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description: Passively manage your holdings
---

# Balanced Strategy

###

### What is the Balanced Strategy? <a href="#docs-internal-guid-d232ebd6-7fff-c0a3-c7ba-fcf37e3bd63d" id="docs-internal-guid-d232ebd6-7fff-c0a3-c7ba-fcf37e3bd63d"></a>

The balanced strategy maintains a specific target weight per crypto token or Index with the remainder of capital used for yield farming. The strategy sets aside a part of the portfolio in cash that will be algorithmically used to buy more of a given asset when markets selloff. When markets rally, the strategy will rebalance to move part of the portfolio in cash. This creates an automatic buy-low, sell-high dynamic that works well for a long term investor.

Yield farming earns a return on spare cash while waiting to be utilized by the Balanced Strategy. This typically entails providing liquidity for others to swap between stablecoins for a fee, or lending to money markets.

### Implementation Example

* A 50-50 balanced strategy using our Global Crypto Index implemented on BSC
* A user mints the GCI with BNB and deposits GCI into the Balanced Strategy Vault
* The strategy then invests 50% into Teragon GCI
* The remaining 50% is in cash and yield farms
* Every month, the strategy rechecks the weights and rebalances if the target weights are off by 10% or more. This rebalancing is automated inside the smart contracts
* If there is a market selloff and now the GCI value is only 40% of the total, then the strategy will use the available cash to buy more of the underlying Index to bring the weight back to 50%



<details>

<summary>Fee Structure </summary>

Teragon charges a 1% annual vault fee on all Tensors.&#x20;

The resulting revenue is directed to the Teragon treasury.

</details>

### Strategy Details&#x20;

![](https://1159898521-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F0CIBVavyL0qY3s4tkeUu%2Fuploads%2FbMm3RubTXLjtVIiTGqLs%2F5%20Balanced%20Strategy.PNG?alt=media\&token=722b1504-d67a-494c-b615-f7489d3042f5)

### Strategy Algorithm&#x20;

#### Issuance&#x20;

![](https://1159898521-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F0CIBVavyL0qY3s4tkeUu%2Fuploads%2FDyzBOP6DmSZ7SmUGHEYo%2F6%20Balanced%20Strategy.PNG?alt=media\&token=8701c342-ff27-434a-aa5c-6c0db80833bb)

#### Rebalance Logic&#x20;

![](https://1159898521-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F0CIBVavyL0qY3s4tkeUu%2Fuploads%2F8jmn4UdOuMqMRmmNMze0%2F7%20Balanced%20Strategy.PNG?alt=media\&token=24cb51bc-d051-4cbd-bb39-925b1fe6a87d)

#### Rebalance Algorithm&#x20;

Pi' = New Index price, Py' = New Yield price, Ui' = New Index Unit, Uy' = New Yield Unit

Uy' = (Py' Uy + Pi' Ui) / 2 Py'

&#x20;Ui' = (Py' Uy + Pi' Ui) / 2 Pi'
