One protocol that have caught my eye for sometime already have
💵 Raised from the community
🚢 Constantly shipped and evolved
🌊 Weathered through the various market conditions
Standing very strong and their push for innovation just doesn't stop there 🧵
1/ One that continues to evolves with each iteration being better than the next is @GearboxProtocol.
This time presenting to you a different perspective to understand the protocol
1️⃣ Gearbox at its core
2️⃣ Evolving through v1, v2
3️⃣ Gearbox v3
4️⃣ Thoughts and conclusion
2/
1️⃣ Gearbox at its core
With Gearbox Protocol, you can harness the power of DeFi leverage and use it across different protocols.
You have that flexibility to take positions that align with your goals.
3/ Leverage-as-a-service is Gearbox's key differentiator. It allows you to take leverage trade on any protocol's strategies, through a single click.
This composable leverage can only be made possible by Gearbox's credit account architecture.
4/
2️⃣ Evolving through v1, v2
I wanted to bring you through Gearbox's evolution and to where is it today. Building around its concept of Credit Accounts, it continued staying true to its core.
Let's understand what Gearbox is through its evolution.
5/
🔹Gearbox V1: Proof of Concept
Idea began in 1Q21 as a margin trading protocol for Uniswap but liquidity being sourced directly from its pools.
Trading with 4x leverage worked on Uniswap.
6/ And so you might have noticed...that it only allows leverage trades only on Uniswap and for specific LPs.
People got hungry for leverage across more assets. This required deep order books, which could be tough in bear times.
A more generic build is required.
7/ Credit accounts were born to achieve generalised leverage.
For deeper leverage, for more assets, across more protocols.
The value proposition shifts from margin trading to an infrastructure layer, which increases capital efficiency for any protocol going through the DAO.
8/
🔹Gearbox V2: Proof of Ability to Scale
Starting 2Q22 a whole lot of features were added and more action was going on to ramp up product development.
This was done through launching a product through a DAO, which took time.
https://twitter.com/GearboxProtocol/status/1577650481131831299
9/ Here are some improvements in v2
▫Leverage went up to 10x
▫AllowedList added a range of bluechip protocols and assets
▫Well known security audits
▫UI/UX improvements
▫Ready strategies to farm in a click
▫Monthly reporting of protocol
10/ Gearbox found a good product market fit, amassing over TVL > 100M.
Its stringent safety framework, assured with countless security audits, resulted in $0 bad debt.
People wanted more than leveraged yield farms. Gearbox brought composability and security to new heights.
11/
3️⃣ Gearbox v3
Essentially, v3 builds upon v2 with many reDEFIning works in place: leverage, assets, scalability, tokenomics, revenue, UX and more!
All that is going on right now in 1Q23 into 2Q23.
12/
🔹Alpha Pools
Built with the idea of modularity and scalability, passive lenders can now choose to opt into the Alpha pools, taking on more risk.
They can enjoy higher APYs coming from higher borrowing rates and through fancier strategies.
All while maintaining security.
13/
🔹Asset Limits and Quotas
v3 introduces exposure limits for assets in Allowed List
What his means is that sum of all quotas cannot exceed the total limit for an LP on Gearbox.
Quotas refers to borrower's collateral value. Total limit refers to the pool's maximum exposure
14/ There are several benefits to this:
▫It puts a cap to protocol risk
▫Cross chain deployment now possible
▫Users can now enjoy higher APYs from higher risk protocols (coming from more integration and partnerships)
15/
🔹Quota Interest
These extra APRs derived from quotas (collaterals) are paid by borrowers.
Quota interests are then paid to Alpha pool resulting in a total APY coming from
= Bluechip + Alpha APY + Quota interest
16/
🔹Revenue via Staking
Revenue share (or quota interest APRs) tweaking need to be constant and doing it through governance snapshots is inefficient.
A more continuous on-chain system is needed.
While devs create token utility via staking, the DAO decides how to use it.
17/ Here's the process flow:
▫Setting the APY Range parameters
▫$GEAR holders decide split
▫Rates recalculated based on votes at the start of weekly epochs
▫$GEAR used for voting will be staked for each asset
Though revenue sharing isn't planned, a DAO vote can turn it on
18/
🔹Automation on Chain
Gearbots execute your position with these assets and automatically creating entries/exit.
(Cool use of words here!)
19/ Automated portfolio management use cases include:
▫Submit SL, TP orders
▫Auto convert collateral into underlying if HF falls below threshold
▫Auto rebalance funds between diff assets and leverage levels
On chain fund management is also coming your way
20/
4️⃣ Thoughts and conclusion
Have been watching @GearboxProtocol since it gained some attention during its raise last year. I like how it weathered through so many events.
2021's Defi summer,
hit from 2022's covid,
went on to raise a huge sum,
token launched in bear.
21/ With more integrations i.e. @Balancer, @AuraFinance and with its composable and scalable architecture, I am excited for what @GearboxProtocol will bring to DeFi.
Will it satisfy the market needs?
Will the new features be new narratives?
Pretty hyped overall!
Source: https://twitter.com/arndxt_xo/status/1638137131767070722