Gearbox
Gearbox is a generalized leverage protocol that allows anyone to access DeFi-native leverage and use it across various third-party protocols.
- Documentation
- Auditors
- Please see our FAQ on experienced auditors
- Website
- Token: GEAR
- Tags: Lending
- TVL: $1.1M (Rank #192)
- TVL Ranking by Lending: #0
- Blockchain: Ethereum
- Chain TVL
- Ethereum: $1.12M
- Code reviewed by several experienced auditors including ChainSecurity and ABDK
- Anonymous team reduces transparency
- No documented protocol hacks since launch
- 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
- 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
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.
