Too many projects today are trying to crack becoming a leverage dApp
Then thereโs one on its way to become the base layer of leverage in DeFi with $100M TVL and they just announced a V3:
1/19๐
Then thereโs one on its way to become the base layer of leverage in DeFi with $100M TVL and they just announced a V3:
1/19๐
2/ Gearbox protocol is a lending enabled composable leverage protocol where you can choose to be a lender and earn yield OR get 10x leverage and use that position to farm on DeFi protocols such as Yearn, Convex, Lido and Curve
3/ So whats the issue that Gearbox is now looking to solve in its next iteration?
In two words, scale and safety.
But to scale you need to enable access to assets, pools, L2s, chains and protocols beyond the most liquid ones.
In two words, scale and safety.
But to scale you need to enable access to assets, pools, L2s, chains and protocols beyond the most liquid ones.
4/ Leverage is a high liquidity-demanding primitive, making it difficult to safely give margin on mid-tail assets and L2s (wtf Linn you sound so big brain), but is necessary to crack to create the base layer of DeFi leverage.
5/ Meanwhile you need lenders to enable leverage and a mechanism to split the value the system generates.
6/ So how do they "redefine" this leverage and lending?
A new modular lending market design. Lenders can manage the risk to rewards basis of what pool they enter.
A new modular lending market design. Lenders can manage the risk to rewards basis of what pool they enter.
7/ Apart from the existing conservative Main Bluechip pool there will a higher APY Alpha pool
Main Bluechip pool will remain low risk integrations and asset LTVs while the Alpha pool will have slightly more risk but expected higher returns
Main Bluechip pool will remain low risk integrations and asset LTVs while the Alpha pool will have slightly more risk but expected higher returns
8/ The extra APY in the Alpha pool will be at least the base APY of the Bluechip pool plus extra fees taken from the โquotasโ Asset, pools and chain expansion through bounding risk:
9/ Gearbox Protocol will limit the exposure to assets in the Allowed List to ensure safety, this effectively means the total exposure of the protocol to medium risk assets will be bounded. In turn making liquidations much easier.
10/ For each allowed asset on the protocol, there is a total limit denominated in the underlying asset of the corresponding pool. Each borrower can set a quota value for their assets, which determines the actual amount of assets they intend on borrowing
11/ The sum of all quotas set by users cannot exceed the total exposure limit of the protocol.
Thus, exposure of the pool to an asset is capped, preventing borrowers from getting more exposure than the liquidity of the asset.
Thus, exposure of the pool to an asset is capped, preventing borrowers from getting more exposure than the liquidity of the asset.
12/ This ensures that the borrowers are never able to create a bad debt in the system and the lenderโs capital is always safe while generating higher APYs
This also makes Cross-chain deployments possible, even for low liquidity assets, as they can be capped at $1-2M limits.
This also makes Cross-chain deployments possible, even for low liquidity assets, as they can be capped at $1-2M limits.
13/ Making Gearbox scalable across chains, assets and pools of a magnitude more than they currently deal with.
Quota interest: A new kind of interest that borrowers pay on their quota size for each asset, instead of their borrowed amount Quota interest is essentially a %APR...
Quota interest: A new kind of interest that borrowers pay on their quota size for each asset, instead of their borrowed amount Quota interest is essentially a %APR...
14/ ...on the borrower's quota size and is paid to the Alpha pool, which receives base Bluechip + Alpha APYs + all quota interest collected Higher APYs due to quota interest can bring in more Lenders, making higher risk strategies more predictable over time.
15/ $GEAR holders configure the APR on quotas through the GEAR voting system.
They decide how much of the revenue is split between the DAO and the lenders.
They decide how much of the revenue is split between the DAO and the lenders.
16/ While there isn't a decided mechanism to share the revenue they help split right now, the token holders can now decide to create that given the staking tech is now already enabled on the protocol.
17/ Giving the choice to the holders regarding what kind of utility they want to create while ensuring faster delivery on this by creating the base tech needed to make it possible.
18/ What else?
- Balancer & Aura integrations for even more diversified yields Revenue sharing (real yieeeld)
- Automated portfolio management: Stop losses/Take profit Bot, HF management Bot, Strategy management Bot.
- CEX like UX
- Possibly expanding to L2s (up to the DAO)
- Balancer & Aura integrations for even more diversified yields Revenue sharing (real yieeeld)
- Automated portfolio management: Stop losses/Take profit Bot, HF management Bot, Strategy management Bot.
- CEX like UX
- Possibly expanding to L2s (up to the DAO)
19/ All in all a very innovative approach, and Linn likes the innovationโฆ
Linn would like to remind everyone that Linn is only a Spiritual Advisor not a Financial Advisor.
Please remember: "Hatred does not cease by hatred, but only by love."
Linn would like to remind everyone that Linn is only a Spiritual Advisor not a Financial Advisor.
Please remember: "Hatred does not cease by hatred, but only by love."
Loading suggestions...