Why GCR Invested in Gearbox – the Upcoming Ethereum Shanghai Catalyst
The Decentralized Finance (DeFi) space has seen rapid growth and evolution in recent years, leading to a growing demand for platforms that offer new and innovative solutions to the centralization, privacy, ownership, and other challenges often faced by Traditional Finance (TradFi). One such platform is Gearbox Protocol.
We at GCR DAO saw the potential of Gearbox Protocol in revolutionizing the industry and participated in its latest funding round. The DAO believes in Gearbox’s commitment to providing users with a safe and efficient platform for managing their investments, and its integration with the wider DeFi ecosystem.
What is Gearbox?
Gearbox Protocol is a DeFi platform built on the Ethereum blockchain, essentially acting as a two-sided lending marketplace: it connects users who want passive safe APY with leverage lovers who know how to make more with leverage and alpha. Notably, what sets Gearbox Protocol apart from other DeFi lending platforms is its implementation of composable leverage.
Composable Leverage is Key
Composable leverage refers to the ability to use leverage in multiple layers, allowing for more efficient use of capital. In the context of Gearbox Protocol, this means that users can borrow against their deposited assets and then use those borrowed assets as collateral to borrow even more. This is also known as one’s Credit Account (CA) on Gearbox.
The CA effectively creates a “cascading” effect where users can continue to borrow and lend, increasing their returns on their deposited assets. This is made possible through the use of “collateral tokens” which are minted when a user borrows and can be used as collateral for further borrowing.
The composable leverage feature provides users with greater flexibility and control over their capital. It also allows for more efficient use of capital as users can borrow and lend multiple times, increasing their returns on their deposited assets. Additionally, by using collateral tokens, Gearbox Protocol is able to offer a wider range of borrowing options and interest rates, making it more accessible to a larger range of users.
Currently, using Gearbox leverage can allow one to earn up to 15%+ APY on stablecoins and ETH – via Curve, Convex, Lido, Yearn, and others. You choose your collateral and your own risk parameters.
March Ethereum’s Shanghai Upgrade is a TVL Amplifier
Ethereum Shanghai coming in March will enable withdrawals of ETH for stakers, and the stakers who locked their ETH back in December 2020 will finally be able to withdraw their 16.3M ETH from the Beacon chain.
We anticipate this event as a huge catalyst and TVL driver for Liquidity Staking Derivative protocols, aka LSDs. Specifically, we believe TVL for staking will increase from ETH coming to rush from existing solo stakers, a growing organic preference for LSDs for liquidity, and an overall increment in staking due to ETH withdrawal availability.
LLSD, or Leveraged Liquidity Staking Derivatives, is a collaborative approach and not a competitive one. In this case, Gearbox’s credit accounts can create Leveraged LSDs with DeFi-Native 10X leverage, which means Gearbox will indirectly benefit from this increased growth and adoption of LSDs. By effectively working as a base layer of leverage on these protocols, Gearbox allows users to natively stake up to 10x ETH of their collateral to earn the staking yields.
In terms of yield, compared to the typical 5% yield from LSDs, Gearbox lets you multiply the generated yield and get you to 15%+ using the exact same sources but with leverage.
To read more about this strategy, go here.
GCR x Gearbox Protocol
GCR invested in Gearbox Protocol in 2022 as we saw the team’s emphasis on security, transparency, and decentralization. The founder’s focus on building a strong technical product was very compelling to the GCR community.
We also valued the DAO’s focus on execution and getting the product into the hands of users. The team’s dedication to decentralized governance is something that is very much appreciated in the DeFi space.
Without a doubt, we’ve seen some strong execution coming in Q4 and the start of 2023 and we are excited about what the team builds for the coming years.
Gearbox Protocol has an active community of users who can participate in the governance of the platform through the $GEAR token. Users can vote on proposals that affect the platform, such as changes to the interest rate, the addition of new assets, or other important decisions. This decentralized governance model ensures that the platform is transparent and accountable to its users.
Learn more about Gearbox Protocol:
User Docs: https://docs.gearbox.finance/
Developer Docs: https://dev.gearbox.fi/
Snapshot page: https://snapshot.org/#/gearbox.eth
And, of course, the DAO working docs: https://gearboxprotocol.notion.site/gearboxprotocol/Gearbox-DAO-23966f122ae4421492819242b30a0e7a
This article has been written and prepared by the GCR Research Team, a group of dedicated professionals with extensive knowledge and expertise in their field. Committed to staying current with industry developments and providing accurate and valuable information, GlobalCoinResearch.com is a trusted source for insightful news, research and analysis.
Disclaimer: Investing carries with it inherent risks, including but not limited to technical, operational and human errors, as well as platform failures. The content provided is purely for educational purposes and should not be considered as financial advice. The authors of this content are not professional or licensed financial advisors and the views expressed are their own and do not represent the opinions of any organization they may be affiliated with.