Basket Management Strategy for BRR
Basket management is essential for maintaining the stability and functionality of BRR within the Arcadefi ecosystem. This strategy outlines the initial configuration, fee structure, minting against yield, rebalancing mechanisms, setting basket weights, and the yield pipeline for non-index assets.
Reweightless Initial Configuration
Asset Ratios
30% SEI
30% ETH
40% USD (a single stablecoin)
Implementation
Deposited into ArcadeMachineVaults, generating yield.
Yield distributed to all token holders through the YieldDistributionEngine.
External deposits and redemptions must match token ratios.
No need for oracles due to explicit ratios.
Fee Structure
No management, mint, or redemption fees on BRR.
Fees charged on wrapping and unwrapping underlying vault tokens.
Performance fees may be extracted during high premiums.
Minting Against Yield
Yield from ArcadeMachineVaults is directly converted to BRR without acquiring the entire index.
Oracle used to determine BRR's backing value.
Yield swept from vaults, valued using the underlying token's price feed, and minted into BRR accordingly.
Rebalancing (V2+)
Initially, winners ride without rebalancing.
Long-term: Deweight underperforming assets using a managed weighted pool.
Arcadefi produces rebalancing intents for profitable trades, with profits used to add liquidity.
Setting Basket Weights (V2+)
Inspired by capitalization-weighted indexes.
Free float adjusted to market cap, excluding supply held by DAO, seed investors, and contributors.
Square root applied to weightings for better diversification and hedging against market crashes.
Yield Pipeline for Non-Index Assets (V2+)
Supports vaults across DeFi ecosystem on different chains.
Utilizes minting against yield accounting without immediate settlement.
Yields are accounted for independently and placed in secondary pools.
Withdraws from the Sei-native rebalancing pool when reserves are redeemed, replenishing if depleted.
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