Auto Rebalancing

Each index is designed to keep a target allocation across its tokens (e.g. : Blue Chip index with $BONK - 22%, $JLP - 20%, $JUP - 20%, $JITO -20% and $PYTH - 18%). Over time, token prices move, and these weights drift.

To preserve the index’s structure, an auto-rebalancing engine monitors the vault continuously.

How it works:

1. Drift Monitoring

   • The engine checks (uses Switchboard oracle every 1 min) if the weight of any token deviates more than the threshold defined by the vault manager or the admin (e.g. 10%) from its target allocation.

   • Example: If $BONK should be 22% but grows to 32%, it’s flagged for rebalancing.

2. Triggering Rebalance

   • When drift exceeds the threshold, a rebalance is triggered.

   • The rebalancing engine operates on a delta basis. Using the vault’s swap function, it executes only the minimal set of trades required to restore the target allocation, selling overweight assets and reallocating into underweight ones.

   • To maximize capital efficiency and reduce the frequency of rebalancing events, each deposit is allocated to assets that are furthest from their target weights, bringing the portfolio as close as possible to the intended allocation.

3. Execution

   • Rebalance swaps are executed atomically through Jupiter aggregator.

4. Outcome

   • Vault composition is restored to its target weights.

   • Index token price (NAV) remains continuous, as TVL is preserved (minus minor trading fees/slippage).

   • Users don’t need to take any action - it’s fully automatic.

Why it matters:

• Keeps indexes true to their narrative (you always get the intended exposure).

• Protects against over-concentration in a single asset.

• Makes the product truly “set and forget” for users.

Rebalancing is executed autonomously by the protocol. dToken holders do not initiate or control individual swap transactions.