What is the Band System?
Rebalancing Mechanism in Price Bands
Rebalancing operations are crucial for maintaining the health of leveraged positions. These operations are triggered when the underlying price reaches predetermined thresholds (see Risk parameters). To optimize efficiency and ensure profitability for keepers executing these operations, all positions are strategically grouped into uniform price bands.
Price Band Structure
Each price band has a precise width of 0.15%. This careful calibration allows for batch processing of similar positions, enhancing system efficiency and reducing operational costs.
Benefits of Band-Based Rebalancing
This systematic approach offers several advantages:
Gas Efficiency: Multiple positions can be rebalanced in a single transaction
Keeper Incentives: Batch processing makes rebalancing operations more profitable for keepers
Predictable Execution: Users can anticipate when their positions will undergo rebalancing
System Stability: Prevents cascading liquidations by proactively managing risk
The price band system ensures that risk management occurs in a timely, cost-effective manner while maintaining the integrity of the protocol during market volatility.
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