Single Asset Withdrawal - Investor Limitation

#1

Managers need to be able to restrict investors to only being allowed to withdrawal in a single asset stable coin like USDC or USDT, as this will significantly reduce the complexity of rebalancing a portfolio.

During a single asset withdrawal, dHEDGE automatically sells each position in a pool pro-rated to an investors share of the pool, and converts it to a single asset before sending this to the investor in return for their DHPTs. This maintains the overall portfolio’s allocation% in the underlying positions.

Restricting investors to only being able to withdrawal a single asset will help managers maintain their proper allocation % targets of exposure and not have to rebalance when an investors withdrawals their portion of the pool if the investor chooses only ETH or only BTC, which could significantly throw off portfolio allocation targets, and require many rebalances.

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#2

I don’t really understand here. Your last 2 paragraphs are contradictory.

From a Managers perspective, it makes no difference if an investor withdraws all assets or a single asset, the end % of portfolio composition is the same.
EG Pool has $1000 total, with $500 in ETH and $500 in BTC.
Investor A owns 10%($100)
If they exit their position the pool will now be $900 total, with $450 in ETH and $450 in BTC.
It makes no difference what asset they choose to exit into as the trade into a single asset is done as a separate tx after the exit from the pool.

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#3

If the investors withdraws only BTC, the Pool will be left as $500 ETH and $400 BTC, and thus out of balance. They will take the underlying BTC and not 50/50.

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#4

Incorrect.

If the investor exits in BTC then this happens all rolled into a single tx.

  1. Exit the pool - which withdraws $50 BTC and $50 ETH.
  2. Trade $50 ETH into BTC
  3. $100 BTC transferred to investor.

The pool still holds $450 BTC and $450 ETH

Manager is not required to rebalance.

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#5

I see. Wonderful, great explanation.

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#6

Taminator is correct. Single asset withdrawal does not change a pool’s composition

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#7

Okay, so to clear this up, regardless if an investor chooses a single asset or the underlying assets to withdrawal, it will never unbalance the pool composition?

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#8

Yes, that’s correct.

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