Rebalancing a Node

Rebalancing Process

1. Pre-Rebalance

   • Ensure cooldown period has passed

   • Pay any pending management fees (must be outside window)

   • Verify component ratios sum to 100% with reserve

2. Start Rebalance

   node.startRebalance()  // Updates totalAssets cache

3. During Window

   • Process pending redemptions from reserve or components

   • Invest excess reserve into components when:

     • Reserve is above target ratio

     • Component deviation exceeds maxDelta

     • Following target weights

     • Following liquidation queue order

4. Window Closure

   • Automatically ends after rebalanceWindow

   • Next window cannot start until rebalanceCooldown passes

Example Flow

// 1. Outside rebalance window
node.payManagementFees()  // Pay any pending fees
node.updateTotalAssets()  // Optional: update cache if needed

// 2. Start rebalance window
rebalancer.startRebalance()  // Also updates totalAssets cache

// 3. Process redemptions
node.fulfillRedeemFromReserve(controller)  // From reserve
// or
node.fulfillRedeemBatch(controllers)       // Batch process
// or
router.fulfillRedeemRequest(node, controller, component)  // From component

// 4. Invest excess reserve if:
//    - Reserve above target
//    - Component delta > maxDelta
//    - Following liquidation queue
router.invest(node, component, minSharesOut)      // For ERC4626
// or
router.investInAsyncComponent(node, component)    // For ERC7540

// 5. Window automatically closes after rebalanceWindow duration

This timing mechanism allows for controlled, periodic portfolio adjustments while maintaining flexibility for the rebalancer to choose optimal execution times.

Rebalance Timing

1. The cooldown period sets a minimum time that must pass between rebalance windows

2. Once the cooldown period has passed, the rebalance window doesn't automatically start

3. The rebalancer must explicitly call startRebalance() to begin a new window

4. The rebalancer has discretion over when to start the window, as long as the cooldown has passed

Rebalance Start Conditions

startRebalance() will revert if:

• Component target weights plus reserve ratio don't sum to 100%

• Cooldown period hasn't passed since last rebalance window

• Caller is not a whitelisted rebalancer

Additional Notes

• Rebalancer decides optimal timing

• Management fees must be paid outside window

• totalAssets can be updated anytime

• Execution fees apply to investments, not withdrawals

• Node owner can optimize fees by:

  • Setting longer cooldown periods

  • Increasing maxDelta tolerances

This timing mechanism allows for controlled, periodic portfolio adjustments while maintaining flexibility for the rebalancer to choose optimal execution times.