> ## Documentation Index
> Fetch the complete documentation index at: https://docs-staging.centuari.finance/llms.txt
> Use this file to discover all available pages before exploring further.

# Rebalancing

> How vault rebalancing works and when it triggers

<Warning>
  **Coming Soon** - Mutual Fund Vaults is an upcoming feature. Further details will be available when it launches.
</Warning>

## Overview

Rebalancing is the process of adjusting vault allocations to maintain target strategy weights, optimize returns, and manage risk. This can be done automatically or manually by curators.

## Rebalancing Triggers

### Time-Based Triggers

| Trigger              | Frequency     | Purpose                     |
| -------------------- | ------------- | --------------------------- |
| Daily Check          | Every 24h     | Assess drift from targets   |
| Weekly Review        | Every 7 days  | Full allocation review      |
| Monthly Optimization | Every 30 days | Strategy performance review |

### Event-Based Triggers

| Trigger           | Condition              | Action                |
| ----------------- | ---------------------- | --------------------- |
| Drift Threshold   | >5% from target        | Rebalance to targets  |
| Rate Opportunity  | >100bps better rate    | Consider reallocation |
| Position Maturity | Position matures       | Redeploy capital      |
| Large Deposit     | >10% of vault          | Deploy new capital    |
| Large Withdrawal  | >10% of vault          | Source liquidity      |
| Risk Threshold    | Concentration exceeded | Reduce exposure       |

## Rebalancing Process

### Automated Rebalancing

For vaults with auto-rebalancing enabled:

<Steps>
  <Step title="Monitor">
    System continuously monitors allocation vs targets
  </Step>

  <Step title="Detect">
    Drift or trigger condition identified
  </Step>

  <Step title="Calculate">
    Determine trades needed to restore targets
  </Step>

  <Step title="Validate">
    Ensure trades comply with vault rules
  </Step>

  <Step title="Execute">
    Submit transactions (gasless)
  </Step>

  <Step title="Log">
    Record rebalancing event
  </Step>
</Steps>

### Manual Rebalancing

Curators can manually trigger rebalancing:

```typescript theme={null}
// Check current allocation
const allocation = await vault.getAllocation();
console.log(allocation);
// {
//   positions: [
//     { protocol: 'Centuari', maturity: '30d', amount: 450000, target: 300000 },
//     { protocol: 'Centuari', maturity: '60d', amount: 250000, target: 350000 },
//     { protocol: 'Centuari', maturity: '90d', amount: 250000, target: 350000 },
//   ],
//   cash: 50000
// }

// Execute rebalancing
await vault.rebalance({
  actions: [
    { type: 'reduce', position: '30d', amount: 150000 },
    { type: 'increase', position: '60d', amount: 75000 },
    { type: 'increase', position: '90d', amount: 75000 }
  ]
});
```

## Rebalancing Strategies

### Maturity Laddering

Maintain exposure across multiple maturities:

```
Target Allocation:
├── 30-day: 33%
├── 60-day: 33%
└── 90-day: 34%

Rebalancing Logic:
- When 30-day positions mature, redeploy to 90-day
- Maintains continuous laddering
- Natural liquidity every ~30 days
```

**Benefits**:

* Regular liquidity events
* Reduces rollover risk
* Smooths rate exposure

### Rate Optimization

Shift allocation based on rate opportunities:

```
Current Rates:
- 30-day: 7.5% APY
- 60-day: 8.2% APY ← Best rate
- 90-day: 8.0% APY

Optimization Action:
- Increase 60-day allocation (within limits)
- Reduce 30-day when positions mature
```

**Constraints**:

* Stay within concentration limits
* Consider liquidity needs
* Account for expected rate changes

### Risk-Based Rebalancing

Adjust for changing risk conditions:

```
Scenario: Protocol X shows concerning signs

Current: 30% in Protocol X
Limit: 40% max

Action:
- Reduce Protocol X to 20% (conservative)
- Redeploy to other protocols
- Monitor situation
```

## Example: Full Rebalancing Cycle

**Starting State** (Day 0):

```
Vault AUM: $1,000,000
Allocation:
- 30-day Centuari: $300,000 (30%)
- 60-day Centuari: $350,000 (35%)
- 90-day Centuari: $300,000 (30%)
- Cash: $50,000 (5%)

Targets: 30%/35%/30%/5%
```

**Day 30**: 30-day positions mature

```
Event: $300,000 matures + $6,000 interest

Post-Maturity:
- Cash: $356,000 (34%)
- 60-day (now 30-day): $350,000 (33%)
- 90-day (now 60-day): $300,000 (28%)

Drift: Significant - needs rebalancing
```

**Rebalancing Action**:

```
Deploy $306,000 to new 90-day positions:
- $106,000 → 90-day (restores 30% allocation)
- $200,000 → 90-day (rebalances from over-weight cash)

Post-Rebalance:
- Cash: $50,000 (5%)
- 30-day: $350,000 (33%)
- 60-day: $300,000 (28%)
- 90-day: $356,000 (34%)

Note: Slight over-weight on 90-day is acceptable within 5% drift threshold
```

## Costs of Rebalancing

### Gas Costs

* Protocol covers gas for automated rebalancing
* No cost to vault depositors

### Opportunity Cost

* Exiting positions early may sacrifice yield
* Moving to lower-rate positions reduces returns

### Slippage

* Large rebalancing in thin markets may have slippage
* Partial rebalancing over time minimizes impact

## Rebalancing Controls

### Curator Controls

| Control             | Options              |
| ------------------- | -------------------- |
| Auto-Rebalance      | Enable/Disable       |
| Drift Threshold     | 2-10%                |
| Rebalance Frequency | Daily/Weekly/Manual  |
| Max Trade Size      | % of vault per trade |

### Protocol Safeguards

| Safeguard           | Purpose                   |
| ------------------- | ------------------------- |
| Rate Floor          | Don't deploy below X% APY |
| Concentration Limit | Hard cap per position     |
| Liquidity Reserve   | Never go below X% cash    |
| Pause               | Emergency stop            |

## Monitoring Rebalancing

### Dashboard Metrics

| Metric             | Description                  |
| ------------------ | ---------------------------- |
| Current Allocation | Live allocation breakdown    |
| Target Allocation  | Strategy targets             |
| Drift              | Current vs target difference |
| Last Rebalance     | When and what was done       |
| Pending Actions    | Scheduled rebalancing        |

### Rebalancing History

View all rebalancing events:

| Date       | Trigger          | Actions                  | Cost | Result              |
| ---------- | ---------------- | ------------------------ | ---- | ------------------- |
| 2025-03-15 | Maturity         | Deploy \$300k to 90d     | \$0  | Targets restored    |
| 2025-03-08 | Drift >5%        | Reduce 30d, increase 60d | \$0  | Drift reduced to 2% |
| 2025-03-01 | Rate opportunity | Shift to higher rate     | \$0  | +20bps yield        |

## FAQs

<AccordionGroup>
  <Accordion title="Does rebalancing cost me money?">
    Gas is covered by the protocol. Opportunity costs (from early exit or rate changes) may exist but curators optimize for overall returns.
  </Accordion>

  <Accordion title="How often should rebalancing happen?">
    Depends on strategy. Fixed Rate Focus vaults may rebalance monthly at maturities. Yield Optimized may rebalance weekly or when large rate opportunities emerge.
  </Accordion>

  <Accordion title="Can I see upcoming rebalancing?">
    Yes. The vault dashboard shows scheduled maturity events and pending rebalancing actions.
  </Accordion>

  <Accordion title="What if the curator doesn't rebalance?">
    Automated rebalancing handles routine events. If a curator is inactive for extended periods, governance may intervene.
  </Accordion>
</AccordionGroup>

<Card title="View Vault Allocations" icon="chart-pie" href="https://app-staging.centuari.finance/vaults">
  Check current allocations and rebalancing history
</Card>