Capital Splitting

By default, Zyfai Agents allocate capital across multiple pools rather than concentrating it in a single position. This feature, called Capital Splitting, balances yield maximization with pool diversification and ensures proportional, fair access to the best opportunities.

Why Splitting Exists

A simple yield optimizer would allocate everything to the single highest-APY pool. This creates two problems:

1. Pool Monopolization: a large deposit can consume a significant portion of a pool’s capacity, limiting access for others and concentrating risk in a single position.
2. Yield Dilution: a substantial deposit into a smaller pool reduces the effective APY for everyone in that pool, including the depositor. Chasing the highest raw APY can be self-defeating.

Splitting solves both problems by distributing capital proportionally across multiple validated pools.

How It Works

1. Weight Calculation

Each wallet receives a proportional share of pool capacity based on its weight within its balance tier:

Weight = wallet_balance / total_tier_balance

Variables:

• wallet_balance: Total portfolio value for this wallet.
• total_tier_balance: Sum of all wallet balances in the same tier.
• Default: Weight defaults to 1.0 if tier balance is unavailable.

A user holding 30% of the tier’s total capital has claim to 30% of each pool’s allocable capacity. This ensures larger wallets get proportionally larger shares without monopolizing any single pool.

2. APY Simulation with TVL Impact

Raw APY numbers do not account for how your deposit affects pool returns. Before allocating, the Agent simulates the post-deposit APY using each pool’s specific Interest Rate Model (IRM).

This captures yield dilution: the real yield you will earn after your capital’s impact is factored in.

3. Risk Validation

Every candidate pool must pass a multi-factor validation gate $V(p)$ before it is considered for allocation. Checks include:

• Pool exposure limits
• APY and TVL stability
• Liquidity depth
• Protocol security

A pool is only eligible if it passes all checks and offers a positive yield improvement.

$V(p) = \bigwedge_j R_j(p)$, where $R_j$ is a binary risk check

A pool is valid for scenario $k$ only if:

$V(p, k) = \text{true} \wedge \Delta_i > 0$

4. Greedy Allocation

Validated pools are ranked by their simulated post-deposit APY (highest first). The Agent allocates capital greedily, filling each top pool up to your proportional share of its capacity before moving to the next best option. Any remaining balance is added to the highest-APY pool if capacity allows.

For each pool (sorted by APY):
	allocAmount = min(remaining_balance, fairShare)
	
	If passes validation:
		allocate allocAmount to pool
		remaining_balance = remaining_balance - allocAmount

5. Rebalance Threshold

Before executing, the Agent verifies that the new split allocation provides meaningful improvement over your current position:

New weighted avg APY - Current weighted avg APY ≥ ε (default: 0.1%)

This prevents unnecessary rebalancing for marginal gains that do not justify transaction costs.

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Multi-Wallet Fairness

Splitting ensures proportional access across all users within the same tier. No single user can monopolize a pool regardless of deposit size.

Two users in the $500k tier:

• User A, $150K deposited: 30% weight, receives up to 30% of each pool’s capacity
• User B, $350K deposited: 70% weight, receives up to 70% of each pool’s capacity

For a pool with $100k capacity, User A can allocate up to $30k and User B up to $70k.

Force-Splitting

By default, Splitting only triggers when it results in higher yield compared to a single-pool position.

For portfolios above $10,000, users can also enable Force-Splitting to allocate capital across multiple pools purely for risk diversification, regardless of whether it improves yield. This option is available manually in Agent Execution settings.

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The Result

• For users: capital is deployed across a diversified set of validated opportunities, maximizing risk-adjusted returns without self-diluting yield.
• For the community: no single actor can monopolize a pool, access to the best yields is distributed proportionally within each tier.
• For integrated protocols: they receive balanced capital inflows that support sustainable growth rather than volatile concentration.