Mysterious Box in the Sky: LP + use and earn $GEAR. Making V1 go with a bang!
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:
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.
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.
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.
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.
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
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.
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:
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:
