> ## Documentation Index
> Fetch the complete documentation index at: https://docs.hyro.network/llms.txt
> Use this file to discover all available pages before exploring further.

# Dynamic Position Rebalancing

> How positions rescale atomically with capital changes to hold LP leverage constant.

When LP capital enters or exits a vault, position sizes must scale proportionally so existing LPs aren't exposed to changed leverage. This is the mechanic that distinguishes a proper LP-funded vault from a copy-trading platform.

## The leverage drift problem

<Warning>
  **Example.** A manager trades $400K notional on $1M AUM (0.4× exposure). An LP withdraws $500K → AUM is now $500K but the same \$400K position remains → effective exposure jumps to 0.8×. Remaining LPs are suddenly at 2× the leverage they signed up for. This is a system error, not a feature.
</Warning>

The reverse also matters: if an LP deposits $500K, AUM rises to $1.5M but the same \$400K position now represents only 0.27× — the new LP is under-invested versus what they expected.

**Solution:** positions rebalance atomically with capital changes.

## Rebalancing modes

The manager picks the mode at vault creation:

| Mode                     | Behavior                                                | Best for                                     |
| ------------------------ | ------------------------------------------------------- | -------------------------------------------- |
| Auto-immediate (default) | Rebalance instantly on every LP entry/exit              | Tight risk control, short-horizon strategies |
| Scheduled 4h             | Aggregate deposits/withdrawals; rebalance every 4 hours | Swing strategies, reduced execution friction |
| Scheduled 24h            | Rebalance daily at a fixed time                         | Long-horizon, low-frequency strategies       |

## Technical requirements

<CardGroup cols={2}>
  <Card title="Atomic" icon="lock">
    Either all positions rescale or none — no partial rebalance.
  </Card>

  <Card title="Audited on-chain" icon="file-text">
    Full audit log with timestamp, pre/post sizing, and NAV reference.
  </Card>
</CardGroup>

<Note>
  **Failsafe.** If rebalancing fails (illiquid market, exchange downtime, partial fill), the vault pauses new deposits, the manager is alerted, and manual review is required before resuming.
</Note>

<Card title="LP deposits & withdrawals" icon="arrow-left-right" href="/lps/deposits-withdrawals" horizontal>
  How capital enters and exits, with rebalancing in context.
</Card>