Rebalancing

Rebalancing keeps every index aligned with its target allocations and within its risk limits. It is triggered by rules, prepared by the AI Operator, and executed through the multisig.

What triggers a rebalance

• Concentration cap breach. Any single position exceeding 2.5% of capital is an automatic rebalance signal.
• Score decay. A held pool's composite score falling into the exit set.
• Corridor drift. On the RWA Index, price moving such that the 3-corridor bands need widening, tightening or recentering.
• Risk flags. Depeg risk, TVL outflow, exploit/governance events, or a lending health factor approaching threshold.

The rebalance loop

monitor ──▶ score ──▶ flag ──▶ operator validates ──▶ prepare (unsigned) ──▶ multisig executes
   ▲                                                                                │
   └────────────────────────────────────────────────────────────────────────────┘

1. Monitor. The AI Operator watches every position continuously.
2. Score & flag. Drift, decay or risk raises a flag.
3. Validate. The human operator confirms the flag against the live index.
4. Prepare. The AI Operator produces the rebalance as unsigned calldata.
5. Execute. The 4-of-6 multisig authorizes; the move executes after the time-lock.

Rebalancing the 3-corridor RWA Index

For the RWA Index, rebalancing operates on the three bands:

• Widen Core when volatility rises (keep liquidity in range).
• Tighten Tactical/Working when the market is calm (maximize fee capture).
• Recenter all bands around a new price after a trend.

Each action is decided per band by volatility regime.

Discipline, not discretion

Rebalancing follows the methodology — it is not a venue for directional bets. The operator confirms the machine's read and executes; the rules (caps, exit-weakness-first, sustained-APY) are fixed. This is what keeps yield sustained and risk bounded rather than chasing the market.