Allocation Engine

The Allocation Engine is the decision-support core of RAX Protocol.

It is designed to help users allocate capital in a disciplined manner by applying explicit risk constraints, strategy profiles, and real-time risk intelligence.

Rather than optimizing for maximum yield, the Allocation Engine prioritizes control, resilience, and capital efficiency.


How It Works

Each evaluation follows a structured sequence:

  1. Load the vault's current state and active mandate

  2. Check whether the vault is paused

  3. Calculate risk metrics across all current positions

  4. Check for emergency triggers (critical risk, drawdown breach, liquidity crisis)

  5. Detect current market and portfolio conditions

  6. Verify the minimum rebalance interval has elapsed

  7. Evaluate available opportunities against the mandate's constraints

  8. Propose an allocation based on strategy profile and risk-adjusted yield

  9. Run a full compliance check against all mandate constraints

  10. Generate an explanation of the reasoning

  11. Determine whether the deviation warrants rebalancing

  12. Execute, request approval, or hold based on compliance results


Strategy Profiles

The engine operates using strategy profiles that define the user's risk posture:

  • Defensive β€” focused on capital preservation and stability, favoring low-risk positions

  • Balanced β€” targeting risk-adjusted efficiency across the portfolio

  • Aggressive β€” tolerating higher volatility for potential upside

Profiles define boundaries and priorities. They do not execute trades automatically unless autonomous mode is enabled.


Risk Constraints

Risk constraints are explicit limits applied to every allocation decision:

  • Maximum acceptable Risk Score

  • Maximum protocol exposure per position

  • Maximum chain exposure

  • Minimum liquidity threshold

  • Maximum capital moved per rebalance

  • Drawdown tolerance

  • Protocol and asset allowlists

Constraints act as guardrails that prevent allocations outside acceptable risk boundaries. If any constraint would be violated, the proposal is rejected.


Allocation Suggestions

Based on the active profile and constraints, the engine generates allocation suggestions that may include increasing or decreasing exposure to specific strategies, rebalancing across protocols, reducing concentration in high-risk areas, or maintaining defensive positioning.

All suggestions are advisory by default and require user approval unless autonomous mode is enabled.


Human Oversight and Control

The Allocation Engine is designed with human oversight in mind. It does not execute trades autonomously unless the user explicitly enables auto-execution in the mandate. Users remain in control of strategy selection, constraint configuration, approval decisions, and the ability to pause at any time.

This design ensures accountability and transparency at every step.

The Allocation Engine is available from the Pro tier. Autonomous execution requires the Power tier.

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