What is Gearbox Protocol (GEAR)?

Deep Dive

1. Purpose & Value Proposition

Gearbox solves DeFi’s leverage fragmentation by letting users take loans once and deploy them across protocols like Convex, Lido, and Pendle without repeated collateralization. This eliminates slippage and swap fees typically incurred when looping positions through DEXes.

The protocol creates a symbiotic ecosystem:
- Lenders earn yield from borrowers’ interest and leveraged farming activities
- Borrowers access undercollateralized loans (up to 40x) via isolated Credit Accounts

2. Technology & Architecture

Gearbox uses programmable smart contract wallets called Credit Accounts that:
1. Hold both collateral and borrowed assets
2. Interact directly with yield-bearing contracts (e.g., Lido’s stETH minting)
3. Enable atomic leveraged transactions without DEX routing

This architecture supports non-tokenized assets like Convex’s $1.5B Curve LP positions – assets traditionally excluded from lending markets due to lack of DEX liquidity.

3. Key Differentiators

• Contract-level leverage: Mint/redeem assets natively via protocols’ functions (Gearbox)
• Institutional-scale LTVs: 40x leverage vs typical 2-3x in traditional DeFi lending
• Risk isolation: Curators like Chaos Labs create customized pools with specific collateral/asset rules

Conclusion

Gearbox reimagines onchain leverage as composable infrastructure rather than isolated lending markets, particularly benefiting yield-bearing assets and institutional participants. As DeFi matures beyond tokenized assets, can its contract-native approach become the standard for capital efficiency?