BASKET Fund Rebalancing

Picnic Fund has a positive bond curve. It will initially consist of Fund A later joined by Fund B and C.

Fund A will be subject to rebalancing targeting a constant mix in the weights set for the fund. The proposed rebalancing schedule is monthly with an arbitrage mechanism encouraging deposits of those underlying assets with lower purchasing power between these calendar points. This is subject to governance.

Target Weights

And corresponding tolerance range of Picnic Fund A

• BTC 15% allocation with +/- 5% weighting corridor

• ETH 15 % allocation with +/- 5% weighting corridor

• PICNIC 10% allocation with +/- 5% weighting corridor

• LINK 10% allocation with +/- 5% weighting corridor

• THETA 10% allocation with +/- 5% weighting corridor

• XMR 10% allocation with +/- 5% weighting corridor

• DOT 10% allocation with +/- 5% weighting corridor

• ADA 10% allocation with +/- 5% weighting corridor

• UNISWAP 10% allocation with +/- 5% weighting corridor

Corridor Strategy

The -/ 5% corridor strategy allows for some time for the rebalancing algorithm to be effective.

The Rebalancing Algorithm will adjust the exchange rate for minting BASKET to incentivise minting of assets with lower purchasing power. A favourable spread encourages deposits in those assets the fund requires to return its composition in relative buying power to the fixed weights.

This creates an arbitrage opportunity for investors in the fund thereby increasing expansion and velocity in the network.

It may be necessary to sell a portion of one or more assets should their purchasing power continually outstrip the tolerance levels of the fund. This provides BASKET with a market for direct exchange and can offer OTC (Over the counter) rates.

Redemption Mechanism

There is a redemption mechanism of BASKET to claim the proportional share of the fund. The fund fee is 10% - which is kept within the BASKET fund - therefore the redemption increases the value of BASKET token, despite capital invested decreasing.

Due to the redemption fee, this mechanism is unlikely to be utilised, furthermore, If the redemption was inspired by an arbitrage opportunity then that opportunity closes as the redemption is made thereby increasing the value of circulating BASKET.

Redeeming BASKET token has a lead time, redemption penalty of 10% and a 1% transaction fee paid in PICNIC.