Rebalancing

Any alteration of a DTF’s basket is done via a dutch auction. Each auction is configured with parameters to define which tokens are to be traded, the pricing curve of the auction that will handle the auction, and the target end ratios of the tokens in the basket.

Auction Pricing

When configuring an auction for approval by governance, the Expected Volatility (EV) presets can be used to set the pricing curve and target token ratios. Choosing Low EV will configure a smaller pricing curve with more compact target ratio ranges, while choosing High EV will configure a much wider pricing curve with wider target ratio ranges.

When launching an auction via Register as the Auction Launcher, the EV presets can again be used to set the final pricing curve and target ratios.

When launching an auction via Register as any other actor, the EV presets are not available, as permissionless auction launches are not able to modify the pricing curve.

Auction Timing

The time-to-live (TTL) parameter gets set when an a rebalance auction is approved. This parameter defines how long a rebalance auction can exist in the Approved state before it is considered invalid and can no longer be launched.

The TTL matters significantly, especially with respect to the Admin-defined DTF parameter Auction Delay. The Auction Delay defines how much time an auction can exist in the Approved state before it can be launched by anyone. Before the delay ends, the only actor that can launch the auction is the Auction Launcher.

If TTL is set longer than Auction Delay then the auction will realize a period during which the auction can be launched permissionlessly, adding to the DTF’s decentralization. If TTL is set at or below Auction Delay, then the Auction Launcher will be the only actor that is ever able to launch the auction. This gives more control to the Auction Launcher and entrusts them with more responsibility, so any Auction Approver should be sure about the TTL that they set.