> For the complete documentation index, see [llms.txt](https://limelight-1.gitbook.io/limelight-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://limelight-1.gitbook.io/limelight-docs/for-creators/rebalancing.md).

# Rebalancing

> **Coming soon.** Rebalancing arrives in a later phase, alongside expanded creator tooling. This page describes how it will work.

When you seed a market, your liquidity enters at a fixed, neutral distribution — typically 50/50 for a binary market, or evenly across outcomes for multi-outcome. As traders push the price one way, your anchored seed stays put while the market moves on. **Rebalancing** lets you internally withdraw that anchored position and redeploy it around the current odds — or further, in the direction you actually believe.

## Who Can Rebalance

Rebalancing is a **creator-only** action, scoped tightly:

<table><thead><tr><th width="264">Rule</th><th>What it means</th></tr></thead><tbody><tr><td>Only market creators</td><td>Regular traders cannot rebalance. The feature is restricted to addresses that created a market.</td></tr><tr><td>Only your own markets</td><td>You can rebalance markets you created. You can never touch another creator's seed.</td></tr><tr><td>Only your seed inventory</td><td>The Rebalance screen swaps the shares you received when you seeded — not shares you bought afterward as a regular trader.</td></tr></tbody></table>

Trader-side shares (any shares you bought in your own market through the regular Buy / Sell panel) stay separate and are managed through normal trading.

## What Rebalancing Actually Does

Rebalancing **swaps your own seed inventory inside your own market** — internally withdrawing your anchored position and redeploying it around current prices. You can:

* **Realign** your seed with the market's current odds, reducing the curve drift you'd otherwise absorb.
* **Tilt** your position toward an outcome you have conviction in, taking on directional exposure on purpose.
* **Adjust** your risk profile if the market has moved further than you expected.

It works the same for multi-outcome markets: pick which outcomes to sell, pick which to buy, and the LS-LMSR curve handles the rest.

## The Rebalance Ratio

The Rebalance Ratio shows the LS-LMSR conversion rate at this moment — "for every 1 share you sell, you get X shares of the other outcome." It's a swap rate based on current prices, color-coded so you can read efficiency at a glance:

<table><thead><tr><th width="144">Ratio</th><th width="175">Color</th><th>Meaning</th></tr></thead><tbody><tr><td>0.5 – 1.0</td><td>Green</td><td>Efficient — prices are relatively aligned</td></tr><tr><td>0.2 – 0.5</td><td>Yellow</td><td>Moderately inefficient due to price mismatch</td></tr><tr><td>0.0 – 0.2</td><td>Red</td><td>Very inefficient — selling cheap to buy expensive</td></tr></tbody></table>

If you swap a cheap outcome into an expensive one, expect fewer shares back. If you swap an expensive outcome into a cheap one, expect more shares back.

## A Concrete Example

You create a YES/NO market with **1,000 USDCx** seed and a 1% creator fee, starting at YES 0.50 / NO 0.50. Over Day 1, traders push the market to YES \~0.70 / NO \~0.30. Your seed is still anchored at 50/50 — now mispriced relative to current odds, taking mild curve drift. Your creator fees (1% of volume) offset that drift in a busy market; in a slow one, the drift can outpace fees.

On Day 2 you rebalance: you sell some seed YES shares (the favorite, at 0.70) and buy NO (the underdog, at 0.30). Because you're selling high and buying low, you receive **more** NO shares than the YES you sold. The swap routes through the same curve as any trade, so it moves the price (YES ticks down, NO ticks up). You've now taken a directional position on NO.

> **The slippage you pay isn't lost.** Under LS-LMSR, price impact stays in the pool and is redistributed to winning shares at resolution — which is why deep, balanced markets can settle slightly above $1 per winning share.

## What Rebalancing Does NOT Do

* It doesn't change the market's question, outcomes, or resolution rules — those are locked at creation.
* It doesn't withdraw capital to your wallet. To pull money out, sell shares back to the market or wait for resolution.
* It doesn't touch other people's positions, or your own trader-side positions.
* It's not free. You pay LS-LMSR slippage on the swap, plus **MOVE** gas. Large swaps on thin markets pay more.
* It's not a way to cancel your market. Markets can't be cancelled after going Active.

## FAQ

<details>

<summary>How often can I rebalance?</summary>

No protocol-level cap. The right cadence depends on your market — a fast-moving market may justify several rebalances; a quiet one may need none.

</details>

<details>

<summary>Does rebalancing affect my LP?</summary>

No. Your seed-amount LP is awarded once, at market creation. Rebalancing is a position-management action, not a new seed event.

</details>

<details>

<summary>Can anyone else rebalance my market?</summary>

No. Rebalancing is permissioned to the wallet address that created the market.

</details>

<details>

<summary>What happens if I rebalance right before resolution?</summary>

A well-timed late swap can reduce unwanted exposure, but as prices push toward 0 or 1 the curve gets less forgiving, so large late swaps pay more impact. Check the preview pane before confirming.

</details>


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