Hey Nathaniel Cook! To answer some of your questions:
- The assets being sold are held by the smart contract — though you hold claim to it through your stake in the Set. If you’re an end user that is just buying and selling the Set on the exchange, you’d be taxed on capital gains related to the purchase and sale prices. If you’re actively issuing/redeeming/rebalancing Sets, your tax implications are different. Though, I’d suggest people would need to consult a tax expert to figure out whether rebalancing is a taxable event in your jurisdiction.
- Rebalance frequencies or intervals are codified into the “Rebalancing Set Token” smart contract. They can defined to be anywhere from once a day to once a year or so. Of course, with each rebalance — there is an associated amount of slippage, so there are tradeoffs between frequency and long-term cost.
- Anyone can pay for the gas to initiate an auction (the most gas intensive). Initially, we will be subsidizing the gas costs and building tools to monitor the smart contracts. Eventually, we imagine other folks will build their own tools. The actual rebalance itself is carried out by traders / arbitrageurs who will pay the gas of the bidding interactions.