Gearbox is a composability-driven leverage protocol. It is a prime brokerage platform that enables earning passive APY by providing one-sided liquidity or utilizing one's own DeFi leverage on platforms such as Curve, Uniswap, Convex, Yearn, and Uniswap.
Gearbox - Credit Platform
Gearbox is a generalized leverage protocol that allows anyone to use leverage in their own DeFi-native way and then employ it across different DeFi protocols.
For example, you can use leverage for trading on Uniswap, employ leverage on Yearn or Curve and Convex, create complex strategies using options and derivatives, obtain leverage as a service for your structured product by executing complex positions, and more.
It is a two-sided protocol: passive liquidity providers on one side and active traders and position managers on the other.
Liquidity providers can deposit their funds into the liquidity pool for lending and earning interest. In principle, it functions similarly to other major lending protocols like Aave or Compound.
Active traders seek to obtain leverage and use it across various DeFi protocols. They open a credit account, providing initial funds, and additional funds are borrowed from the pool. The trader can then use their new credit account with borrowed funds to interact with connected protocols.
Types of Credit Loans on the DeFi Platform
A credit account is a new DeFi primitive—an isolated smart contract that allows the execution of financial orders (interaction with third-party protocols) but does not provide direct access to the funds it holds.
Credit accounts execute transactions on their behalf; however, each executed transaction must pass several checks. The target contract and incoming tokens must be whitelisted, and the Credit Account Health Factor must be greater than 1 after the transaction.
Funds in credit accounts are used as collateral for debt, and users can manage these funds by sending financial instructions to their credit accounts. This can include:
- Marginal trading on Uniswap or Sushiswap
- Utilizing yield farming on Yearn
- Arbitraging pegged assets on Curve and much more!
The platform distinguishes itself with the following advantages and features.
| Feature | Description |
|---|---|
| Composable Environment | Gearbox doesn't have its own order book or trading environment. Leverage is used across multiple DeFi protocols and assets, making it fully composable. |
| 0% Financing Rates | The offered leverage is asset-backed by real assets on third-party protocols, eliminating the need for maintaining long and short positions through financing rates. |
| Leverage as a Service | The Gearbox protocol provides benefits to other protocols without altering their own architecture. It also grants them access to the Gearbox user base. |
| Permissionless Strategies | Credit accounts allow for expanding positions and trades, including complex strategies such as short position farming on Yearn or using LP tokens as collateral for more composable actions. |
| Low Gas Overhead | By utilizing isolated smart contracts, gas overhead is minimized to the bare minimum. |
The Gearbox protocol is potentially compatible with many DeFi and NFT protocols and is designed as a building block, a primitive. You can create integrations for your protocol and even request a grant from the Gearbox DAO to assist you!