Automated Rebalance

Use Case Scenario

For our scenario, let's assume we want to open a vault with WETH as collateral. However, we want to be protected from liquidation in case of a price drop, similar to setting a stop loss on a centralized exchange. To achieve this, we can utilize the Automated Vaults feature in Super Vault.
This feature implements checks to reduce the risk of abuse, such as limiting the collateralization ratio that must be achieved before rebalancing, controlling the maximum change in vault value during rebalancing, and limiting the number of rebalances that can occur within a given time frame.
Users can set the fees they're willing to pay for rebalancing, including flat fees per rebalance and variable fees based on the rebalanced amount, to incentivize keepers and cover the gas costs of calling the rebalance function. This allows users to delegate the management of their vault to others while maintaining proper safeguards.

Automated Rebalance Configuration

To open a vault up for automated rebalances, a user must must set the following automated rebalance parameters :
  • The id of the vault to rebalance.
  • The maximum allowed slippage on rebalancing swaps : each rebalance call will swap one collateral for another. This parameter impose maximum slippage amounts to ensure a vault collateral doesn't lose too much value in between rebalances. The variation is calculated as :
vaultVariation=rebalanceValueswapResultValuerebalanceValuevaultVariation = \frac{rebalanceValue - swapResultValue}{rebalanceValue}
  • The targeted ratio of the rebalance : each rebalance will move the collateral and debt from the starting vault to a vault with less volatile collateral to bring the starting vault's collateralization ratio to a given target ratio.
  • The trigger ratio for the rebalance : keepers can only rebalance if the vault's collateralization ratio is lower or equal than the trigger ratio set by the user.
  • The rebalancing vault MCR buffer : the automated rebalance calculates the amount of collateral and debt to rebalance based on the MCR buffer padding set by the user. A higher MCR buffer means the rebalancing vault will be healthier after the rebalance, though it will also require more collateral and par debt to be moved from the starting vault to reach this padding. Each automated rebalance will withdraw just enough PAR to keep the to vault at this collateralization ratio (vault MCR + MCR buffer).
  • The rebalancing fees : users can configure how much they want to pay to incentivize each automated rebalance by setting a variable and/or a fixed fee. Rebalancing fees are paid in PAR borrowed from the vault that is rebalanced to. Setting higher fees incentivizes more people to monitor a vault for rebalances, but makes each rebalance more costly. The total fees paid per each rebalance is given as :
totalFees=fixedFee+variableFeerebalanceValuetotalFees = fixedFee + variableFee * rebalanceValue
To avoid substantial loss of collateral through multiple rebalances, Super Vault limits the amount of automated rebalances on any vault to one per day.