Dear Tribe,

The Profit and Loss (P&L) feature has been enabled for your account. As you review your portfolio’s P&L, you may notice that the invested value shown is lower than expected. This is due to the asset rebalancing on January 17, 2025.

Rebalancing was based on the overall portfolio value, and when combined with FIFO-based P&L calculations, it affected the invested value displayed to the user.

What Changed After Rebalancing

Asset rebalancing was done based on portfolio value, not on the number of tokens held or their individual purchase prices. As a result:

• A portion of certain token quantities was reduced
• P&L uses FIFO (First-In, First-Out) to compute cost basis

Key Terms to Keep in Mind

• Portfolio Value: The market value of your holdings
• Invested Value: The cost basis of the assets you currently hold
• FIFO (First-In, First-Out): The earliest-purchased tokens are sold or deducted first.

To understand the impact of rebalancing, let’s walk you through an example.

And, in case you want to read about asset rebalancing, click here.

Example to Show the Impact of Rebalancing on User A’s P&L

Portfolio Before the Incident (July 18, 2024)

User A held 2 BTC in their crypto portfolio.

Purchase history:

1 BTC purchased at 400 USDT

1 BTC purchased at 600 USDT

Average buy price:

((1*400) + (1*600) / 2 = 500 USDT

Invested value (as of July 18, 2024):

= Average buy price * quantity
= 500 * 2 = 1,000 USDT

Rebalancing That Happened on January 17, 2025

As part of the asset rebalancing, user A effectively retained around 85% of the portfolio value (not the token quantity).

Revised portfolio value:

1,000 × 85% = 850 USDT

Based on this revised portfolio value, the user’s rebalanced BTC quantity is recalculated.

For example, let’s assume the new BTC quantity is 1.2 BTC.

This means 0.8 BTC was rebalanced out of the portfolio.

FIFO Impact on The Remaining Holdings

Since P&L is calculated using the FIFO (First-In, First-Out) method, the deducted 0.8 BTC is removed from the oldest purchases first:

• 0.8 BTC deducted from the 1 BTC bought at 400 USDT
• Remaining holdings:

0.2 BTC at 400 USDT

1 BTC at 600 USDT

Revised Average Buy Price

The new average buy price for the remaining 1.2 BTC is:

((0.2 × 400) + (1 × 600)) ÷ 1.2 = 566.67 USDT

Revised Invested Value

Invested value after rebalancing:

= (Revised Avg buy price * Rebalanced quantity)

= (566.67 * 1.2) = 679.92 USDT

Why Does The Invested Value Appear Lower?

The above example shows why the invested value may appear lower after rebalancing. As part of the rebalancing process, a portion of quantities of tokens were deducted. Therefore, the invested value reflects the cost of what you currently hold, not what you historically invested.

And, the change is due to the combination of:

• Portfolio-value-based rebalancing, and
• FIFO-based P&L calculations

Your token quantity may decrease, and the average buy price is adjusted according to FIFO rules. This results in a new invested value that may appear lower; rest assured, your overall portfolio value remains accurate.