What is Gearbox Protocol? Gearbox Protocol is a platform that allows users to use leverage to optimize profits in participating in using DeFi protocols from idle assets. Leverage is a primitive human need when investing in any market.
So how does Gearbox Protocol work? Let’s find out with Weakhand in this article.
What is Gearbox Protocol?
Define
It can be said that Gearbox Protocol is a Leverage Yield Farming platform that allows users to borrow more than what they have as collateral, thereby optimizing profits when participating in DeFi and allowing users with idle assets to can deposit money into the platform to earn interest from borrowers.
Gearbox Protocol’s operating mechanism
During the operation of the project, many parties participate including:
- Liquidity Provider: Are liquidity providers for the platform. Liquidity here is the user’s idle assets deposited into the pool to get interest. After providing liquidity to the Gearbox Protocol platform, it will return LP Tokens representing the user’s assets in the pool.
- Lender (in the image is Trader): are users or protocols integrated with Gearbox Protocol who want to optimize their positions with leverage up to x10.
- Credit Account: A smart contract created to store information about users, loan amount, interest rate, collateral, liquidator, etc. When each user or protocol opens a position, There will be different Credit Accounts.
- Tresury: A place to collect fees and then buy insurance for the liquidity pool. The liquidation fee for users is 4% with other protocols being 1.5%.
The mechanism of action is relatively simple as follows:
- Step 1: LPs will deposit their assets into the Pool.
- Step 2: Traders (users or protocols) suggest Credit Manager to open a Credit Account for them and then deposit their collateral into the Credit Account.
- Step 3: Borrow other assets with leverage up to x10
- Step 4: Participate in DeFi activities on Uniswap, Sushiswap, Curve Finance,.. through the Gearbox Protocol platform (funds are still under the management of the Gearbox Protocol platform).
- Step 5: Earn profits from participating in DeFi activities returning the loan and a portion of interest to the pool then taking back the collateral.
Currently, Gearbox Protocol is accepting many different types of collateral, making it easy for users and the protocol to access the project. Besides, the project has also been audited by many parties such as SigmaPrime, ChainSecurity, PeckShield, Mixbytes,… which also helps users feel secure when depositing their assets into the platform.
Gearbox Protocol Differences
Gearbox Protocol has many strategies for users to freely choose from such as Leverage Liquid Staking, One click Strategies, Leverage Stablecoin Farming, Leverage Vanilla yVaults, Farming Long/Short or Free Leverage Positition and Arbitrage of Correlated Assets.
Each strategy will suit different investment styles and risk appetites, which is also a strategy that helps Gearbox Protocol diversify and optimize its user base.
Core Team
Gearbox Protocol was first introduced in the ETHGlobal hackathon in February 2021, but since December 2021, the project has been managed and developed by DAO (the project’s GEAR token holders).
Mikhail Lazarev: CTO
Currently Mikhail is working as Co Founder and CTO for many projects in the crypto market such as SPb BlockChain Community and DLTXperts. Previously, Mikhail also worked as CEO & Founder of the Tokenstarter project. It’s possible that he joined the crypto market quite early, in May 2017 when the market was still very exciting.
Jared Hedglin
Jared has experience participating in many different crypto companies and projects such as Coinbase and BitGo.
Investor
August 29, 2022: Gearbox Protocol officially announced its successful call for $4M with the participation of Placeholder, Zee Prime, Ledger Prime, Polymorphic and GCR.
Tokenomics
Information about Gearbox Protocol tokens
- Project name: Gearbox Protocol
- Code: GEAR
- Blockchain: Ethereum
- Token classification: ERC – 20
- Smartcontract: 0xba3335588d9403515223f109edc4eb7269a9ab5d
- Total supply: 10,000,000,000
Token Allocation & Release
Community Portions: 58% and no vesting. The right to release how much and how to release will be voted on by the Gearbox Protocol community.
- Credit Account Mining: 5% will be created by the first 5,000 people or protocols to establish a Credit Account.
- Community Tester: 1,085%
- Early Discord Member: 0.348%
- Retroactive reward for 2021: 0.5%
Internal External Contributors: 1.28% with lock period of 12 months and installments within 18 months.
Internal Core Contributors: 29.2%
- Intinial Core Member: 20% with lock-in period of 12 months and installments within 18 months.
- Intinial Contributors: 9% with lock-in period of 12 months and installments within 12 months.
Intinial Company Wallet: 11.52% with lock period of 12 months and installments within 18 months
Token Use Case
Users who hold GEAR can participate in voting on decisions on the Gearbox Protocol.
Exchanges
Currently, users can buy and sell GEAR tokens on a number of exchanges such as OKX, MEXC, CoinEx, Gate.io, Houbi,…
Gearbox Protocol Information Channel
Summary
Gearbox is a Levergae Yield Farming platform that continues to be notable in the crypto market as it has integrated with many reputable DeFi platforms.