Gearbox DAO Updat3: March‘23
The third month of the year brought to life the plans of Gearbox V3. (Did the title give away the V3 part?)… The larger developments on V3 have now been laid out from a tech stack perspective. What exactly will this tech stack do? That’s for the DAO to decide. Exciting? Read on below to know how exactly the V3 announcement and subsequent weeks folded out in March’s DAO update.
The DAO update also marks the end of Q1 for Gearbox and a continuation post will come through subsequently with a small summation of all the big tasks that we have been able to achieve this year so far. Meanwhile, read on to capture all the Gearbox developments in one go.
You can read our previous updates on our medium or check the DAO work on our notion.
1. Gearbox V3: Redefining Leverage and Lending
The one that everybody awaited. The one that takes Gearbox to the next stage of its evolution in becoming a base layer of leverage in DeFi, Gearbox V3 was finally unveiled.
After just 4 months from the launch of V2, the V3 tech stack was unveiled as the code was sent to audit. You can read the entire update below.
The update comes with multiple redefining features including:
- New Lending Market: Addition of Mid-Tails means higher APYs for those who opt in for the new Alpha Pool. If you don’t opt in, you can still earn decent APYs from the lower risk Bluechip Pool
- Quotas for better Risk Management: To manage liquidity linked exposure for the protocol, the V3 update will come out with Quotas that define how much exposure the protocol can have to a certain asset or protocol.
- New Integrations: Balancer and Aura will be the new integrations for the upcoming V3.
- Minimum Viable Tokenomics: The token holders will now decide how the fee from alpha pool will be distributed and if they were to get a share from the DAO side of the fee
- Improved UX: Gearbots bringing the automation to portfolio management for our CA users
All this and more is planned for V3 already, this will be followed by discussions and votes by the DAO to decide what actually happens. V3 is bound to be exciting for our users and for the future of leverage in DeFi.
2. Understanding the why of V3: Gearbox Evolution
The Gearbox V3 announcement comes on the back of the learnings the DAO has had from V1 and V2.
V1 was always our test in prod, a product that was there to verify whether or not the idea that Gearbox was built on was safe to execute or not. Basis the learnings from V1 and a renewed risk framework, the DAO created Gearbox V2.
The goal of V2 was to be our proof of scaling with safety. To ensure whether the idea could be scaled with the levels of safety we desire to have.
With V2 being live for over 4 months and a constantly $100M+ TVL in place, we knew it’s time to take the next step. The step to take native leverage to more protocols and add more assets. This meant adding mid-tails and enabling L2s. This meant increasing the overall scale the protocol could reach.
And that’s why the DAO conducted a self evaluation on where it stands and how it can get there. You can visit the parameters for the same below and read the complete logic of V3 tech stack in the article above.
3. Protocol stood tall through USDC Depeg
Amongst all the bank failures, crypto was hit with uncertainties around what will happen to USDC. Naturally, amongst the uncertainty, USDC dropped peg amidst fears that it now won’t be backed 1:1.
This wasn’t the best situation for leverage takers. Positions going through uncertain volatility and DEXes going through skewed liquidity. For the protocol though, this was a test of it’s design.
And it stood tall. While the TVL dropped by $40M or 33%, the protocol never faced bad debt, never had issues liquidating and was comfortably able to wind down the positions. At all times during the depeg, the Gearbox System was over-collateralised. This was due to the LTVs and bounds set by Risk Committee alongside Risk DAO and the allowedlist in place that guarded the money lent to the protocol.
You can read the complete details including how less than 1% of the users and TVL actually needed to be liquidated during the depeg. This is all a part of the design created to keep lent funds safe even with high utilisation. So lend in and relax, anon: https://charts.gearbox.fi/pools
4. The L2 discussions heating up
Within the V3 Tech Stack, is the quota gem. Quotas effectively limit the risk the protocol has towards an integration or asset by limiting the overall exposure.
In doing so, they also make L2s a possible addition. L2s are significantly lower in terms of liquidity which makes building a high liquidity demanding protocol on top of them a high risk.
By deploying quotas, Gearbox can severely limit the overall exposure of the protocol compared to the liquidity and thus ensure the value of assets we hold on the protocol are liquidate-able.
The above discussion has been kicked off by the Risk committee and it’s for the DAO to decide how and where the Gearbox Protocol will be deployed first.
It encapsulates an analysis on the 3 big L2s: Optimism, Arbitrum and Polygon. Read the pre-GIP to learn more about the same.
5. Votes and Governance
There were two key votes that went live through the month of March.
The first of the two votes focused on finalising the responsibilities of the Gearbox Foundation. The foundation enables the DAO to have real world presence for multiple aspects. You can read the complete details here
The second vote concerns the GEAR/WETH liquidity mining program. With the passing of the vote the monthly emissions to the pool have been reduced from 6.66m GEAR/month to 3.33m GEAR/month. These are the tokens captured from the Cider Fee. This will initially utilise the remaining GEAR from the currently approved liquidity mining program until gone and then be funded by the DAO if need be. You can read the complete details below
6. Financial Update
As of end of March, the DAO treasury holds $4.94M in its address and an additional 4.53B GEAR Tokens. The realised revenue for the month of March was 98k while spends were at 175k. Contributors are to be sent $64k for March while obligations for Feb at $64K were paid out. 20K USDC were spent on legal, 55K on quarterly initiatives of BD and Risk Reports, further 33K USDC were spent on Risk DAO.
For GEAR outflows, 22M were deployed as a part of the LM programs. While the rest were paid out for Legal(10M) and to Risk DAO(1.11M).
This puts the DAO in a healthy financial place with a runway of over 2 years even after factoring in growth.
Little things, Big impact…
1. LLSD spaces with LIDO and Blocmates
To help users understand better how liquid staking works and how Gearbox’s native leveraged staking is a natural progression for LSDs.
2. Blockworks Coverage on V3
3. De.Fi coverage on Gearbox
4. Mellow making 7% in one transaction during Depeg
5. Ninjas Outsmarting the Depeg
6. Trading on Gearbox? Cheapest Funding Fee
And that’s all for the DAO update bosses. 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:
