ABCDEFGHIJKLMNOPQRSTUVWXYZAAABACAD
1
Take a simple rebalancing portfolio of 50% ETH and 50% USDC
2
Rebalance to...Price (0)Price (1)Price (2)Price (3): Origin
3
Initial
4
ETH Price$1,000$2,000$1,500$1,000
5
Initial ETH Units1.001.000.750.88
6
Intial Eth Value$1,000$2,000$1,125$875
7
Initial USDC Units1,0001,0001,5001,313
8
9
Ending
10
Need to sell ETH worth$0.00$500.00-$187.50-$218.75
11
Ending ETH Units1.000.750.881.09
12
Ending ETH Value$1,000$1,500$1,313$1,094
13
Ending USDC Units1,0001,5001,3131,094
14
Balance50%50%50%50%
15
Portfolio Value$2,000$3,000$2,625$2,188
16
17
Gain (Loss) from last Rebalancing($)$1,000-$375-$438
18
Gain (Loss) from last Rebalancing (%)50.00%-12.50%-16.67%
19
20
HODL VALUE$2,000$3,000$2,500$2,000
21
Gain (loss) from HODL ($)$0$0$125$188
22
Gain (loss) from HODL (%)0.00%0.00%5.00%9.38%
23
24
The point here is that a rebalancing porfolio profits from volatility and thus can not only beath HODLing but has very different dynamics than the CPMM. The CPMM can ONLY be flat or have loss as a result of price changes, whereas a rebalancing portfolio can have gain or loss depending on the price series.
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100