GM! As you could have noticed, we have moved the articles to our own blog (ghost) now at https://blog.gearbox.fi/. Please go there to check the latest!

Gearbox Protocol Blog

Other links you might want to go through are:

• Discord 👾 https://discord.com/invite/gearbox
• Forum (Inside Discord): https://discord.com/invite/gearbox
• Telegram: https://t.me/GearboxProtocol
• Twitter: https://twitter.com/GearboxProtocol
• Blog: https://blog.gearbox.fi/
• DAO Voting: https://snapshot.org/#/gearbox.eth
• Main website: https://gearbox.fi/
• Extended dApp: https://app.gearbox.fi/
• Analytics: https://charts.gearbox.finance/
• Developer docs: https://dev.gearbox.fi/
• Monitoring Tool: https://risk.gearbox.foundation/updates
• GitHub: https://github.com/Gearbox-protocol

Monthly Reports

Moving to Blog.Gearbox.Fi was originally published in Gearbox Protocol ⚙️🧰 on Medium, where people are continuing the conversation by highlighting and responding to this story.

GM frens! In this article, risk members [amantay, ilgiz, & others] describe their framework & general approach to risk assessment in Gearbox Protocol. So if you ever wondered “How are new contracts (protocol integrations) and assets (to trade, farm, portfolio margin, etc.) are assessed before being voted on? And when is my bag going to be available on Gearbox?!”— you’ll like this article!

Leighton on Twitter: "The way @GearboxProtocol enables under-collateralized borrowing is genius and similar to flash loans can ONLY happen on a blockchain. / Twitter"

The way @GearboxProtocol enables under-collateralized borrowing is genius and similar to flash loans can ONLY happen on a blockchain.

The magic is in Credit Accounts. TLDR: you can’t just randomly get x10 your capital (borrow on leverage) and syphon the $$ of the system into a malicious contract or an illiquid asset. Or rather, you shouldn’t be able to. The list of actions is restricted by the Allowed List of contracts and assets. So let’s dive into some specific risks the risk committee accesses…

First of all, let’s consider some of the potential risks

• A sharp price change of an asset can lead to position insecurity and bad debt (bad debt = loss for LPs).
• Illiquidity of Assets: liquidity especially in the bear market often degrades on DEXes, which can cause liquidity pools on Uniswap/Sushiswap and other exchanges to become quite thin. This lack of depth leads to the fact that it becomes impossible to liquidate a position without losses to LP funds. A potential example of this is the recent event in Solend.
• Cascading liquidations: all protocol liquidations lower prices in the market, leading to more liquidations, and so on, as a death spiral.
• Lack of liquidators: this can occur if the income from liquidation is less than transaction costs, for example, in case of high gas price peaks.
• Smart contract risk and other technical risks (on both Gearbox and third-party protocols) could cause liquidity to be drained…

In this article, we won’t address the smart-contract risk as it’s a pure technical risk. If you want to know more about it, see more on audits and bug bounty programs here. V2 will have 3 more audits covering the entire system. But, no number of audits makes a protocol fully safe though, DeFi is a very risky area, please keep that in mind and understand the risks.

Token volatility analysis

First of all, currently whitelisted tokens in the Gearbox V1 Allowed List are blue-chip tokens that have sufficient liquidity and proven history of non-fraudulent emission. As always, a token can be whitelisted only after a proper discussion on the DAOForum and a subsequent formal voting proposal.

Gearbox Protocol uses Chainlink price feeds (as do Aave and Compound) to estimate a Credit Account’s Health Factors. The problem here is to set correct values of Liquidation Thresholds, so that while a liquidation is in progress (a liquidation always takes some time) — the price does not become too low, resulting in a loss of LP’s funds. For the set of tokens approved we gather on-chain prices and price feed updates.

All historical price and deviation data is presented in the report:

There have not been too many liquidations in Gearbox so far. However, the system works as expected, and liquidations happen on time (some stats can be seen here), maintaining zero bad debt so far!

Liquidity analysis on the DEX — assessing the illiquidity of assets and the likelihood of cascading liquidations

We collected data from decentralized exchanges and analyzed how much liquidity there is for supported tokens. This data allows you to assess how deep liquidity is on the exchanges (see here).

At the same time, we look at positions that are open in Gearbox (see here), and also account for which tokens and on which pools/credit managers. This allows us to estimate the potential volume of liquidations (upper estimate).

The product feature improvement includes a visualization of Health Factor positions to estimate at what price levels there will be maximum liquidation volumes and assess the risk of cascading liquidations. It should be noted here that we are just approaching this task — but the Gearbox Protocol alone is still too early to cause such serious price movements. The hypothetical case of amounts being traded via Gearbox becoming significant implies either adding very low-liquidity assets (which could be seen as a subpar idea) or the protocol growing to truly large utilization number.

V2 Stablecoin & LPs analytics approach

As you may have read in the previous article, the main focus of Gearbox Protocol v2 will be on leverage farming (as one of the product suites being pushed first, but composability doesn’t stop there!). You can see concrete numbers and product snippets in this Leverage Ninja teaser. Therefore, risk assessment of farming strategies becomes an important topic.

Let’s discuss the approach in more detail. What is important to note here:

• Stability of a peg: how the peg is maintained, what price stabilization mechanisms are there, how robust was a peg historically.
• Exit liquidity: is there enough liquidity on DEXes to support a position unwrap.
• Withdrawal slippage: whether a user incurs losses when unwrapping the position.

Stablecoin analysis and LP farming cannot be done without a deep study of Curve and Convex (because they absorb the main liquidity of stables). And keep in mind that for on-chain systems, it’s generally not a good idea to have trust assumption in place. That is if USDT goes to .95 cents — the system should liquidate an affected user, and not hard peg their Health Factor at USDT = 1. Yes, the peg can come back, but it’s not up to resilient on-chain systems to make such assumptions. What is important though is to make a system that can’t be easily manipulated in such cases.

The analysis of peg stability is basically the same as the analysis of volatility in the section above. A more interesting question is what happens in a negative scenario when a stablecoin starts to depeg: does this lead to cascading liquidations and a further peg collapse, or will the system (and positions in Gearbox) come to some kind of new equilibrium?

First of all, the analysis in Gearbox is complicated by the fact that Gearbox allows a user to independently choose the leverage ratio and, accordingly, the level of risk — and this affects the Health Factor of the position and the liquidation price.

So primarily, we look at what will happen when positions are liquidated in the event of a depeg. It is important to take into account not only positions in Gearbox, but also in other protocols:

Next, we conduct stress tests during the implementation of such events — what kind of slippage will occur due to the simultaneous liquidation of large positions. For example, the chart below assumes that 5% of the Curve of the stETH/ETH pool will be liquidated — what price change will this lead to.

Such an analysis allows us to select parameters to make the system robust for various scenarios. We check what positions are available on the market, how this can affect the price and will a liquidation in Gearbox be safe in the case of large liquidations on other protocols.

Gearbox Protocol ⚙️🧰 on Twitter: ""Is this structured finance, like vaults that earn for me?"- No, with Credit Accounts because YOU are in control. YOU DECIDE what to enter, when to enter, what liquidation price to maintain and what risk exposure to have. You want a tight stop and highest leverage? Up to you 🤖 https://t.co/XY7jIDw9ir / Twitter"

"Is this structured finance, like vaults that earn for me?"- No, with Credit Accounts because YOU are in control. YOU DECIDE what to enter, when to enter, what liquidation price to maintain and what risk exposure to have. You want a tight stop and highest leverage?

Monitoring system

An additional level of system protection is a real-time monitoring system. The Gearbox infrastructure allows collecting all the protocol-related on-chain data, including underlying tokens’ events and allows monitoring the system security. The automatic notification system provides actionable alerts in case of a significant change of liquidity or price.

The on-chain risk monitoring system also scans all actions with credit accounts and pools and, if fraudulent behavior is detected, it can auto-pause contracts and inform the dev team / multisig / any user — about potential threats. This role has been designated to the emergency multisig function, and it can only do that one function. It’s all fully non-custodial.

Keep in mind this is a system used by some devs to help detect potential issues, and not a guaranteed safety backstop. You and anyone can run their own tools, all data is on-chain. Think through the risks yourself!

What are the examples of such cases? After the UST depeg and the frantic Luna printing, which value rapidly dropped to ~$0, the Chainlink price-feed returned 0.01$ value as it was the minimum value of the circuit breaker function that was automatically triggered on its smart contract. Multisig quickly forbade opening UST positions and later replaced the Chainlink price feed with a custom 0-price oracle to prevent any possible risks.

Fund are safu, all reports and actions can be found here:

Audits and Risks

Keep in mind that no number of audits can guarantee full safety. However, the largest expenditure item of Gearbox Protocol & now the DAO has always been and will continue to be security. We started with a preliminary audit back when we had the v0.1 version, then run numerous audits with the full release of v1 and DAO launch in December 2021, and have been continuing to do multiple audits in 2022. See here. More is coming.

Next to that, we have a security bug bounty initiative with Immunefi which we would like to upgrade through the DAO to a larger payout in the coming weeks. Please find the details here.

There are plenty of risks associated with DeFi, as many platforms are composable and depend on each other. There is no guaranteed return on Gearbox — you have to understand the possible risks. You can find them in the docs. Please suggest whatever you think is missing.

Further, it would be interesting to implement quantitative simulations and stress tests under various scenarios. We are not pioneers here — a good benchmark for us is Gauntlet, RiskDAO, Chaos Labs, etc. This is just a brief dive into how we (some of the members, again, there is no full control of any process in Gearbox DAO) use mathematical tools for risk analysis and assessment. If you want to join - jump into our risk-analytics Discord!

If you would like to join — just get involved on Discord. Discuss, research, lead and share. Call contributors out on their bullshit and collaborate on making things better. Here is how you can follow developments:

• Website: https://gearbox.fi/
• dApp: https://app.gearbox.fi/
• User Docs: https://docs.gearbox.finance/
• Developer Docs: https://dev.gearbox.fi/
• Forum: https://gov.gearbox.fi/t/start-here-forum-rules/
• Blog: https://medium.com/@gearboxprotocol
• Github: https://github.com/Gearbox-protocol
• Twitter: https://twitter.com/GearboxProtocol
• Snapshot page: https://snapshot.org/#/gearbox.eth
• And, of course, the DAO working docs:

Gearbox DAO

Risk Committee: DAO’s framework for accessing assets & contracts was originally published in Gearbox Protocol ⚙️🧰 on Medium, where people are continuing the conversation by highlighting and responding to this story.

The journey is taking a new course… In the last series of Leverage Sensei’s memoirs, we learned about the coming of V2 and the next mysterious island we have to travel to. How did we do that? — It was all in the box Leverage Sensei left for us. There were quite a few messages hidden in there, which will take time to decipher, but today we will focus on the first one:

Leverage Ninjas: a group of new Gearbox heroes helping us reach V2 and unlock the new features. And YOU can be one of them!

Today, we shed light on Gearbox’s upcoming V2 that truly takes the idea closer to the potential we wanted to realize. A task so monumental, though, can not be completed without a force just as strong and that’s why our force… Leverage Ninjas. Our Ninjas, tasked with delivering a V2, also get to experience the advancements the V2 brings!

With V2, access in the first weeks will be restricted to Leverage Ninjas: a curated list of whales with a minimum $50K collateral who will be able to enjoy leveraged yields from Convex, Curve, Lido, and so on.

💡 Meanwhile, the LP side of passively providing liquidity Aave-style is open 24/7. You can already provide liquidity on the passive side and earn yield + retroactive GEAR. You can do so in Gearbox dApp. LM would likely be commencing soon with V2. This primer is however focused on the active side, giving a glimpse into what our Credit Accounts will soon be capable of.

In short, it’s a list of members who want to use V2 live on mainnet in a few weeks, with a minimum amount of 50K in collateral. They can enter or exit any position at any time. And the only requirement to become a Leverage Ninja, is to understand the protocol and submit your address [ping in Discord]. Easy? — Then let’s destroy bear market yields with Gearbox!

V2: what yield & how can Leverage Ninjas get it?

The following will be quite complex if you are new to Gearbox architecture or forgot about the technicalities. If that is the case, make sure to refresh your memory here and here. In terms of the flows, V2 isn’t much far from V1.

With V2 and the subsequent votes, the functionality of Gearbox will grow significantly compared to V1! To be exact, this is what can be expected to be up for voting, and if goes through, for leverage users soon after:

New Assets: enabling you to leverage trade in-and-out of CRV, CVX, FRAX, FXS, and so on. At the same time, you can also use these and more assets as collateral to increase your leverage (even for another asset).

New protocol integrations: experience your favorite protocols like Lido + Curve + Convex + Yearn with leveraged farming enabled!

You can make any leveraged position, be it long or short, farming stables or using portfolio margin, etc…

• Leveraged stablecoin farming (meaning you can take even x10 leverage);
• Leverage farming Lido stETH (meaning you can take even x10 leverage);
• Cross-collateral leveraged positions (get ETH-native yields while having debt in stables) and cross-collateral farming (use WBTC as your collateral yet farm with stables);
• Portfolio margining your bags (get leverage in stables while not selling your bags). You can also leverage trade, but alas, perps offer higher leverage than spot;
• In terms of pools on Curve, Convex, and Yearn: 3CRV, steCRV, sUSD, FRAX, GUSD, LUSD should be available. YOU decide how and where to get the yield! Gearbox just gives you leverage.

NOTE: keep in mind thought that Gearbox is not a structured finance protocol or a vault: nobody is managing your position on the Credit Account side or imposing any lockup periods. YOU DECIDE what pool to enter, how to enter, how to select your leverage, and so on. Basically, structured finance products can be built with the use of Gearbox’s leverage, but it’s not the core protocol job. End users, meaning you, have all the control.

A leverage-user guide, KNOW-HOW!

Below you can find brief info on what APYs you can earn, the risks, and how to become a Leverage Ninja. So how do you earn this 20% yield? — UST on Anch… Nono, we mean just follow the below steps.

The yields above are not fugazi, they were calculated from borrow<>deposit ratio currently on the market. Despite the yields having fallen across the board, they are still pretty juicy considering you don’t take risks on some options volatility selling, trading shitcoins, etc. The yields come from the usual LPing in Curve and Convex, as well as rewards for those pools (mostly in the form of CRV, LDO, and CVX). What you already love, but more!

Leveraged stablecoin farming // stable to stable brrr

Open a Credit Account with debt denominated in DAI, and borrow more DAI. Let’s say you put in $50,000 DAI and go x9 into a total $450,000 position. Then, throw that entire $450,000 DAI position into Curve → and then Curve LP tokens into Convex. Done! Brrr…Let’s recap again.

It’s nothing out of the ordinary, it’s fairly easy!

1. Put in some DAI and then borrow a bunch more of DAI on leverage;
2. Put all that DAI in Curve LP FRAX pool (or some other pool like LUSD);
3. Put those Curve LP tokens into Convex;
4. Bam, done, you are farming with composable leverage 🥷

Leveraged Lido stETH // leveraged staking -> Convex

The same goes for stETH: take x5 leverage only, and you can weather even a drop below 0.90 stETH/ETH. Historically speaking, Chainlink oracles have never reported such a drastic drop, so you would be fairly safe from liquidations. And if it goes south, you can unwrap a part of your position any time, or add collateral.

Let’s recap again. It’s nothing too out of the ordinary, it’s fairly easy!

1. Put in some ETH and then borrow a bunch more of ETH on leverage;
2. Stake all that ETH in Lido or just buy stETH with leverage;
3. Put that stETH in Curve LP pool;
4. Put those Curve LP tokens into Convex;
5. Bam, done, you are farming with composable leverage 🥷

More complex strategies for farming // portfolio margin

1. Open a Credit Account with debt denominated in DAI;
2. Put in your WBTC as collateral, increasing your Health Factor and as a result, your borrowing power;
3. Borrow a bunch of DAI;
4. Go farm with that DAI in Curve’s FRAX pool or somewhere else;
5. Put those Curve LP tokens into Convex;
6. Bam, done, you are farming with composable leverage 🥷 And even more so, your exposure to BTC is still in tact. So you kept your productive collateral while getting stablecoin delta-neutral yields!

Increase your position size and continue doing what you love! If you used any of the above protocols before, the experience should be very easy and known to you.

🎮 But if this stuff seems a bit too complex for some… yet you still wan’t to play with leverage and get juicy APYs, you will also be able to just use a couple of buttons and reduce the headache of entering a position manually! Thanks to multicall which bundles a few transactions into one, TBA…

So, how to become a Leverage Ninja?

If you would like to join — just get involved on Discord. Discuss, research, lead and share. Call contributors out on their bullshit and collaborate on making things better. Here is how you can follow developments:

• Website: https://gearbox.fi/
• dApp: https://app.gearbox.fi/
• User Docs: https://docs.gearbox.finance/
• Developer Docs: https://dev.gearbox.fi/
• Forum: https://gov.gearbox.fi/t/start-here-forum-rules/
• Blog: https://medium.com/@gearboxprotocol
• Github: https://github.com/Gearbox-protocol
• Twitter: https://twitter.com/GearboxProtocol
• Snapshot page: https://snapshot.org/#/gearbox.eth
• And, of course, the DAO working docs:

Gearbox DAO

Leverage Ninja: Gearbox Early V2 Access. A leverage-user teaser. was originally published in Gearbox Protocol ⚙️🧰 on Medium, where people are continuing the conversation by highlighting and responding to this story.

The past few weeks.

It was the beginning of April, way before the unnamed parties news - it was Leverage Sensei who went missing. His GEAR Robots, still running the systems smoothly, were still with us, but without his care it was only a matter of time that they wouldn’t be able to keep the V1 Island afloat.

The multisigs and the contributors searched for sensei only to find his dojo at sixes and sevens, Gears on the floor, V1 robot’s schemas missing and… a mystical box shining with bright light in the middle of it all.

What seemed like a consequence of destruction quickly turned into a flood of hope and adventure as we found the below note by Leverage Sensei.

Aiding the master, the DAO passed a few GIPs and further improved the protocol in hope to actually unveil Sensei’s location and find out what happened to him. There wasn’t any other choice than to trust the box?

While contacting Sensei was hard, it was harder to find the secret of the box. In hopes to find the secret of the box and where our Sensei was, we took the box to the one responsive thing he had left behind… The V1 Robots.

One V1 robot saw the box and in a glimpse was stunned, what seemed like danger to us was quickly accepted by him. The box drained the V1 of almost all it had and let out a beam towards a cloud in the sky…

The V1, like the force it has always been, accepted evolution as an old friend, and went with it gladly, and, as equals, they departed the island of V1.

Befuddled and amused, the contributors through May and April put in everything they had, growing the TVL, adding new assets and developers gearing up the potential to cross that cloud where our Sensei and Gear Robot might be. Here are the travellers’ notes about the process you can read. After all the effort, we managed to get to the floating castle in the sky.

“Don’t Look Up” to the sky, as the movie title says, was the wrong advice — the answer was indeed in the sky. We managed to get to the floating castle in the sky. What a journey it was! And here is what we found…

The events of today.

There were more robots.

But there was something peaceful in their appearance. They were unbothered. Moisturized. Happy. In Their Lane. Focused. Flourishing.

It’s almost like they went through a lot, and were waiting for something to happen… and that was indeed the case. They have lived through the June contagion of 2022. And not just that.

These V1 robots were the early creation of Leverage Sensei, who kept helping him along the process. He instructed them to guard V1 and give his students instructions on how to find him. We looked at the notes Sensei left for us, and found a secret room in the heart of the island.

It was a control panel with instructions on it. Right in the center of the island, where a gear-box was fuelling the castle floating in the sky. That was it, that’s where V1 was operated from! And on its side, there was a note:

Good job on finding this place! I guess my first robots helped you. Take them with you. As for me, I have gone further to finish my work on V2… I can feel it’s almost done! But I have to disappoint you — V2 is not on this island. Let this island float in the sky, don’t destroy it. Let it be. Take the new gearbox with you, all the instructions are there! I have to run now. Good luck…

We searched for hours, but we couldn’t find any new boxes. Confused, we were ready to leave the island. And then, something unexpected happened…

Another Box fell from the sky!

Maybe Sensei instructed one of his helpers to reveal it only after we were ready to leave, maybe it was coincidence. But with it came new challenges and new mysteries, how do we open the box? How do we get past the cloud?

And then we saw it…

What awaits us in the future.

A special task required a special force and Gearbox has been blessed with the best of it. We saw it, the Leverage Ninjas — who they are and where to find them? We’ll find out soon… Guess that’s enough of a lore today!

Now, let’s distill the narratives and move back to the product side of things.

The past months have been a lot of work and audits have been going on with regard to V2. Remember that Gearbox Protocol is modular, so a full re-deployment is not required as some pieces can be taken in-and-out as the DAO votes & multisig executes on these actions. With work nearing completion, we expect the Leverage Ninja mode to go live end of July with better interface flow, better anal… you know what? Why don’t we keep this for the next lore.

What can you do right now though?

Keep an eye on the Discord and Forum to discuss and vote on new assets & improvements; provide liquidity on the LP passive side to earn APY and GEAR rewards (they are not shown yet, but they are accumulating), and wait to see more news about how & where Credit Accounts can be used in V2! See you soon, GEARheads. Let’s see where the Leverage Ninjas are hiding…

If you haven’t guessed yet, most references are to the “Castle in the Sky” anime. It’s a family-friendly one, recommended to watch. Here is the Wikipedia page.

How To Get Involved?

If you would like to join — just get involved on Discord. Discuss, research, lead and share. Call contributors out on their bullshit and collaborate on making things better. Here is how you can follow developments:

• Website: https://gearbox.fi/
• dApp: https://app.gearbox.fi/
• User Docs: https://docs.gearbox.finance/
• Developer Docs: https://dev.gearbox.fi/
• Forum: https://gov.gearbox.fi/t/start-here-forum-rules/
• Blog: https://medium.com/@gearboxprotocol
• Github: https://github.com/Gearbox-protocol
• Twitter: https://twitter.com/GearboxProtocol
• Snapshot page: https://snapshot.org/#/gearbox.eth
• And, of course, the DAO working docs:

Gearbox DAO

[the story continues…] Searching for Leverage Sensei on the floating island. was originally published in Gearbox Protocol ⚙️🧰 on Medium, where people are continuing the conversation by highlighting and responding to this story.

Welcome back, GEARheads! So much has happened over the last weeks, you can read all about it in the latest update by our unpaid intern Joel:

Gearbox Update: March-May 2022

Today, we have gathered you to talk about something very important — Leverage Sensei’s Box has pointed to the big cloud…

What could it mean?! Some believe it to be V2. We are to set on a journey to discover Sensei’s secrets. A flight over the skies into the promised land... Embark with us!

As we travel to the skies, we will be discovering the new things V1 has to offer:

• Higher Credit Account limits, as you can now borrow up to $400,000 per account. If you open all four accounts (denominated in, also known as able to borrow in WBTC, ETH, USDC, DAI) that can be over $1.5M you can borrow at 4x leverage! Up to you what you do with that in V1.
• DeFi wars can now happen in a decentralized way with SUSHI, LDO, and CRV — being available both as assets to trade to <-> from as well as assets you can use for portfolio margin to borrow from.

What is this “Box in the Sky”?

This is about a few weeks of the active test-in-prod period with higher limits, pushing V1 usage further and letting it go with a bang. The goal is to try to trade with more assets, increase TVL in the pools, and get more DeFi users familiar with Credit Accounts as a leverage primitive. This will set up the groundwork for degen mode and V2 going live later closer to July.

On that note, let’s dive into what & how…

WHY would you try Gearbox V1?

The proposal suggested includes some ideas for the rewards, quoting:

• A spot in the pre-liquidity event planned for approximately July as discussed in Discord. Details have not yet been voted on, but it might be a type of an event where any DAO sale (a small range of 2M to 4M USD) would 100% become POL in the form of LP.
• Possible access to use V2 adapters prior to release and thus get higher APY on strategies, and earn organic yield higher that the market offers.
• Retroactive GEAR rewards for those who have used the protocol on mainnet in the recent months + a short-term program before V2 is there.

HOW and WHAT can you do with Gearbox now?

Passively provide one-sided liquidity and earn

You are lazy and wanna be passive? - Then you can earn APY (yield) by supplying one-sided liquidity to the pools. It’s very easy, just 2 clicks! You can choose between WBTC, ETH (it converts it for you into WETH), USDC, DAI.

NOTE: If the utilization rate APY seems low at the beginning, don’t forget the protocol shall touch upon this very soon and gib some governance tokens. That is to grow two sides of the protocol before real utilization kicks in later.

Keep in mind that LP side has a 1% withdrawal fee for now, which should go away in a few weeks. It’s there only for this test-in-prod period.

Now, the fancy part is the other side of the protocol — taking generalized leverage! You can leverage trade some* assets on Uniswap or Sushiswap, farm in yvUSDC and yvDAI, and more. This list shall grow much more in V2, but we work with what we have, for now.

Some strategies possible in V1 Credit Accounts

Find the contracts & assets that you can interact with (from your terminal without UI, if you must) in the docs. The list is not large for V1, double check.

AllowedList Policy

1. Short ETH or WBTC x4 in a decentralized way

• Open a Credit Account denominated in the asset you want to short
• Borrow more of that asset (in other words, take leverage in it)
• Sell that asset to USDC or DAI, for example. As a result, you are short WBTC to a stablecoin. If you sell WBTC to another asset in AllowedList, you are essentially short WBTC to that asset, or rather — long that asset to WBTC. For example, CRV/ETH.

Try it now on mainnet.

2. Turn that x4 short into a farming position

In case you shorted to USDC or DAI (specifically, for now) you can then put them to use by farming in yvUSDC or yvDAI. As such, your borrow rate can perhaps be repaid (more so!) by the farming APY you are getting.

Try it now on mainnet.

3. Portfolio margin: short majors while collateralizing your alts

You can also borrow WETH, WBTC, USDC, or DAI — if your collateral is in CRV, LDO, AAVE, and a few other assets. Just watch out for your health factor if you draw max leverage possible, you might be liquidated.

Try it now on mainnet.

4. Long DeFi coins

You can long LDO, SUSHI & CRV. To achieve that, you can decide whether you long them against stablecoins or BTC or ETH. Depending on that, you need to:

• first, open a Credit Account either in USDC | DAI or WBTC | ETH
• borrow x4 or less of those assets when opening the Credit Account
• buy all-in or partially the asset you want to go long

Try it now on mainnet.

A quick cheat-sheet:

• Long or short majors like WBTC and ETH x4 (x6+ soon!)
• Long DeFi coins like AAVE, 1INCH, CRV, LDO, SUSHI
• As you short or long, try to farm later on

There is more where this came from — try Uniswap with Wallet Connect, leverage trade majors more actively, use some of your assets as collateral.

How to open a Credit Account

Some teasers for V2 and what’s coming.

The above V1 is less than 1% of what Gearbox will be capable of soon…

While v2 is already in audits and we should still focus on V1, the stuff that will be coming out is quite exciting! We can’t wait to share that with you, you can find some clues already on the DAO page:

Gearbox DAO

It will include the voting for the following adapters:

• Leverage Farming in Convex pools like LUSD & FRAX
• Leverage Farming in more Yearn pools
• LPing in Curve
• Leverage Farming with stETH & leverage stake into Lido

With the addition of Multicall, you will be able to have complex 1-click strategies. Liquidation flow will also get more capital efficient and faster. And next to that, the leverage possible would be far beyond x4+. And one can only imagine what positions and strategies this can allow… SoonTM!

DeFi summer is not far ahead!

How To Get Involved?

If you would like to join — just get involved on Discord. Discuss, research, lead and share. Call contributors out on their bullshit and collaborate on making things better. Here is how you can follow developments:

• Website: https://gearbox.fi/
• dApp: https://app.gearbox.fi/
• User Docs: https://docs.gearbox.finance/
• Developer Docs: https://dev.gearbox.fi/
• Forum: https://gov.gearbox.fi/t/start-here-forum-rules/
• Blog: https://medium.com/@gearboxprotocol
• Github: https://github.com/Gearbox-protocol
• Twitter: https://twitter.com/GearboxProtocol
• Snapshot page: https://snapshot.org/#/gearbox.eth
• And, of course, the DAO working docs:

Gearbox DAO

Mysterious Box in the Sky: LP + use and earn $GEAR. Making V1 go with a bang! was originally published in Gearbox Protocol ⚙️🧰 on Medium, where people are continuing the conversation by highlighting and responding to this story.

GM Gearheads, we are here to report back on the activities & traction from ETH Amsterdam / ETHGlobal hackathon that took place last week. It was amazing to see so many of you in person! In fact, it was the first time some of the core DAO members have met in real life. Let’s dive into the events.

A few quick notes & the DeFi Panel

First of all, we surely didn’t make enough stickers & merch… Hoodies and stickers disappeared in a matter of hours. We’ll make sure to get more merch for next time! It was fun & cool seeing DAOs make so much high quality merch with unique designs, and supplying crypto builders with enough socks+t-shirts+hats+hoodies for the months to come…

The organization of all events was impeccable! ETH Amsterdam, ETH Global, and even the side events were all on time, with drinks & snacks, and most importantly — with a great crowd of builders. Fantastic time!

On Thursday, just before the hackathon, Mikael took part in the DeFi panel organized by Maven11 & Framework, chatting about synthetics / spot leverage w Float and Tracer. Have a look:

ETH Global Hackathon

On Friday, we put up the booth with banners & some stickers flying around — and got to the workshop part. For almost an hour, Mikael presented a deep dive into how Gearbox Protocol works, what’s under the hood, and other relevant details, especially for those who want to build with Gearbox:

After that, hackers went back to build. Of course, they walked over to the booth to ask some questions and feedback, and got to know the stack better. After two sleepless nights, they were ready to present their solutions…

Amazing submissions for Gearbox at ETH Global

The submissions were wow! Dev docs for v2 have been semi-polished literally just a few hours before the event, yet multiple teams managed to fully grasp what Gearbox Protocol can do and navigate their way through:

Hello from Gearbox Protocol Developer Docs | Gearbox Protocol Developer Docs

Archimedes — 1st prize $7K

Distribution layer of investment strategies tokenized using ERC-4626 standard. Tokenized Gearbox strategies with ERC4626 to simplify the access to highly levered strategies. Casual users and financial institutions can access levered and hedged strategies with a single transaction. Strategies provide a liquidation protection mechanism as well. See all the info and the video:

Archimedes · ETHGlobal Showcase

VeriFried-Strategy — 2nd prize $4K

An infrastructure with a simple trend following strategy where the user will be able to define and backtest the strategy and deploy it using smart contracts. To allow users to get a better return on investment, this strategy will be able to use leverage, using Gearbox Protocol, and the liquidity that is not being used at any moment of time could be deployed in Yearn, to earn yield in the assets that are not being deployed in the strategy. See all the info and the video:

VeriFried-Strategy · ETHGlobal Showcase

Team Pemma — the most complex composable strategy prize $2K

The strategy consists of 7 steps:

(1) swap all capital available and farmed APW for USDC on Uniswap,
(2) use it as collateral to take leverage on Gearbox,
(3) swap the leveraged USDC to USDT
(4) deposit the capital on Aave and get aUDST (aave interest bearing tokens)
(5) stake the aUSDT on APWine for PTokens (principal) and FYTokens (variable APY)
(6) swap the PTokens for USDT
(7) repay the Gearbox debt instantly within the same transaction

Now the user is left with FYTokens that can be farmed by providing them as liquidity to the internal APWine AMM. This strategy is automated with Gelato. The overall market performance of such strategy is characterized by low volatility and limited to null exposure to the underlying asset by selling a future on the APY which can be changed at ease in the smart contract constructor. Users instantly get back their initial capital and are left with a value-accruing token. See all the info:

Team Pemma · ETHGlobal Showcase

ćeD — Leverage Sensei’s favorite prize $2K

Enabling leveraged LPing on UniswapV2-like DEXes with the help of the Gearbox protocol. This project enables leverage LPing on UniswapV2-like DEXes to the users. It is built on the top of the Gearbox protocol where users can leverage up their assets.

We build our solution from the Gearbox contracts-v2 repository, using their existing AbstractAdapter contracts and extending UniswapV2Adapter to enable more features such as adding liquidity to the protocol. Our adapter supports adding liquidity starting with just one token in a single transaction. A key part was also writing a fool proof oracle for the LP pair, as a native LP oracle implementation is vunerable to a flashloan attack. See all the info:

ćeD · ETHGlobal Showcase

niftytable — the best dune dashboard prize $1K

Niftytable made a cool dune board with some new metrics which can be relevant especially when analyzing for which Adapters to build next, by analyzing the wallet activity of current Credit Account owners:

Dune

This can be added / improved learning from the previous dune by asot:

Dune

Let’s build together!

With regard to the teams that made amazing full-fledged products with the use of Gearbox, we should chat to them and encourage to continue working further. Any such grants would go through the DAO voting process.

As Gearbox DAO is growing and traction is growing, we’d like to invite everyone to build with / on top of / alongside Gearbox! That relates both to hackathons & having DAO grants & prizes at any time. Just suggest some ideas and start diving in, we’d love to help you out.

libevm.eth on Twitter: "Interesting idea I had over the hackathon but didn't build out: Using @GearboxProtocol to leverage your capital to perform JIT https://t.co/WdnJjYnEIl / Twitter"

Interesting idea I had over the hackathon but didn't build out: Using @GearboxProtocol to leverage your capital to perform JIT https://t.co/WdnJjYnEIl

• Website: https://gearbox.fi/
• dApp: https://app.gearbox.fi/
• Docs: https://docs.gearbox.finance/
• Developer Docs: https://dev.gearbox.fi/
• Forum: https://gov.gearbox.fi/t/start-here-forum-rules/
• Blog: https://medium.com/@gearboxprotocol
• Github: https://github.com/Gearbox-protocol
• Twitter: https://twitter.com/GearboxProtocol
• Snapshot page: https://snapshot.org/#/gearbox.eth

ETH Amsterdam 2022 Recap: amazing submissions & dev interest was originally published in Gearbox Protocol ⚙️🧰 on Medium, where people are continuing the conversation by highlighting and responding to this story.

We are back from the radio silence! A lot of work has been happening behind the scenes with v2 audits starting up, research for new protocols’ adapters, and onboarding contributors to Gearbox DAO. All that you can find in the next monthly community update. Here is the previous one:

Gearbox DAO: Retroactive Public Contributions Funding & Jan Recap

Today though, we have something else to talk about — recap of the gHearbox Hour (it was in fact two hours though) from the Twitter Spaces talk with Element Finance developers. gHearbox Hour TM is a podcast that we started to do research into potential integrations on the fly. What does it mean?

Well, we jump on Twitter Spaces with teams / devs / DAOs and talk about their products, how integrations could be done, what they think of the DeFi rates, and so on. Quite literally, technical due diligence and idea sharing with each other and the communities LIVE. It’s an important process as it helps Gearbox become more composable: as the architecture of different protocols is quite similar, one solved case potentially smooth out the integration process for others. Ok, let’s dive right into the specifics.

First of all, you should have enough technical context on how the Gearbox Protocol architecture works and what composability entails. A TLDR is that simple adapters can be built for practically any protocol, that allow Gearbox leverage to flow into a given protocol after it passes through the DAO governance. See what is required and what the process looks like:

How to add new Contracts & Assets to AllowedList

The first gHearbox Hour we did was with Element Finance devs, chatting about fixed yields and leveraging on interest rates.

You can read about Element Finance here. In short, they make it possible to split yield between fixed (Principal Tokens) and variable (Yield Tokens) rates. As a user, you can decide to lock in the current yield the system offers, while other market participants can act on yields increasing, raising the fixed rate yield on the marketplace. Moreover, you can also leverage both into fixed and variable yields, which is where Gearbox Protocol comes into play!

Let’s say that you “deposit” aka provide liquidity into Curve Finance and later deposit into Yearn Finance. Your Yearn LP tokens can be then deposited into Element Finance. Element Finance splits that into Principal Tokens representing a fixed-rate future on an underlying asset — and Yield tokens representing a position with variable rate which can go up or down.

Principal Tokens in AllowedList for Gearbox

Adding Principal Tokens as Allowed Tokens allows users to buy leveraged fixed-yield. If the current Element Finance yield on a given pool is 5%, you can buy that fixed rate — and receive that APR, even if the rate goes lower. Accordingly, if a user expects that the floating rate in the Gearbox pool will not be higher than the fixed yield they are deploying into, they can create a leveraged fixed rate position… and get higher returns.

Imagine that the Gearbox rate for borrowing is 5%, the fixed rate is 10% at Element, so then with x5 leverage the user will receive a yield of 50%!

What are the complications on the technical side?

First of all, how should we value eP tokens in the absence of an oracle for Principal Tokens? As a reminder, Gearbox uses some price feed to calculate the health factor of Credit Accounts to understand if it is safe or should be liquidated.This question caused a lengthy discussion. As a summary:

• The value of Principal Tokens always goes towards the value of their underlying asset. As such, it’s a guaranteed redemption after a certain period of time.
• If we value Principal Tokens as its underlying asset, this creates an interesting case that the Credit Account can be temporarily undercollateralized. Over time, the Principal Token will become 1:1 and the credit account will become collateralized again at the redemption.
• Valuing PTs as 1:1 complicates liquidation of Credit Accounts as sometimes the liquidator should lock their capital in ePs and wait for the maturity date to exit from it… This drastically raises the capital requirements for liquidators (especially if there will be high limits for Credit Accounts with ePs as allowed tokens).

An interesting point is that such time arbitrage can be done via Gearbox itself (see the presentation here) and it is one of possible niches Gearbox can be quite effective in existing DeFi now. So it’s an interesting case to build such a time-arbitrage bot on top of Gearbox and bootstrap this market…

CeFi-like periods = modified Credit Accounts?

This time-based Credit Account model can actually be further applied to options. For example, it’s not yet possible to efficiently exit options positions in DeFi during the week period. But if you wait until the redemption period and take into account a high possible drop, you can also structure the liquidations that way. This can be applied to Yield Protocol, Notional Finance, Opium, Ribbon, and other protocols working slightly more like a CeFi model where redemption times and fixed periods are more important than 24/7 liquidity and a slight sacrifice of composability?

Yield Tokens in AllowedList for Gearbox

Adding Yield Tokens provides exposure to future variable rates over a fixed time period. Things get tricky if we want to forecast these rates, which requires some use of oracles. Unlike with fixed yield where redemption is guaranteed to be 1:1 [note: unless smart contract hacks which can’t be taken into account] — variable rates can fluctuate from 10%+ to 3% even as we have seen in the past few weeks.

One option is to calculate the yield rate on-chain.

Let’s say we have Curve 3pool:

• Emissions can be pulled on-chain (number of CRV tokens farmed to LPs)
• Liquidity staked can be pulled on-chain (number of LP tokens)
• LP token price can be pulled on-chain (LP’s value is some derivative of underlying tokens that can be precisely calculated)
• CRV price can be pulled from the Chainlink price oracle

What questions still remain?

How much such a calculation can be manipulated? That’s for some future research. Calculating the liquidation depth for YTs is harder but it can be balanced with taking a low LTV and a very low possible variable rate, as such the redemption pool will always make up for at least some amount. But then the question is how to make such a product offering capital-efficient…

Splitting Diesel tokens (Gearbox LP tokens) into Principal and Yield Tokens by Element

Now this is more for the Element Finance integration side.

When a user provides liquidity to Gearbox, they get Diesel tokens.

Pools & APY

Diesel tokens are a standard float-rate LP token, the rate on which depends on the pool utilization, similar to how it works on Compound or Aave. This opens up an opportunity to split diesel token’s rewards — so that diesel token can be divided into principal token and yield token using Element Finance.

For example, gDAI (gearbox DAI LP token) can be divided into ePgDAI Principal Token and eYgDAI Yield Token. Now imagine that eYgDAI will be added as allowed tokens. This allows a DAI Credit Account user to buy the required amount of eYgDAI and get a fixed rate for the loan they have. That actually means you can borrow at a fixed rate. And this is very cool, since one of the Gearbox Protocol potential use cases is interest rate arbitrage, and it is very critical to understand at what rate you are lending and to be sure that your rate doesn’t change in future.

We’d love to hear from community builders what integrations they see interesting, what is the benefit of such integration for both projects and for the DeFi community overall. As always, you can see the latest on the DAO notion page of the Risk Committee:

Risk & Math | Product & Integrations

If you are interested in getting involved deeper and would like to develop Gearbox Integrations, you can dive into smart contracts or read our documentation and get started today. You can also contact us on our Discord if you have any questions or would like to discuss new integrations that weren’t covered in this post. Let’s make DeFi & NFTs more composable!

Useful Links

• Website: https://gearbox.fi/
• dApp: https://app.gearbox.fi/
• Docs: https://docs.gearbox.finance/
• Forum: https://gov.gearbox.fi/t/start-here-forum-rules/
• Blog: https://medium.com/@gearboxprotocol
• Github: https://github.com/Gearbox-protocol
• Twitter: https://twitter.com/GearboxProtocol
• Snapshot page: https://snapshot.org/#/gearbox.eth
• Developer Docs: https://dev.gearbox.fi/

gHearbox Hour with Element Finance: leveraging fixed & variable rates? was originally published in Gearbox Protocol ⚙️🧰 on Medium, where people are continuing the conversation by highlighting and responding to this story.

A fancy title to bait you! Jk, it’s real. This article is a recap of the 1st month of Gearbox Protocol life as well as Gearbox DAO coordination so far. Buckle up, there is a lot to go through. For example, unexpected rewards to the first active contributors — which is in the title as you could have guessed — as well as that Discord bot for the Genesis distribution finally going live.

Want some $GEAR? Get a piece of the protocol by contributing!

Gearbox Protocol Statistics

Before digging in, it would be good point out that the deployment is still test in prod with very low limits for TVL: $30K max borrow limit & only a handful of older assets available, see the AllowedList here. The DAO is working on improving this & opening the doors for new users… more on that below.

Despite the hardcore limits in place, this month has been a great avenue for testing the dApp, liquidations, and figuring out features in prod. For example, here is an awesome analytical tool built by one of the contributors amantay, you can find him on Discord to shout out :) There is more!

The protocol has stayed overcollateralized and safe at all times, detecting no bad debt despite the super volatile markets. This is thanks to the limits in place being very safe, as well as some Credit Accounts being liquidated at a slight loss at the core contributors’ own expenses. Is that okay? - Yes, because it is caused by artificially suppressing TVL which creates small Credit Accounts where liquidation premiums don’t make up for gas costs (e.g. 5% of $1K USD doesn’t even pay for one Uniswap swap). In a real battle with sizable amounts, this would not be the case. Despite all this, there is already work on improving the liquidation flow which was discussed on Contributor Call #2.

The 4 pools — WBTC, DAI, USDC, ETH — have been semi-filled despite there having been no extra APY or tokens promised for this. It’s a DAO! In other conditions, it would not be hard to fill up to $20M even with expectations of retroactive airdrops, but this is now a DAO, so that’s not possible… right?

Anyway, the amounts currently available are totally acceptable for this test in prod stage, where users can still play around with the protocol. So

In terms of the Credit Accounts, it looks as follows — nobody wanted to short WBTC from the pico top! Users mostly took stables as leveraged borrowing, but didn’t profit that much from it. So far, it has all worked pretty well, and presented great feedback for future iterations.

Most of the capital seems to be leverage farming in Yearn now, showing that leverage farming passively is what users so far seem to make out of Gearbox — however, this can be an artificial metric given the restrictions on TVL & assets in place. Need to add, iterate, improve the product, and see what users actually do with thew product.

Mikhail Lazarev on Twitter: "Testing new @GearboxProtocol analytics app (it would be a 💣), found one account which made 62.3% profit (in USD) last months. Not bad, ser, not bad.It was possible to deposit DAI into @iearnfinance to gain even more profits. pic.twitter.com/KB8Nn7y8YL / Twitter"

Testing new @GearboxProtocol analytics app (it would be a 💣), found one account which made 62.3% profit (in USD) last months. Not bad, ser, not bad.It was possible to deposit DAI into @iearnfinance to gain even more profits. pic.twitter.com/KB8Nn7y8YL

Speaking of the dApp, try it out — https://app.gearbox.fi/

Gearbox Protocol

Product next steps

The risk committee notion page has also been updated following a community forum discussion and assessment on the most desired protocols by the community, which took place here:

Signalling for Protocols to be Added

Currently, the work is ongoing on a few fronts, with Curve / Convex / Yearn leverage farming being available for farming in the next few weeks and pending DAO votes. The short-list also has Lido leveraged staking, as well as a few regular ERC20 assets being onboarded. Check the protocol list here.

Security is of utmost importance, whereas there are efforts to get Immunefi bug bounty up as well as initiate discussions with insurance protocols as suggested by DAO members. Next to that, there is yet another large audit scheduled to begin at the end of February, which is a developer deadline for the first suit of adapters to be built and then tested by the security researchers. That’s a deadline the devs are working towards.

Audits & Bug Bounty

You can see the ContributorCall#2 recap on the main notion page.

How to add new Contracts & Assets to AllowedList

If there is a protocol you like, then get a developer (unless you are one yourself!) so they could build an adapter and have it be ready for the audit. This can get a grant too! Reach out on Discord with ideas-proposals.

DAO Coordination & Work

Retroactive public contributions funding

The Gearbox community has been absolutely awesome, DAO vibes to the max. So much was discussed and actually built! It’s super motivating to work together with everyone. Working members weren’t even sure if they would get something, there were no expectations…

Despite that, they shall be rewarded! The weights are subjective, but nobody would argue that these guys are super awesome and have dedicated weeks to gearbox already. Super based. Be among them ⚙️🧰

NOTE: where are the tokens coming from, if this wasn’t the DAO decision? This portion is derived from what was cut from botters in the Genesis ceremony, found by community members on the governance forum. Kilpatrick and Spadefish get what the forum says. As such, this portion was under initial distribution, and thus repurposed to more productive members. From now on, there are no discretionary decisions remaining, see the full token distribution here: https://docs.gearbox.finance/gear-token/gear-overview.

Contributors Going Forward

At this point, the work of the DAO is organized and documented via Notion where you can see the to-do list real-time and the research list of protocols, as well as all the other things. There are concrete tasks ranging from making documentation better, to creating a bi-weekly newsletter, to a bunch of dev tasks. Dive in, take ownership, take responsibility, and LFG!

In terms of the rewards, it is becoming more clear who prefers to be chatting & helping vs really doing the work and putting hours in. Both are fine and welcome, but they deserve a different level of compensation.

As such, the hands-on work can be split as follows:

• The Thinkers. Contributors who love the protocol and commenting every now and then, bringing in good ideas and thoughts -> they can become delegates for the protocol, for which the DAO can incentivize them. Info on this should be open shortly, stay tuned! And suggest ideas too.
• The Seasonals. Grants-based contributors: somebody taking a specific task and leading it from start to finish based on KPIs. This is similar to committee-approach but instead it’s even more agent-based. You want to integrate something and have the skills to? You want to do merch and have the time & connections? Put up ideas-protocols in Discord, have the DAO members comment, and take over that specific task!
• The workers. Full-time contributors pulling night shifts working on the protocol. Those are put on a continuous by-monthly retainer/payroll and they do all the work they can! Truly dedicated members willing to stick for a long time. The rewards for this group can be discussed right now, seeing how a few members are aspiring to get in these ranks. You rock!

Discord Bot — Genesis

If you didn’t know of this before, just scroll through as it’s a thing of the past.

There was a Discord snapshot of active members before the launch in November, so now the bot is finally live to take your addresses! Very simple, just gib ur addy. The info was here if you want to know more:

Early Testers and Discord

What do, wen gib token, what bot?

This bot is just for Discord, testers distribution will be different.

• Go to Gearbot#1468. He will be seen at the top of Discord as a separate role, next to Leverage Sensei. Don’t click on anything than Gearbox! Check the username of the bot and its role in the server to confirm. Make sure to NOT get rugged by sending anyone your seed phrase. Again, it won’t ask you for absolutely anything except your wallet address.
• In case you encounter issues, check your settings in case you don’t allow non-friends to message you. Apologies if that’s inconvenient, you can turn your settings back to normal after you go through. If nothing helps fix the issues, go to bug-reporting <- do not spam in other channels.
• Such a drop won’t happen again, because now Gearbox is a DAO. Don’t try to spam or you will get banned. This is a retroactive thing of the past.

The contract for claiming will be up in a couple weeks, so you have time to put yourself on the list. It will happen this way: a 1–2 week window now to submit your address, then the merkle is made. For late joiners, the bot will be up for submissions for a few weeks more or so, and a new merkle will be made. After that, if you didn’t manage to chat with the bot and submit your address, you are just out, nobody will process anything after that.

A few more cool things which happened around the DAO

• Being able to track governance status on Messari Governor
• Discord call with Synthetix legends chatting about possibilities
• More app improvements coming from Kovan to mainnet
• A Dune Analytics dashboard for Credit Accounts

Back to work. Cheers!

If you want to contribute… then do it! Don’t ask for permissions. Lead discussions, bring interesting topics and research, and do with the work! LFG ⚙️🧰

• Website: https://gearbox.fi/
• App: https://app.gearbox.fi/
• Docs: https://docs.gearbox.finance/
• Forum: https://gov.gearbox.fi/t/start-here-forum-rules/
• Blog: https://medium.com/@gearboxprotocol
• Github: https://github.com/Gearbox-protocol
• Twitter: https://twitter.com/GearboxProtocol
• Snapshot page: https://snapshot.org/#/gearbox.eth
• Developer Docs: https://dev.gearbox.fi/

Gearbox DAO: Retroactive Public Contributions Funding & Jan Recap was originally published in Gearbox Protocol ⚙️🧰 on Medium, where people are continuing the conversation by highlighting and responding to this story.

Hi there, gearpersons! This article will be short and on-point. First of all, Gearbox is now official a DAO: the protocol control has been given to the community + community-enacted multisig. Now let’s get to business!

Source code is open + verified on Etherscan

First of all, 10 months of daily work are now open-source. Gearbox Protocol is also deployed on Kovan network, for testing your integrations you can use of following deployments — see the info here.

GitHub - Gearbox-protocol/gearbox-contracts: Gearbox core contracts V1

If you want to know a story about how it all started, see Mikael’s thread:

Mikhail Lazarev on Twitter: "Hello, world!Meet gearbox contracts: https://t.co/Sos1nBCdCh, finally they're open-sourced! It is all planned to go live tomorrow..."Never give up" story 👇 how the first version was developed in a little thread. / Twitter"

Hello, world!Meet gearbox contracts: https://t.co/Sos1nBCdCh, finally they're open-sourced! It is all planned to go live tomorrow..."Never give up" story 👇 how the first version was developed in a little thread.

The dApp (interface) is not yet open-source. It does not mean the protocol access if gated or anything is siloed. It’s just to avoid lousy forks at the start. It should be shipped open-source within the next few months as well. Moreover, the DAO should take as its mission to decentralize the UI & perhaps even incentivize building of new UIs. However, since the App logic is not as simple, it might not be realistic to create many different versions.

Learn about the DAO governance setup and contribute!

Audits

• Consensys Diligence Fuzzing (04/10/2021- 13/12/2021): report
• ChainSecurity (31/08/2021–13/12/2021): report
• MixBytes (06/07/2021–22/12/2021): report
• Peckshield (22/07/2021–10/08/2021): report
• Peckshield (09/04/2021–03/05/2021): report

Keep in mind that no number of audits can ever guarantee full safety. There are always high risks involved in DeFi, as many platforms are composable and depend on each other, especially Gearbox. There is no guaranteed return on Gearbox — you must understand the risks involved.

Bug Bounty

The scope of the bug bounty refers to the core contracts available at this repository: https://github.com/Gearbox-protocol/gearbox-contracts. If you have found a bug that you think is within the security interests of the protocol but is outside of the scope of the repository above, please do notify us then anyway. We can decide ad-hoc together with you. All the info is here:

Audits & Bug Bounty

Security is a continuous effort which must always be following protocol growth. As a DAO, it is imperative to constantly dedicate ample resources to ensure safety of user funds and improve security standards.

Contribute + developer docs

Developer docs are currently somewhat raw and will be updated shortly:

Hello from Gearbox Protocol Developer Docs | Gearbox Protocol Developer Docs

Gearbox is composable by design, so as a community we should uphold the ethos of collaboration. Dev contributions are the essential part of achieving that, so please join the community and contribute. Be at the start of a new primitive coming to life — let’s push it forward together!

• Website: https://gearbox.fi/
• Docs: https://docs.gearbox.finance/
• Forum: https://gov.gearbox.fi/t/start-here-forum-rules/
• Blog: https://medium.com/@gearboxprotocol
• Github: https://github.com/Gearbox-protocol
• Twitter: https://twitter.com/GearboxProtocol
• Snapshot page: https://snapshot.org/#/gearbox.eth
• Developer Docs: https://dev.gearbox.fi/

>Hello World! Source code is open. Bug bounty and audits. was originally published in Gearbox Protocol ⚙️🧰 on Medium, where people are continuing the conversation by highlighting and responding to this story.

Gearbox Protocol on Twitter: "Here is an amazing final dashboard by @k06a!- $7.3M spent for deploying the contracts- 0.35E per account average- 5,000 accounts minedhttps://t.co/RrlLwwRNsv[if you wanna know how to join the DAO and what to do, see the discord link in the RTed post] let's build ⚙️🧰 https://t.co/WYZJOMsciL pic.twitter.com/GGtvtIejIW / Twitter"

Here is an amazing final dashboard by @k06a!- $7.3M spent for deploying the contracts- 0.35E per account average- 5,000 accounts minedhttps://t.co/RrlLwwRNsv[if you wanna know how to join the DAO and what to do, see the discord link in the RTed post] let's build ⚙️🧰 https://t.co/WYZJOMsciL pic.twitter.com/GGtvtIejIW

The ceremony is now over! Let’s launch it ❤

GEAR UP! Credit Account Mining is here. For the apes and degens who prefer to not read a lot, here is a quick TLDR of what this ceremony is about:

5,000 Credit Accounts to mine. 55,000+ eligible wallets. 2.4M in gas costs to deploy each one ❤️‍🔥 5% GEAR distributed. Become one of the early DAO members & decide the future of composable leverage 2.0! FCFS.

GEAR token: 0xba3335588d9403515223f109edc4eb7269a9ab5d

AccountMining: 0x7B1AAF21AC0D420666B5966338FF9aEe763C29DF

⛔ warning: there is no special list, no new way to GEAR tokens, no special unlocks, nothing. Stay safe and don’t fall for phishing attacks! All the information can be found in docs. Nobody will ask you for money. Cross-check contract code and token code when deployed, before the ceremony.

Special UI designed for this ceremony, which opens up when mining starts (see below for more) — https://credit-mining.gearbox.finance/

Credit account mining | Gearbox

Degens & developers help Gearbox Protocol deploy pieces of its infrastructure [smart contracts] and get GEAR tokens in return. The list of eligible addresses [who are governance participants of other protocols, see below] can pay gas costs for one Credit Account deployment each, which is about 2.5M in gas — approximately 0.25 ETH if gwei is 100. Max 5.000 accounts are to be deployed, from 56K+ eligible addresses. FCFS.

1. Come to the special fun UI: https://credit-mining.gearbox.finance/

2. Play with it, try some commands, and connect your metamask. Only Metamask connection would be possible, no Wallet Connect or other wallet services in this instance. Chrome has been tested, Firefox worked fine too. But other browsers we can’t guarantee. Please prepare!

3. Pay deployment costs. There will be no approval transactions or anything like that, just 1 transaction to pay costs for a deployment. Simple. Source code will be open for you to check. If somehow you send a transaction after the 5,000 limit has been reached — you wouldn’t burn the entire amount. Only the calculations up until that point. Less than 5% of transaction cost (but still be wary, it might be more for some reason)

4. You got GEAR tokens. Done! Welcome ❤ Join DISCORD.

Ser, am I eligible for this mining?

There are 56,198 addresses eligible for Credit Account Mining. Technically speaking, out of this list — only 5,000 addresses will be able to participate. To check yourself before the start, you can simply ctrl+f in this file:

launch-snapshot/snapshot final.txt at master · Gearbox-protocol/launch-snapshot

The goal of Credit Account Mining is to restock the factory of Credit Accounts (isolated smart contracts) that leverage users can “rent” from later on. This way, leverage users won’t need to deploy expensive smart contracts every time, but instead just rent and give it back to the protocol after closing or being liquidated — this makes the protocol gas efficient! If you want to learn more about this renting model, you can check out tech paper.

Then, the number of CAs had to be chosen. Looking at the unique DeFi users on mainnet, the numbers are still in the low 4 digits (below 10K per protocol, at best). We don’t expect Gearbox Protocol to be an exception to this just yet, because the protocol is not even live yet! But we also want to make sure the protocol has enough accounts for the first few months. After all, some accounts don’t get closed, some people might open a few at a time, and so on. Therefore, a number of 5,000 accounts to start with — seemed logical. If more are to be needed later on, another ceremony in an auction model could be held, for example, or deploying from DAO Treasury.

Then, how does one choose who is eligible for it? And now we are getting to the objective of the CA Mining ceremony: we already have the early testers and early community list, we have some early developers, and some early contributors… So for this ceremony, we decided to include governance participants of other protocols. This achieves the following: (i) choosing users who are familiar with governance and have voted before, so they potentially could be good for Gearbox DAO; (ii) visibility from other community because they are being given a cool chance to take part in the very first days of another DeFi protocol for potential integrations later on ; (iii) slightly works as an anti-sybil mechanism to make sure 1 group doesn’t take the entire supply.

1. Lobsterdao NFT collection holders.

2. Snapshot pages of: 1inch.eth, Alchemixstakers.eth, Bancornetwork.eth, Convex, Cream-finance.eth, Dydxgov.eth, Fei.eth, Gitcoindao.eth, Index-coop.eth, Lido-snapshot.eth, MIM, Olympusdao.eth, Powerpool, Rari Capital, Ribbon.eth, Snxambassador.eth, Snxgov.eth, Spartancouncil.eth, Sushigov.eth, Tokemak, Yearn.eth, Ybaby.eth.

3. On-chain governance of: ENS delegates, COMP delegates, UNI delegates, veCRV holders, MakerDAO voters, Aave voters, Nexus Mutual voters.

4. And also: Element Finance LPs & GTC claimants. See full logic here:

** 2, 3, 4 — had a 10txs+ per address as a requirement.

GitHub - Gearbox-protocol/launch-snapshot

When does it start? * — delays could happen

Approximately at 15:00 UTC on December 16, Thursday.

Could be a few minutes before or after, depending on how the UI goes up — stick around Twitter and Discord to know what’s up and make sure you don’t miss anything. Technically, mining starts when the transaction for mining start goes through on mainnet. Also TBA, and see below…

How will it work? — special UI / use merkle proof directly

To mine a Credit Account from an eligible address, you still need a merkle proof and salt. Those merkle proof and salt are baked in the UI to simplify this process. You can still do it all manually though. So why do it this way at all?

This is a slight protection against those who might have a lot of wallets in the eligible list and would otherwise do batched transactions and wipe all 5,000 off at the start. With such UI, real governance members have a better chance of not being fully botted out in the first second, as bots would need to calculate and match the merkle proof and salt first.

We will still post UI code and all the files necessary, in case the UI gets absolutely overflown (although we took a lot of precautions) so that tech-savvy users can manually piece it together and participate in the ceremony from their local machines without touching any new interface. Contract code will be open-source so you would be able to check.

Here is more cool info from Uniswap article on these merkle things.

Special UI designed for this ceremony, which opens up when it starts (see below for more information) — https://credit-mining.gearbox.finance/.

Credit account mining | Gearbox

Is it FCFS or what can we expect? — likely no

In the most pure form, one account deployment costs 2.5M in gas fees, which is 0.25 ETH in case gwei is 100 — like it has been in the past weeks.

If somehow you send a tx after the 5,000 limit has been reached — you wouldn’t burn the entire amount. Only the calculations up until that point. Less than 5% of then transaction cost overall (but still be wary!)

With the current Ethereum block limit of 30M gas, there can be at maximum 12 Credit Accounts in a block. However, as every block has other important launches, liquidations, etc. — it’s likely the number will be lower. This could potentially clog Ethereum for a few hours and make gas costs go up (?). Let’s say 7 accounts per block * 15 second block = 35 accounts per minute => 2,100 accounts per hour. Technically, it can be done in 3 hours.

We apologize for a possible network congestion (or maybe it won’t!), but it was a better decision: if done differently, users would have to deploy and then throw away their Credit Accounts every single time, causing much more wasteful gas usage. With the model in place though, there is this one-time event which costs a lot, but after that users would be able to just rent Credit Accounts and thus make the network a bit less clogged.

If not all 5,000 Credit Accounts are mined within the 48 hour period — they will remain there to be mined by the same wallet list (nothing will change with regard to that). So the window is not anyhow enforced, it’s simply there to start DAO votes asap. If there is not enough demand for such a ceremony, eligible wallets can mine remaining in a month or even later.

This is not a sale, no money goes to anyone (except miners!) As such, if not all accounts are mined (now or ever) — it’s totally okay. 5,000 mark was a high ballpark estimate for the potential demand in the first few months. If less accounts are mined, it’s totally acceptable. Smaller comfier DAO!

Ahhh I am a DAOooor — use your GEARs!

GEAR starts untransferable, up until the DAO votes otherwise. Then, all non-locked non-vested tokens become liquid. See this breakdown. So once you mine a Credit Account, you will get GEAR tokens but you won’t be able to move them. However, you would be able to vote with them on snapshot:

Governance Model

Anyway, the docs are now complete! So dive in, read all about the architecture, try the app on testnet (faucet to be fixed later), and so on. And dive into the governance work on forum, to get the protocol live next week!

Gearbox Governance

• Website: https://gearbox.fi/
• Docs: https://docs.gearbox.finance/
• Forum: https://gov.gearbox.fi/t/start-here-forum-rules/
• Blog: https://medium.com/@gearboxprotocol
• Github: https://github.com/Gearbox-protocol
• Twitter: https://twitter.com/GearboxProtocol
• Snapshot page: https://snapshot.org/#/gearbox.eth
• Developer Docs: https://dev.gearbox.fi/

Credit Account Mining — GUIDE. Fueling up for the launch! was originally published in Gearbox Protocol ⚙️🧰 on Medium, where people are continuing the conversation by highlighting and responding to this story.