Inventory Based Rebalancing
The ICHI Vault Algorithm rebalancing strategy aims to maintain a "Healthy State" where the price moves within the optimal range for accumulating the deposit token.
Healthy State: Optimal state for earning trading fees and accumulating the deposit token.
Over Inventory State: Prioritizes selling deposit tokens to return to a healthy state.
Under Inventory State: Prioritizes buying deposit tokens to return to a healthy state.
High Volatility State: Spreads liquidity across the full range to mitigate rapid price changes.
Extreme Volatility State: Locks the vault to prevent further deposits and requires human intervention.
Depending on the state, the rebalancing strategy will allocate the token and designate token concentration accordingly.
Healthy State: Ensures liquidity is positioned to maximize trading fee accumulation. (See diagram below)
Over Inventory State: Adjusts to prioritize selling deposit tokens and return to a healthy state. (See diagram below)
Under Inventory State: Focuses on buying deposit tokens to restore balance. (See diagram below)
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