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Portfolio Balancing & Diversification

Polli's intelligent balancing system automatically maintains optimal stake distribution across validators, minimizing risk while maximizing returns through strategic diversification.

Why Diversification Matters​

Concentrating your stake with a single validator or a small group creates significant risks:

  • Slashing Risk - If a validator is penalized, all delegated stake loses a portion
  • Downtime Risk - Validator outages result in missed rewards
  • Single Point of Failure - Over-reliance on one operator's infrastructure
  • Centralization - Large stakes concentrated on few validators harm network security

By diversifying across multiple validators, you protect your portfolio while contributing to network decentralization.

Automatic Portfolio Balancing​

Polli maintains an optimal distribution of your stake across validators based on your total delegation size:

Diversification Tiers​

  • Minimum - All stakes should be spread across at least 5 validators for basic risk mitigation
  • Medium Stakes - Automatically balanced across 10-15 validators for enhanced protection
  • Large Stakes - Distributed across 20-30 validators to minimize concentration risk

The system dynamically adjusts your portfolio as your stake grows or market conditions change.

Smart Distribution Strategy​

Our balancing algorithm ensures:

  • Risk Distribution - No single validator holds excessive percentage of your stake
  • Performance Optimization - Stake is allocated to top-performing validators within your diversification tier
  • Capacity Management - Avoids over-concentrating stake on any single validator
  • Strategic Rebalancing - Adjusts distribution when redelegations occur or new validators are added

Maximum Concentration Limits​

To protect your portfolio, Polli enforces concentration limits:

  • Typically no more than 10-20% of your total stake with any single validator
  • Larger portfolios have stricter limits to ensure proper diversification
  • Limits are dynamically calculated based on your total delegation amount

The Balancing Process​

When redelegating stake from underperforming validators, Polli's balancing system:

  1. Analyzes current distribution across all your validators
  2. Identifies destination validators that meet performance criteria
  3. Calculates optimal allocation respecting concentration limits
  4. Splits redelegations across multiple validators if needed to maintain balance
  5. Executes transactions to achieve target distribution

UI Guidance​

When staking through Polli's interface:

  • You'll be prompted to select at least 5 validators for optimal safety
  • The system recommends validators based on performance and portfolio balance
  • Visual indicators show your current diversification status
  • Warnings appear if concentration exceeds recommended thresholds

By maintaining intelligent portfolio diversification, Polli ensures your stake is resilient, optimized, and aligned with network decentralization principles.