Rebalancing & Strategy Engine
Highway maintains portfolio health through a hybrid on-chain/off-chain execution model designed for precision and safety.
The rebalancing engine ensures each Highway Asset maintains its target exposure, yield efficiency, and risk boundaries.
1. Purpose of Rebalancing
Rebalancing ensures that a Smart Vault:
maintains its target asset weights
adapts to market changes
reacts to volatility
optimizes yield-bearing allocations
protects users from structural portfolio drift
A Highway Asset should behave like a well-managed ETF:
balanced, predictable, and automatically maintained.
2. Rebalancing Logic
The protocol continuously monitors:
price changes
APYs across strategies
protocol health and liquidity
asset correlations
deviation from target weights
risk thresholds
When a deviation crosses pre-defined boundaries, the Worker prepares a rebalancing plan.
3. Worker-Driven Execution
Similar to entry strategies, rebalancing is executed by the off-chain Worker:
It reads current Vault state.
It compares real allocations with target weights.
It evaluates external APYs (via APIs / oracles).
It determines the most efficient swaps or yield reallocations.
It prepares a multi-step rebalance plan.
For simple assets, this may be a pure ratio adjustment.
For yield-bearing assets, the Worker may redirect funds to a strategy with:
better APY
lower risk
healthier liquidity
4. On-chain Validation
Every proposed rebalancing action is validated by the Highway Contract, ensuring:
slippage limits
protocol safety
price bounds
asset eligibility
adherence to Smart Vault rules
Invalid or unsafe rebalances are rejected automatically.
5. Execution & Vault Update
Once validated:
assets are swapped, deposited, or unstaked
yields are re-routed to the best protocols
final balances are transferred back to the Smart Vault
the Vault state is updated
The system returns to continuous monitoring for the next rebalance trigger.
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