🛳️Auto-Rebalancing Engine

Smart Liquidity Movement, Without Manual Intervention

CrediX's Auto-Rebalancing Engine is the logic layer responsible for continuously optimizing user positions by reallocating assets across integrated lending/borrowing protocols. It enables both yield maximization and cost minimization, with minimal friction or user input.

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Why Rebalancing Matters

DeFi markets are dynamic — rates fluctuate block by block, and optimal positions can change in minutes. Without rebalancing, funds may sit in suboptimal protocols, leading to:

• Lower APY for lenders

• Higher APR for borrowers

• Reduced collateral efficiency

Auto-rebalancing solves this by actively monitoring protocol metrics and reacting to market changes in real time or near-real time.

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Key Rebalancing Objectives

• Maximize Return on Idle Deposits

• Minimize Borrowing Cost Over Time

• Reduce Risk Exposure (e.g., over-utilization)

• Ensure Protocol Diversification (if configured)

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How It Works

The Auto-Rebalancing Engine operates as a background service triggered by either on-chain activity or scheduled checks.

Step-by-Step Flow

1. Monitor Rates: The Rate Oracle continuously tracks lending APYs and borrowing APRs across all connected protocols.

2. Compare Thresholds: A configurable threshold (e.g., 0.30% yield difference) determines when a rebalancing action is justified.

3. Calculate Net Benefit: The engine estimates gas costs, slippage (if any), and timing to ensure rebalancing is profitable.

4. Execute Reallocation: Funds are withdrawn from the underperforming adapter and re-deposited into a better-performing protocol.

5. Emit Rebalance Event: The system logs the rebalancing activity for transparency and historical auditing.

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Rebalancing Triggers

Trigger Type	Description
Time-based	Rebalances every X hours (e.g., 6h, 12h)
Rate-based	Triggers if a better APY/APR exceeds threshold
Manual override	Admins or users with permissions can force it
Risk-based	Activated if protocol utilization crosses safe thresholds

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Example: Lending Rebalance

A user’s USDC is earning 3.5% in Compound. The Rate Oracle flags that Morpho now offers 4.3%. Gas costs are low and the rate difference is above the configured threshold.

The Auto-Rebalancing Engine withdraws the USDC from Compound and deposits it into Morpho — increasing the user’s returns with no action needed on their part.

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Rebalancing Policy Parameters

These can be configured per asset, per user segment, or globally:

• Minimum Rate Difference: e.g., 0.25%

• Cooldown Period: e.g., no rebalancing within 3 hours of last action

• Max Gas Fee Cap: rebalancing won’t execute if gas exceeds preset amount

• Rate Volatility Filter: smooths out temporary spikes

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Gas Efficiency Measures

To avoid unnecessary gas costs:

• Rebalancing is batched when possible

• Gas-efficient adapters reduce interaction overhead

• Simulation layer ensures profitable execution before action

• Users can opt in/out of auto-rebalancing for individual positions

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Smart Contract Integration

Rebalancing logic is built into the StrategyManager contract and can interact with:

• Vault for asset movement

• ProtocolAdapter contracts

• RateOracle for input rates

• AutomationTrigger (e.g., Gelato or Chainlink Keepers)

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Transparency & Auditing

All rebalancing actions:

• Emit on-chain events

• Include before/after rate snapshots

• Are visible on the user dashboard

• Can be exported via CSV or API