Gearbox V3: What You Need to Know
$GEAR Utility, Margin Trading, & more
In today’s edition, we’re briefing you on Gearbox V3. The onchain credit protocol has been around for a while, and they’ve been building during the bear.
The protocol has recently released some launch steps for their long-awaited V3, bringing a host of new features to the table, which we’ve outlined below.
Stay alert, stay informed ⬇
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Crypto Market Update:
- Top Gainer (24H) in the top 50 mcap: Avalanche $AVAX increased in price by 15.6%.
- Top Loser (24H) in the top 50 mcap: Stacks $STX is down -8%.
- Total crypto market cap has seen an increase by 0.1% to stand at $1.57T.
- BTC dominance in the market is currently at 54.9%.
- Median gas price on Ethereum over the past 24 hours has been 57 gwei.
News
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- Bitcoin's Rise Triggers $100 Million in Short Liquidations: The recent surge in Bitcoin's price above $44,000 resulted in the liquidation of nearly $100 million in short positions on centralized exchanges.
- Coinbase Enhances Decentralized Wallet with Messaging-Based Payments: Coinbase updates its decentralized wallet, adding a feature for instant, low-cost money transfers via messaging apps, akin to PayPal.
- Amazon Prime Offers Free Packs for NFT Game Gods Unchained: Amazon Prime subscribers can now claim free in-game card packs for the NFT-based game Gods Unchained, with potential to convert them into NFTs.
Project Updates
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- Impossible Finance and Ronin Partner for Web3 Game Launches: Impossible Finance collaborates with Ronin blockchain to deploy a launchpad for Web3 games, aiming to revolutionize blockchain gaming and NFTs.
- Aevo Introduces aeUSD for Crypto Derivatives: Aevo announces aeUSD, a yield-bearing, stables-denominated collateral asset on its crypto derivatives exchange, offering a 4.75% APY with 20x leverage.
- Worldcoin Launches Grants and Decentralization Plans: Worldcoin, co-created by OpenAI CEO Sam Altman, introduces a new grants program and outlines its decentralization strategy.
- Versatus Labs Secures $2.3M for Blockchain Scaling: Versatus Labs raises $2.3 million in seed funding to develop its Ethereum scaling solution, LASR.
Background on Gearbox
Gearbox was launched on October 30, 2022.
The project is a leverage protocol that works as a standard lending platform.
Where Gearbox differentiates itself is that there are two different user profiles:
Passive liquidity providers earn yield by providing single-asset liquidity.
Active farmers borrow those assets to trade or farm with up to 10x leverage.
This allows users to farm a much greater yield than would typically be available for a given asset.
The protocol also uses the term “composable leverage”, which means that anything can technically be used as collateral for leverage: NFTs, LP tokens, ERC20s…
Gearbox V3
Just 4 months after the launch of V2, the V3 tech stack was unveiled, and the code was sent to audit. The update comes with multiple redefining features including:
New lending markets for mid-tail and long-tail assets (higher risk and higher reward strategies)
Quotas for better risk management
Lowering of collateral limits
New integrations
Expansion to L2s
Improved Gearbots and automation (copy-trading, limit orders, DCA / TWAP…)
Minimum viable tokenomics.
Margin Trading
V3 aims to scale the Gearbox product with more pools, more assets, and more sources of liquidity.
Teaser of Gearbox’s ‘PURE‘ Margin Trading Feature
$GEAR Tokenomics
In order to adequately manage and compensate LPs for the risks they are taking, the DAO will be responsible for much of the decision-making around the protocol.
A $GEAR voting process will be used for controlling parameters including:
Risk Premium (extra interest paid for increased risk exposure)
Quota interest APRs
Protocol integrations
L2 expansions
Long-tail assets
This active governance participation in the form of voting creates a Minimum Viable Token (MVT) model that introduces a very specific use case for $GEAR.
Interest rates will be recalculated at the end of each voting epoch based on the votes cast at that time.
All existing votes will be automatically carried over to the next epoch.
This maintains an ongoing and dynamic interest rate determination process that is driven by GEAR token holders.
When demand for leverage increases → Passive lenders vote to increase lending APY
When the farming APY decreases → Borrowers vote to decrease the borrowing APY
The Gearbox business model still lacks a revenue-sharing feature for $GEAR holders.
While revenue sharing can be an appealing incentive for token holders, it is important to consider that the Gearbox protocol is still in its early stages.
Profit-sharing mechanisms for stakers or a safety module can be implemented later, as it may impact growth of the protocol.
Insights from DAO discussions indicate the significance of having an additional revenue source for the business, as sharing revenue may not be the most effective strategy during the early development phase.
Gearbox V3 Launch
Proposals are currently being voted on which will determine the launch schedule and parameters of the migration from V2 to V3.
The Margin Trading feature is slated to go live next week.
It should be noted that the platform
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