Gearbox

Lending

Gearbox is a generalized leverage protocol that allows anyone to access DeFi-native leverage and use it across various third-party protocols.

Risk Rating
Average
Protocol Code Quality
Protocol Maturity
Protocol Design
Summary
What we like
Gearbox offers users ready-made, one-click strategies to easily lever up on core DeFi positions. The protocol is also managed as a DAO with strong multisig setups.
What we like less
User accounts may be undercollateralized if there are untimely liquidations. Gearbox covers this loss from its reserve but is limited by the valuation of LP tokens owned by the DAO treasury.
What it means for you
Offers you a backend composable leverage protocol that can be used across DeFi. The front-end interface provides you easy access to leveraged DeFi positions.
Information
Info
  • Website
  • Token: GEAR
  • Tags: Lending
Key Metrics
  • TVL: $1.1M (Rank #194)
  • TVL Ranking by Lending: #0
  • Blockchain: Ethereum
  • Chain TVL
    • Ethereum: $1.11M
Risk Assessment
Average
Protocol Code Quality
  • Code reviewed by several experienced auditors including ChainSecurity and ABDK
  • Anonymous team reduces transparency
  • No documented protocol hacks since launch
Protocol Maturity
  • Latest protocol version launched recently in 2023; maturity less than three months increases technical risk as smart contracts are not battle-tested
  • Top 10% by total value locked reduces risk
  • Multisig wallet controls protocol upgrades
  • Multisig consists of at least 4 signers, which means the protocol is less susceptible to centralization risks
  • Timelock is at least 48hrs, which provides users with sufficient time to exit if any malicious upgrades are approved
  • Low voting power concentration reduces risk
Protocol Design
  • No death spiral concerns
  • Robust controls to mitigate oracle price manipulation
  • Isolated markets enable asset risks to be contained to each individual pool without impacting the entire protocol
  • Basic controls in place to prevent risky borrowing
  • Basic mechanisms in place to incentivize liquidations
  • Solid methods to accrue protocol reserves
Things to know about Gearbox

How Gearbox works

Gearbox has two core uses on its platform: lenders and borrowers. Lenders or liquidity providers (LPs) are users who seek passive yield and have a low-risk appetite. LPs on Gearbox operate similarly to Compound as providing liquidity return cTokens to the user. With Gearbox, users get back dTokens, or Diesel tokens, which automatically accrue interest and fees. Borrowers are traders who have a higher risk appetite and want to leverage their positions by borrowing liquidity from Gearbox. Borrowers and lenders are bound together by credit accounts. A credit account is an isolated smart contract containing both the user and borrowed funds, has liquidation thresholds, and has an allowed list of tokens and protocols. Funds on credit accounts are used as collateral to take on debt. Users can operate these funds by sending transactions to their credit accounts. All trades and operations occur through third-party platforms like Uniswap or Curve.

How Gearbox makes money

Gearbox takes fees for different operations. If a credit account is liquidated, a 4% fee is distributed to a third-party liquidator and 1.5% fee goes to the protocol. The protocol also takes a spread fee between the APY that LPs receive and the fee that farmers pay for borrowing their assets. All protocol fees are controlled by governance with nothing reserved for core contributors or the foundation.

How you make money on Gearbox

You can supply assets into Gearbox to earn interest payments paid by borrowers. You can also utilize the platform's one-click strategies to leverage core DeFi positions like staking ETH, stablecoin farming, and Yearn vaults, among others.

Gearbox Pools
Gearbox ETH Lending
9.3%
Yield
$132M
TVL
Risk
C
Protocol
Gearbox
Chain
Ethereum
Gearbox USD Lending
13.8%
Yield
$28M
TVL
Risk
C
Protocol
Gearbox
Chain
Ethereum
Gearbox BTC Lending
3.6%
Yield
$134K
TVL
Risk
C
Protocol
Gearbox
Chain
Ethereum