HomeGuidex Theory – Chapter 5: Tiering & Portfolio Construction

Guidex Theory – Chapter 5: Tiering & Portfolio Construction

Series: Guidex Theory – Reframing Digital Currencies as a Global Kinetic Energy Matrix
Chapter: 5 of 10 – Tiering & Portfolio Construction
Author: Dr. Glen Brown

5.1 Why Tiering Is Essential

Once KIS scores are computed, the next question is: How much capital should we allocate to each asset? Treating all assets as equal simply because they are listed on an exchange is intellectually irresponsible. A deeply secure, widely used, narratively entrenched network should not be funded in the same way as a newly launched, high-entropy meme token.

Tiering allows Guidex to reflect structural differences directly in capital allocation.

5.2 The Four Guidex Tiers

Tier 1 – Core Guidex Reserves (40% of capital)

Tier 1 contains the highest KIS assets—typically Bitcoin, Ethereum, and occasionally another exceptional asset. They serve as:

  • The energetic and narrative backbone of the portfolio;
  • Primary beneficiaries of long-term macro uptrends;
  • Preferred destinations when entropy is rising elsewhere.

Tier 2 – Core Rotational Assets (30%)

Tier 2 typically contains the next 7 assets by KIS. They are:

  • Structurally important smart-contract platforms, DeFi hubs, or settlement layers;
  • High-utility, high-liquidity assets with manageable entropy risk;
  • Major sources of rotational alpha when macro conditions favour growth and experimentation.

Tier 3 – Peripheral Rotational Assets (20%)

Tier 3 holds the next 12 assets by KIS. These:

  • May be technically strong but smaller in ecosystem or liquidity;
  • May have higher regulatory or technological uncertainty;
  • Can provide diversification and tactical opportunities under strict risk controls.

Tier 4 – Speculative / Experimental Energies (10%)

Tier 4 contains the remaining assets—often meme tokens, highly experimental protocols, or assets with powerful but unstable narratives. Capital allocated here is treated as optionality, not as structural exposure.

5.3 Intra-Tier Allocation by KIS

Within each Tier, capital is distributed proportionally to the KIS score of each asset. If wT is the total weight assigned to Tier T and ΣT the sum of KIS scores for assets in that Tier:

Weighti|Tier = wT × KISi / ΣT

This ensures that even inside a “bucket”, capital gravitates toward structurally superior assets.

5.4 Portfolio Entropy (PE) and Noise Control

Guidex defines a portfolio-level entropy metric:

PE = Σ (Wi × Si)

where Wi is the final portfolio weight of asset i and Si its entropy score. The objective is to keep PE below a target such as:

PEtarget ≤ 3.2

If PE drifts above the target:

  • Tier 4 exposure is reduced;
  • Tier 1 exposure (especially BTC, ETH) is increased;
  • High-S assets are systematically trimmed.

This maintains a disciplined balance between opportunity and structural resilience.

5.5 The Role of Guidex in a Live Portfolio

In live operations, Guidex functions as:

  • The universe selector – which assets are included or excluded;
  • The weighting engine – how much capital each asset receives;
  • The entropy governor – how much risk is permitted in the speculative tail.

Execution timing, trade management, and stop-loss logic are then handled by GATS and DAATS, as detailed in Chapter 6.

Next: Chapter 6 – Integration with GATS, DAATS & the Nine-Laws Framework.