Hey Edge readers,
The demand for leverage trading and yield farming remains sky-high in cryptoland. This presents a great opportunity to earn yield by lending your assets to these traders & farmers. We take a look at Gearbox and their passive pools this week so you can start earning that juicy yield.
Here's what we're covering this week:
- Earning passive yield on Gearbox ⚙️
How to earn passive yield on ETH and USD.
- New investable pools on Exponential ✨
3 new ways to earn yield on ETH and multi-assets!
- BlackRock enters the tokenization race 🏁
Ether ETFs, ETHFI airdrop, memecoin presales.
Stay sharp. 🫡
– The Exponential team
Earning passive yield on Gearbox
Gearbox is a decentralized lending platform that enables composable leverage, allowing anyone to leverage on their favorite DeFi protocols. It offers a simple way for DeFi enthusiasts to earn yield through its innovative lending pools. In this issue, we break down Gearbox’s underlying mechanics so you can start earning without the need for active management.
How does Gearbox work?
Gearbox has two core users within its platform:
1. Lenders: Deposit assets to earn passive yield, with single-asset exposure and no impermanent loss. These are users who seek yield at lower risks. It is similar to providing liquidity to Compound or Aave. The lenders’ assets are utilized or borrowed by others, which is where the yield component comes from. The protocol issues dTokens (Diesel Tokens) representing the lenders’ stake, with the interest automatically accruing.
2. Leverage users: Borrow the assets from lenders to create spot leverage positions, which can be used across DeFi. It allows margin trading on Uniswap, leverage farming on Curve, and leverage liquid staking and restaking, among other use cases. These users could be traders, farmers, and even protocols who wish to increase their exposure to DeFi positions.
All of this is made possible by Gearbox’s "Credit Accounts" — essentially leveraged wallets that provide users with additional capital. Credit Accounts “bind” lenders and borrowers together in an isolated smart contract. Gearbox is designed for modularity and composability, making it adaptable for future integrations. It supports improved composability with quicker protocol and asset integration and refined risk granularity, allowing for safer credit opportunities with customizable risk levels.
Understanding the yield sources
Lenders on Gearbox earn yield from two sources:
1. Base APY from fees: The yield you earn primarily comes from the interest rates paid by borrowers who leverage the assets you've supplied for trading or farming. This organic APY is a direct result of the protocol's utilization, with your supplied asset enabling these leveraged activities. The more your asset is borrowed, the higher the interest accrues back to you.
2. $GEAR rewards: On top of the base APY, Gearbox enhances your earnings through its incentives program, distributing $GEAR tokens to liquidity providers. This reward is calculated on a per block basis and adds an extra layer of yield to your investment. However, the $GEAR distribution rate is subject to change based on community proposals and governance decisions.
Gearbox has a transparent fee structure with no withdrawal fees for passive lenders. You can withdraw your assets at any time, ensuring liquidity is not locked. On occasions of peak utilization, immediate withdrawals may be delayed, but such scenarios typically coincide with exceptionally high APYs, encouraging borrowers to quickly repay.
How does Gearbox ensure overcollateralization?
Gearbox uses a risk model to constantly assess the collateral quality of a Credit Account. For each Credit Account, it computes a health factor or a numeric representation of your account’s health. Anyone with a health factor less than 1 is eligible for liquidation. Liquidations are handled permissionlessly by third-party workers. If liquidators malfunction or do not perform in a timely manner, it can lead to the protocol being undercollateralized.
Gearbox takes fees for its operations, part of which goes towards a Reserve Fund. This insurance fund is intended to cover any losses of the pools in case a Credit Account is closed with a loss due to bad or untimely liquidations. Currently, there are over $700K in the fund to cover such losses.
Why choose Gearbox?
Choosing Gearbox means opting for a protocol that combines ease of use with compelling yield opportunities, all while prioritizing the security of your assets. Whether you're looking to lend stablecoins or ETH, Gearbox allows you to start earning immediately on the assets you choose, with single-asset exposure and no impermanent loss.
Check out the Gearbox pools below to learn more:
1. Gearbox ETH Lending - 24% APY
2. Gearbox USD Lending - 26% APY
New on Exponential: Earn 50% yield from market making, plus more investing opportunities
1. Curve TriCRV-ARB Market Making - 55% APY
The TriCRV-ARB pool offers unique exposure to the Arbitrum network through a curated portfolio of two altcoins (CRV and ARB) and a USD stablecoin. Earn over 50% APY on this crypto basket that's boosted by Arbitrum incentives (auto-compounded monthly). This pool is tailored for investors looking to benefit from activity on the Arbitrum network by having exposure to its native token (ARB) and also to the token of a leading decentralized exchange (CRV). When paired with USD, this pool experiences lower volatility than holding the two altcoins individually.
2. Curve Tricrypto-crvUSD Market Making - 16% APY
A new Tricrypto pool providing balanced exposure to BTC, ETH, and USD. Get the best of both worlds by holding all major cryptocurrencies while earning high yields from Arbitrum’s incentives program.
3. Dinero ETH Staking - 9% APY
Step into the future of Ethereum with our latest ETH staking pool. This pool offers exposure to Ethereum staking rewards. Earn up to 9% APY from simply staking ETH to contribute to network security.
In the news
- BlackRock starts a new real-world asset (RWA) tokenization fund on the Ethereum network - Read
- Ethereum spot ETFs may see delay beyond the May deadline - Read
- Optimism launches permissionless fault-proof system on testnet - Read
- Ether.fi begins its first airdrop campaign to users - Read
- Solana memecoin presales have raised $150 million - Read