Rebalancing Logic

Rebalancing is the mechanism that keeps leverage constant without liquidation. PLX’s system uses volatility-weighted rebalance intervals, meaning that rather than rebalancing at fixed times, vaults adapt based on how much the market moves.

For example:

• In a quiet market (SOL moving ±0.5% per hour), the vault allows wider drift before rebalancing.

• In a volatile market (SOL moving ±3% in minutes), the vault tightens its tolerance to maintain stability.

Each vault has its own profile:

• 2× vaults (SOL2X, PUMP2X, CHILLGUY2X) → Wide tolerance, slower rebalance cycles, designed for smooth compounding.

• 5× vaults (SOL5X, PUMP5X) → Tight tolerance, faster micro-adjustments, optimized for fast-paced trending markets.

Rebalancing isn’t just mechanical — it’s economical. The system calculates Expected Value Drift (EVD) using historical volatility and funding rate data. If the expected decay from not rebalancing is lower than the transaction cost, the vault will delay its rebalance. This logic ensures that every rebalance adds net value over time.

This is what makes PLX different from older leverage token systems like FTX’s L-tokens or Binance’s BULL/BEAR tokens, which decayed aggressively in chop. PLX’s smart decay model adapts dynamically to prevent unnecessary churn.