⚖️Lending Rebalance Strategy
Last updated
Last updated
REBALANCE has developed a cutting-edge strategy designed to streamline the optimization of lending portfolio. It's objective is to enhance returns through a process of continuous rebalancing, maintaining a low-risk profile while ensuring your investments are always positioned for optimal performance, eliminating the need for constant manual oversight.
Our vaults are ERC-4626 compliant. Below you can find a complete technical description of its working principles.
When depositing ERC-20 assets to the interest vault users receive a corresponding amount of asset shares which is calculated depending on the current share price. The formula to calculate the shares amount:
When users contribute an ERC-20 asset to the vault, they are granted Asset Shares correlating to the prevailing Share Price. These shares signify the holder's proportional claim to the vault's aggregate assets. The shares allocated upon deposit match the value of the user's input in relation to the entire asset pool at that time. The Share Price adjusts exclusively in response to the accumulation of interest, which, being a non-negative value, ensures that the amount of ERC-20 assets each Asset Share can be exchanged for will not reduce.
For instance
Consider Alice, who secured 10 USDT in the vault, when the initial Share Price was set at 1.00, earning her 10 receipt tokens. Following her contribution, the vault has generated 1 USDT in interest, making the Asset Amount tally 11 (comprising her 10 USDT and the accrued 1 USDT).
The updated Share Price is now 1.10, calculated from dividing the new total USDT (11) by the original receipt tokens (10).
If Bob were to add 10 USDT at this stage, the Asset Amount within the vault would rise by his 10 USDT. With the Share Price at 1.10, Bob's contribution secures him 90.91 receipt tokens (calculated as 10 USDT divided by 1.10).
As the vault continues to earn interest over time, both Alice and Bob will be entitled to a progressively greater quantity of the foundational asset in exchange for their receipt tokens.
Users are eligible to withdraw their assets from the vault at any time, without delays.
However, keep in mind 0.1% withdrawal fee charging, which is applied. This prevents short-term deposits and potential fraud caused by it.
Withdraw fee is set in smart contracts, and can be changed by the admin, and can't be more than max_withdraw_fee which is predetermined to 5%.
The Rebalancer's effectiveness lies in its automated process, which includes:
Gathering and analyzing APRs from a variety of sources to ensure up-to-date information.
Computing the Efficient Allocation Model (EAM), a calculation that identifies the optimal allocation of assets across various protocols. This includes considering the mathematics of each protocol and pre-calculating the potential impact of adding liquidity on the APR to ensure harmonization.
Securely reallocating assets according to the EAM, ensuring the liquidity is consistently optimized.
By adhering to a predefined set of rules and parameters, REBALANCE ensures that users' funds is not just optimized for returns but also for minimizing risk of the integrated protocols.
Future plans include the integration of a separate mathematical model to fine-tune the balance between risk and return, maximizing efficiency and safety in your investment strategy.
