> For the complete documentation index, see [llms.txt](https://city-protocol.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://city-protocol.gitbook.io/docs/platform/product-mechanics/how-otps-work/portfolio-lifecycle.md).

# Portfolio lifecycle

The seven stages of an OTP, from the published methodology to exit or retirement, and the flows that buy and sell the basket.

An OTP moves through seven stages: the methodology is published, the constituents are validated, the portfolio is published and each participant's account provisioned, participants subscribe, composition is reported, the list changes on its named source or rule, and participants exit or the portfolio retires. The portfolio-level stages run once for each OTP. The account-level stages run in each participant's own smart account, where every constituent sits from subscription to exit.

<figure><img src="https://3297077862-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FJxNp2waFk6hg1G4lEQZu%2Fuploads%2FhnWT3drqrkAMyGaPUBc3%2Ffig-otp-lifecycle.png?alt=media" alt="Seven numbered stages down the left; for each stage, what happens at portfolio level and what happens in the participant&#x27;s account, with list-change execution in the account drawn dashed as next phase"><figcaption><p>The seven stages of an OTP. Methodology, validation and publication run once per portfolio; subscription, reporting and exit run in each participant's own account. Execution of list changes in the account arrives with the next phase.</p></figcaption></figure>

## Stages

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### Methodology published

The methodology is defined and published before the product opens. It names:

* the constituents, and the index, source or theme they come from;
* the weights at purchase, for example one seventh each for the Magnificent Seven Index OTP and one quarter each for the Fantastic Four Index OTP;
* the third-party public source or published rule that can change the list;
* the accepted subscription assets, such as USDT for the Magnificent Seven Index OTP on BNB Chain and USDC for the Fantastic Four Index OTP on Base;
* the fee schedule;
* the eligibility policy;
* the distribution policy.

Publication in advance lets a participant establish what the portfolio holds, and the only conditions under which its list changes, before subscribing. Each methodology is versioned, and every new version is published before it takes effect.
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### Constituent validation

Each proposed constituent is checked before it can enter a portfolio:

* token address and network;
* issuer and backing model;
* custody or reserve verification and proof of backing;
* price source;
* onchain liquidity profile;
* approved trading venues;
* transfer restrictions.

A constituent that fails any check cannot enter the portfolio. The constituents of the live range are tokenized equities: bStocks on BNB Chain and Coinbase Tokenized Stocks on Base. The first entry on the Magnificent Seven Index OTP's Rebalances tab records its seven reviewed bStocks on BNB Chain at strategy inception.
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### Publication and account provisioning

The portfolio is recorded in the portfolio registry with its methodology version, fee schedule and eligibility policy, and its product page opens on Venzo. The account factory derives an ERC-4337 smart account owned by the participant's wallet; its address is known in advance, and the first operation from it deploys it. No asset moves at this stage. The wallet is the account's root validator and signs the Approval and Trade permissions through which the automation signer carries out the participant's trades.

The product page runs provisioning and subscription as three steps: create the portfolio account, a smart account owned by the participant's wallet on the portfolio's network; deposit the subscription stablecoin; and build the index. In the next phase, a participant will be able to add the Rebalancing Executor to the account as a session signer through a one-time consent, and the consent will convey no withdrawal authority.
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### Subscription

The participant funds the account with the accepted stablecoin, and the eligibility policy checks the subscription. Exact-amount approvals go first where the account's allowance is short, and one atomic transaction then acquires every constituent at the methodology's weights, pays the execution fee and delivers the assets into the participant's smart account. Execution is price-guarded: the Magnificent Seven Index OTP on BNB Chain executes against live reference prices, and the Fantastic Four Index OTP on Base, funded in USDC, uses independent stock price feeds as its price guard.

Subscription settles within that transaction, with no settlement epoch and no pricing cycle: the constituents are in the account when the transaction confirms. The Magnificent Seven Index OTP's product page shows a minimum buy of 1 USDT, and the History tab records each confirmed buy. The OTP fee is 0.1% of buy and sell volume, charged from Q4 2026; the product page shows it as the execution fee.
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### Composition reporting

An OTP reports composition: the constituents held, the balance of each, their current prices and their current weights. For constituent $$i$$ with balance $$b\_i$$ and price $$p\_i(t)$$ at time $$t$$, the current weight is

$$
w\_i(t) = \frac{b\_i,p\_i(t)}{\sum\_{j=1}^{n} b\_j,p\_j(t)}
$$

where the denominator is the market value of the whole position. At purchase time $$t\_0$$, the subscription buys each balance so that $$w\_i(t\_0)$$ equals the weight the methodology sets. Between list changes, $$b\_i$$ changes only through the participant's own transactions, so $$w\_i(t)$$ moves with prices alone: a constituent whose price rises gains weight, and the others lose weight in proportion.

Reporting answers five questions:

1. Which constituents does the methodology name, and at what weights at purchase?
2. What does the account hold now, and at what prices?
3. What is each constituent's current weight?
4. Is every constituent currently eligible, unpaused, backed and priced within policy?
5. Has the named source or rule produced a list change, and is that change published on the product page and recorded on the Rebalances tab?

The product page answers them on its tabs. Strategy Composition shows the constituents and the weights set at the latest list change; Holdings shows live smart-account balances at independent reference prices; Performance shows the return; Rebalances lists each published list change; History lists the confirmed onchain buys and sells; and Portfolio Info carries the factsheet. Every balance is also readable onchain in the participant's own account.
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### List changes

The list changes only on the third-party public source or the published rule that the methodology names. An Index OTP changes when its published constituent rule adds or drops a name; a Guru OTP changes when a new filing or a disclosed trade is published; and a Thematic OTP will change when a name enters or leaves its theme rule. Every change is published on the product page before it executes and recorded on the portfolio's Rebalances tab with its date, description and trades.

As of October 2026, the Index OTPs hold fixed lists and the first Guru OTP, the Pelosi Portfolio+, is live; each list change is published on the product page before it executes. In the next phase, the Rebalancing Executor will apply each published change inside every enrolled account, and the Basket Execution Router will settle the legs as one atomic batch. Each change will run as a set of trades inside the participant's own account, with every sale and purchase settling back into it. The mechanics are set out in [List changes and the Rebalancing Executor](/docs/platform/product-mechanics/how-otps-work/list-changes-and-the-rebalancing-executor.md).
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### Exit or retirement

A participant exits by converting the basket back to one asset in one transaction, or by selling any constituent on its own. Exit draws on assets the participant already holds, so it runs outside any liquidity terms, queue or settlement cycle, and it stays available while a product is paused.

A retired OTP leaves every asset with its participants. City Protocol publishes notice before a portfolio is retired; subscriptions and published list changes then stop, and each participant keeps every constituent held at that point, free to hold, sell, transfer or pledge it. A Curated Vault winds down differently: it strikes a final NAV, liquidates its components and opens claims, because it holds depositor assets that it must return.
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## Subscription and exit flows

Three flows move assets in and out of an OTP account, and each settles in one transaction signed by the account owner.

<figure><img src="https://3297077862-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FJxNp2waFk6hg1G4lEQZu%2Fuploads%2F3wDzVdNVeo13qMVzkGZ3%2Ffig-otp-subscribe-exit.png?alt=media" alt="Swimlane with five lanes, participant, eligibility policy, router, venues and smart account, showing subscription, full exit and single-constituent sale as three columns of steps"><figcaption><p>Subscription, full exit and single-constituent sale. Only subscription passes the eligibility policy; both exits draw on holdings the participant already owns, and every flow settles in the participant's own account.</p></figcaption></figure>

* **Subscription:** After funding the account, the participant signs one transaction. The eligibility policy checks jurisdiction, allowlists and product rules; the stablecoin is routed at the methodology's weights; approved venues fill each buy with price-guarded execution; and every constituent lands in the smart account within the same transaction.
* **Full exit:** The participant signs one transaction, at any time and also while a product is paused. The exit router routes every constituent to the venues, each sale fills with price-guarded execution, and one asset lands in the smart account, from where withdrawal is owner-controlled and paid without a queue.
* **Single-constituent sale:** The participant picks one constituent and signs the sale. The exit router routes that constituent alone, the sale fills with price-guarded execution, and the proceeds land in the account next to every other constituent, which stays in place.

## Where each stage acts

| Stage                        | Acts on                                                  | Modules                                                                                          | Participants                                                        |
| ---------------------------- | -------------------------------------------------------- | ------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------- |
| Methodology published        | The portfolio                                            | Methodology, portfolio registry, disclosure and lifecycle                                        | Methodology provider; governance or guardian for updates            |
| Constituent validation       | The portfolio                                            | Methodology, portfolio registry                                                                  | Constituent provider, third-party verifier, governance or guardian  |
| Publication and provisioning | The portfolio and each account                           | Portfolio registry, disclosure and lifecycle, account factory                                    | Methodology provider, account owner                                 |
| Subscription                 | Each account                                             | Eligibility policy                                                                               | Account owner, eligibility and access operator, integration partner |
| Composition reporting        | The portfolio and each account                           | Disclosure and lifecycle                                                                         | Account owner, third-party verifier                                 |
| List changes                 | The portfolio; each enrolled account from the next phase | Methodology, disclosure and lifecycle; next phase: Rebalancing Executor, Basket Execution Router | Methodology provider; next phase: Rebalancing Executor              |
| Exit or retirement           | Each account; the portfolio at retirement                | Exit router, disclosure and lifecycle                                                            | Account owner; governance or guardian for retirement                |

The modules and participants are set out in [OTP modules and participants](/docs/platform/product-mechanics/how-otps-work/otp-modules-and-participants.md), and the controls that act at each stage in [OTP security and risk controls](/docs/platform/product-mechanics/how-otps-work/otp-security-and-risk-controls.md).