforth on an exchange, you will notice that your AMPL amount will decrease or increase on a daily basis. This presents some challenges with regard to tracking your cost basis for accurate tax calculations, which we will explain here.

We bought 950 AMPL for $1,000 on FTX and received 8 AMPL the next day from the daily rebase. Our holdings are now 958 AMPL after the rebase, and the cost basis (acquisition cost) is still the same as originally ($1,000). The following day, we sell all AMPL tokens for $1,150.

After importing transactions from FTX, you will see the following transactions:

As we can see above, the cost basis for disposing of 958 AMPL is $1,007.01 instead of $1,000. To fix this, we need to do two changes:

The cost basis will now be tracked accurately, and the gain realized when disposing of AMPL will also be calculated correctly:

The same principle applies also if you have a negative rebase. In all cases, you need to create a manual transaction with the total amount and original acquisition cost.