“Liquid Eigen Layer Beta”- this is a statement we have seen being used to describe Gearbox recently. That claim seems to be even more substantiated as LRT integrations like @RenzoProtocol and @ether_fi have boosted TVL to $97M and put the lending market on course to generate over $15M in fees for lenders. So, is Gearbox about restaking?
Yes, No, and so much more.
Let's look at the metrics and V3's growth strategy 🧵
The "Network Effects" capture strategy
Gearbox is an onchain leverage layer. It enables you to borrow leverage and use it across other protocols and chains. That is currently mostly DeFi, but also some RWA and even staking facilities. With V3, our strategy was to develop Gearbox into a more modular protocol capable of offering leverage on protocols and assets that are the most relevant to users. This was a key growth mechanism to capture and grow our "Network effects". Integrating LRTs, thus, was a part of the V3 strategy and gained significant traction.
Beyond LRTs, V3 enabled leveraged trading on DEXes like Uniswap and Curve with PURE Margin Trading. Also, introduced leveraged RWAs with sDAI, leveraged LSDs with rETH and stETH and more from the @CurveFinance Ecosystem to grow these network effects.
Effect on Borrowers and TVL
With V3's additions, we have seen the user base rise to 240 active borrowers with an average position size of $333K. Whales, few in numbers, but huge 🐋 The overall TVL has now risen from $27M on V2 to $97M on V3, a 259% rise.
Out of this, the leveraged restaking TVL is at $68.7M, Gearbox PURE is at $9.4M Open Trade Value.
Growing Lenders Organically
With V2, the supply side was largely driven by $GEAR incentives. With V3, we have reduced the $GEAR incentives by over 60% and still seen supplied assets grow by over 3x to $80M. This is because Gearbox's lending side is on course to generate $15.5M for lenders annualized.
This enables lending rates of 25%+ APYs on ETH and 10%+ APYs on USDC 🔥
Lenders earn these yields from borrowers who earn 200%+ APYs on LRTs, borrow at 10%+ APYs to margin trade and have other farms that yield 40%+ APYs as well. This enables borrowers to pay above market rates for ETH and USDC and still earn more.
V3's integrations thus make growing Gearbox sustainable without relying on $GEAR emissions.
Composability amplifying our partners & friends
The cool part about Gearbox is its composability. All the trades, farms, liquidations happen on integrated DEXes and protocols. That means more volumes for them, more fees for them. This way, Gearbox brought about $6️⃣B in volumes for @Uniswap, @CurveFinance, and @Balancer over the course of 2023 with its V3! So far, with V3, it has been $100M+ in basically just a couple of weeks (source in next tweet).
Financial Impact for the Gearbox DAO
Gearbox DAO, at current levels, is on its way to $5M+ in revenue annualized. And that comes with a special twist which slowly starts to show its effect: gauges controlled by $GEAR stakers.
The interest rates in Gearbox are split into two parts: base utilization rate that everyone is familiar with + extra quota rates that are different for every asset you leverage. Protocols and whales can stake their GEAR and make those interest rates lower or higher, essentially creating a market for bribes and Gear Wars... but on that, in next tweet.
Next Source of Growth
While in terms of $$ value terms the protocol and DAO are doing well, the current limitations of Ethereum Mainnet's Gas fee and the 25ETH minimum borrow make expanding the user base tough. To enable more users to access Leveraged DeFi, Gearbox is deploying on Arbitrum, which would enable users of all sizes to access Leveraged DeFi. This should further bring Arbitrum-native integrations.
As for the other mainnet integrations, that could be Ethena, KelpDAO, GHO, Balancer and Aura pools, and… what would you like to see?
PS: links to sources and more info below ⤵️
Lido
Vybe Network
Web3Auth
Obol Network
Arcium
aPriori
SkyEcosystem