How does rebalancing work?
Rebalancing day for each YAP:
- SYAP: 1st of each month
- DEFI YAP: 15th of each month
The Midas team makes a rebalancing to equalize the value of each coin based on the split of your portfolio. Rebalancing takes profits from assets in your portfolio that have increased in value and reinvests these to undervalued assets to bring your portfolio long term growth.
Let's take DEFI YAP as an example since it has equal allocation in each coin and will be easier to illustrate, but it works the same for all YAPs:
If you invest $800 in DEFI YAP then behind the scenes your deposit will be split and this amount will be used to buy coins for the portfolio. $100 (1/8 or 12.5%) for each coin in this case. You will have $100 in each coin.
Now let's imagine that one coin doubled in price and the rest stayed exactly the same price. This would mean that your portfolio is now worth $200 + $100 + $100 + $100 + $100 + $100 + $100 + $100 = $900.
This profit will be evenly distributed among the other coins to maintain the same percentage for all coins. When the time comes for the next rebalancing, the coins in the portfolio will be adjusted so that their dollar value returns to the original value (12.5%). In this example, rebalancing will mean each coin in the YAP portfolio will have a $ value of $112.5.