WEN V2?! Next steps leading up to…
Ahhhh wen V2? — Good question! It has been quite a while. 9 months, to be exact. Changes, improvements, optimizations, audits, interface upgrades, security adjustments — all are to be live within the next few weeks!
But wen exactly?! Right, right… Let’s go through the practical steps that need to happen for Gearbox Protocol to transition to V2.
Gearbox Protocol is managed by the DAO & enacted public multisigs. Even V1 was deployed by the DAO after voting on pools and assets. Since then, the “control” has been gradually decentralizing: less operational overhead, all communications in the open, all decisions made by GEAR token holders.… See monthly DAO reports with budgets & find links to open communications:
By the end of the year, all of these processes shall become non-controlled. Meaning there is no and will be no centralized company, no one central party planning or dictating things. On this topic we shall write a separate piece.
Back to the V2 launch and the steps to be taken!
1] Discussions about Risks, Assets, Contracts…
ETA: discussions are happening throughout these weeks, aka now!
A bunch of topics will be popping up to discuss contracts, AllowedList, assets, protocols… all deciding on security parameters. The risk committee is already getting solid advice from RiskDAO on this front too! Anyway, do get into details if you want to learn more about V2:
Voting for all of these will be commencing at the end of September.
Note on modularity: in V2 pools stay the same, so no need to withdraw.
This is why we are saying to not worry about your current passive earning deposits (diesel dTokens). They will not be changing in V2, because Gearbox Protocol is modular. That is, there is no need to redeploy everything with new versions or upgrades. DAO can decide to take things in-and-out, like a literal engine!
Passive LP you can keep the liquidity, no need to withdraw
Credit Account users in V1: continue closing your positions
Credit Managers (the sticking glue in-between controlling collateral checks, loans, and so on) will be changing pending future DAO votes. In fact, closer to the mid October, an actual Liquidity Mining stage will occur with proper GEAR rewards for passive LPs to earn. Stay tuned for that!
Discussion on protocol parameters:
Discussion on fees and Leverage Ninja mode:
2] LM Program for passive pools earning kicking off… 10% APY?!
ETA: by the middle of October.
A few days before V2 is ready to be deployed and switched on — LM for passive pools earning shall kick off. The APY would consist of organic utilization by Credit Accounts + GEAR LM.
Approximately 7.5–10% in $GEAR APY for a $55M TVL estimated and 1–1.5% in organic APY from utilization.
Earning 10%+ in a single-asset, no liquidations, low risk, and absolutely passive. Wdyt sers? Get your capital ready! For the sake of calculations, GEAR price is taken at 200M FDV as just a bit above the last DAO round (and contributor salaries benchmark) whereas during the first weeks GEAR rewards will be non-transferable. They are not locked or vested though, just that GEAR has not been voted to be transferable yet.
Why such LM sers? — that’s the capital the protocol needs to service the other side of the equation. Those are leverage takers, aka Leverage Ninjas using Credit Accounts for their strategies and complex operations in farming & trading. That’s why the push for pools filling up will be a few days before V2 is fully live — so that Leverage Ninjas taking leverage have enough depth to borrow from, as to kickstart the protocol growth.
Gearbox V2 will initially launch in Leverage Ninja mode: the leverage side (not the pools side, that’s open to everyone) will be temporarily restricted to a set of degen wallets who will help v2 test in prod a bit.
Governance Forum Discussion has been initiated:
3] V2 is then launched, Leverage Ninjas — get ready!
ETA: second half of October, after Devcon in Bogota.
Pending the exact pools, assets, and protocols from point [1] from above — V2 will be ready to be deployed by the DAO and switched on. New interface shall become available, and it’s time to… farm, trade, and use Gearbox! We will have more user guides closer to V2 launch, but for now you can check out the YFC series:
- Want to know how to earn ~30% APY on Yearn, go here.
- Prefer Curve pools? No worries, go here.
- Just want to learn about what Frax can do with Gearbox? Here you go.
Passive LPs: nothing new to do. Stay passive and earn APY + GEAR!
Some things that are done and are being finalized right now…
- ✅ Code is audited, pending final auditor remarks [fixes are done];
- ✅ Goerli testnet environment is operational and is being stress-tested;
- ✅ New interface is deployed and is being tested on Goerli;
- ⏳ Editing interface texts, adjusting smart router [pathfinder];
- ⏳ Upgrading the liquidator bot and open-sourcing it;
- ⏳ Fixing the analytical tools & the infrastructure for dApps;
We are so close!
4] 1% LP withdrawal fee to fade away.
ETA: by the middle of November.
The concept of the withdrawal fee was never supposed to stay for long, it was only there to prevent fluctuations during the first weeks of usage. However, it’s important to have liquidity for V2 launch, so the fee doesn’t go away until then. To compensate LPs for the time lost on low organic APYs (due to V1 being throttled and not offering good Credit Accounts usage) — retroactive GEAR APY shall be granted by the DAO.
There is no point doing on-chain sleuthing like it was done before, because the retroactive rewards are based on $ liquidity and duration it stayed in. So making 100 accounts didn’t yield pretty much anything, as was clearly explained at the beginning.
A few weeks into V2 full usage, withdrawal fee shall be removed fully. At that point, LPs can decide whether they want to stay for the organic APYs and the proper LM program — or leave altogether. Free market, free choice.
5] GEAR transferability plans and Gnosis Auction
ETA: November or later.
For now, some DAO members are planning a Gnosis Auction, the details of which can be found in the link above. If you are concerned about taking exposure to a (possibly) volatile auction, joining Gearbox as a liquidity provider is likely the easiest pathway to getting a bag of $GEAR. All of the proceeds in Gnosis Auction will immediately go into the LP pair on either Uniswap V2, or Balancer, or Curve… pending discussions.
Also, all pending DAO votes and discussions, so go participate. After liquidity is supplied and $GEAR is made transferable by the DAO, it’s onnnn!
Note on transferability timing
There is no guarantee or promise of timing, as the decisions are fully dependent on DAO voting results. As you might know, Gearbox DAO is actually pretty active in its decisions, without OG gearheads voting. Only the delegates and community members have been deciding for almost 20 GIPs so far. There is no strong consensus on timing yet, as some DAO members are trying to “time the market”, some are focusing on the narrative, some are focused on development. It will really be up to the vote(s) on wen & how. So do participate and direct the ideas!
GEAR staking? New protocols? Cross-chain? DAO shall decide…
Well, at this point V2 launch would be fully completed and done. Then we shall see what’s the priority together, decide on what to focus on or just let it be, and so on. No one is in charge, no one decides for everyone. It’s up to $GEAR Gearbox DAO to figure it all out. Capital is there, tools are there — what shall happen? Let’s (wait) work and see!
- GEAR Staking & Revenue?
There is currently no specific model apart from active governance for $GEAR. However, protocol fees have been occurring from day 0, so the protocol is earning into the treasury:
Whether the DAO wants to do revenue distribution, re-staking, ve-curve model, etc. — is up to the members and the voting. Any of these things are technically possible. But it may make sense to not eat the treasury while it’s small enough, and instead focus on expansion? Revenue will flow in, but splitting a small pie is likely not the best idea?
2. New protocols & assets?
There are some protocols which could be seen as the next in line to work on. Anyone external can bring forward a proposal and have the DAO vote on it and execute. Whether by internal or external dev power, with a grant or no grant. All up to the DAO to decide on too!
And up to the market to show what Credit Accounts users want. Maybe it’s fixed rate lending (with Yield or Element), or more farming opportunities like Balancer and Aura, or Uniswap V3 LPing… We shall decide then!
The full V2 article will go into more details on integrations…
3. Cross-chain or multichain?
“Wen Arbitrum ser, wen Optimism?” — there are currently quite a few sidechains / L2s / L1s or however you do mental gymnastics when naming those. Gearbox Protocol can easily be ported (ad-hoc) deployed on other EVM-compatible chains. However, the question is “why”. Is it for gas fees? For new farms? For new protocols and assets?
Let’s debunk one-by-one:
- New assets: even major assets on alternative chains usually have low DEX liquidity. See the case of FTM barely having enough liquidity to battle the liquidations of their character “Roosh” (it was a fun saga to read). As such, it’s extremely risky to add new assets on whatever chain. What’s the point for the protocol to take risk on a $5M liquidity pool? How much can even be earned on it, is it worth the risks? Also, there are usually no oracles for these, so it’s almost impossible to add such assets.
- New protocols: this is a good point. If there are farms on Optimism which are tested enough and have decent TVL (let’s say $50M+) it is worth spending the time and resources to offer leverage for those. This is a reasonable argument! They still need to be audited, and oracles need to be figured out for them. But that’s a good “pro” point.
- Gas fees: in the current assumptions for Gearbox Protocol, Credit Accounts are not supposed to be used by thousands of people. Leverage is a complex product, and on-chain it will stay complex for a while. MEV, liquidations, gas fees, slippage… a nightmare for newcomers! So it’s more so for seasoned and capital-efficient parties to make sense of such a product. And those don’t care for even $100 fees.
As such, there is no immediate downside of high Ethereum gas fees. And if you are a small farmer, you are always welcome on the pool passive side, where you can earn compounding APYs + GEAR!
Moreover, smaller farmers can also make use of leverage when other protocols build integrations! For example, strategy builders like Brahma & Mellow. They can take care of gas fees and compound the rewards to make meaning for players of all sizes.
Even if your size is not size, Gearbox will have a place for you! Join the composable leverage family ❤
Overall, it’s up to the DAO to decide and vote, but these are just some things to keep in mind. Every step should be reasonably discussed, especially when taking risks of new assets + bridges + contracts + liquidity depth.
Check the latest DAO monthly reports to always stay up-to-date:
Disclaimer: Gearbox DAO is a group of enthusiasts, developers, and some companies — contributing to the ecosystem. You should not expect anyone else to work: there are no full-time workers. Anyone is free to work and contribute, and there are some funds to compensate for the efforts — but there is no entitlement in the DAO. Want something done? — Do the work yourself and make a funding proposal, There is no central body overseeing anything, nor should you expect to make any profits with the DAO. YOU are in control if you want to be.
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:
