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dear bankless nation,
Leveraged trading is not for the faint of heart. But thanks to the composability of DeFi smart contracts, these are high risk High reward trades are accessible to people outside of TradFi institutions.
Today’s newsletter looks at how Gearbox simplifies complicated leveraged trading strategies with just a few clicks.
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Unbanked Author: William M Peaster
Gearbox is a composable leverage protocol in DeFi. Whether you’re a low-risk lender or a leverage degenerate, this bankless tactic shows you how to approach Gearbox the way it is!
Leverage Degens use Gearbox “Credit Accounts” to streamline aping – via transmission
transmission log is a DeFi lending marketplace that specializes in it compoundable leverage.
This emphasis on composability allows users to leverage – ie use borrowed funds to make further investments – and willingly use that leverage for maximum impact several Logs at once (e.g. Gearbox + Curve + Convex at the same time).
So, Gearbox specifically caters to two main user bases. The first are lenderwho seek to generate low-risk returns by providing crypto liquidity to borrowers, and the second are pry swordsborrowing to try to increase returns from more advanced, actively managed, and riskier DeFi strategies.
Passive yield or active mining, the choice is yours
If you go to the earn section of the Gearbox app you will see a Passive pools Dashboard like the one below.
Passive pool statistics at the time of writing
Here you can check the available loan pools as well as the current stock size of each pool. deliver APY (the APY you would earn from borrowers + GEAR liquidity reduction) and Borrow APY (the rate that borrowers have to pay).
Zooming in, prospective Gearbox rental companies should note the following:
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dTokens are the key โ Diesel tokens are Gearbox’s Liquidity Provider (LP) tokens, and lenders automatically accumulate more of them over time through borrower payments; GEAR rewards are treated separately with a own page!
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No active management โ You don’t have to worry about liquidations. The pools are all isolated so you can sit back and make money by providing your favorite commodity on your own schedule!
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GEAR returns can be volatile โ Expect Supply APYs to fluctuate!
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Gear rental is low risk, but not without risk โ The log has been checked six times, but you should research it anyway what its main threats areand never deposit anything you can’t afford to lose just to be on the safe side!
All in all, if any of these return opportunities appeal to you, just click the pink Deliver button for your desired pool. You will be prompted to accept Gearbox’s conditions and conditions that allowed you to log in to the App using Wallet Signature.
Next you would encounter a provide liquidity Interface where you can enter your chosen deposit amount. Verify the information, trigger a token approval transaction, and then complete the final deposit transaction. When you are ready to close your position, use the withdraw button on the Passive Pools dashboard to continue.
The interface for providing liquidity on Gearbox
Gearbox offers pre-built one-click leverage strategies
First, make no mistake that leverage can be very risky due to the risk of liquidations and hence Gearbox leverage services are for more experienced DeFi users and traders who feel comfortable active management of their positions.
In addition, the Gearbox V2 rental products are new and therefore still in one locked betawhich is currently only accessible to people who post their address on the Gearbox Governance forum and willing to borrow at least $100,000 worth of crypto.
Gearbox Beta Requirements
Of course, Gearbox’s DeFi-native leverage infra will not be in beta foreverso let us walk you through the basics of this system so you can quickly see how it works when it rolls out to DeFi for everyone.
Standing at the center of the Gearbox lever system credit accounts.
If you’re a leveraged sword — a “leverage ninja,” in Gearbox terminology — these accounts are isolated smart contracts responsible for holding your collateral and Your Borrowed Funds. You can think of one like an automated DeFi wallet that is tailored to facilitate leverage.
The Gearbox credit account system
“Credit account balances are used as collateral for debt, and users can manage those funds by sending financial orders to their credit accounts,” Gearbox said explained. โIt could be: margin trading on Uniswap or Sushiswap; Leverage farming on Yearn; Arbitrage pegged assets on Curve and more!โ
To streamline the leverage process, Gearbox V2 also provides One-Click Strategies which allows users to open a credit account, post collateral, and then use external protocols in a single transaction.
Some strategies that are currently possible include:
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Leveraged liquid staking โ e.g. B. Borrow ETH on Gearbox, buy Lido’s stETH, add Curve stETH pool and stake LP tokens in Convex to farm CRV, CVX, LDO, plus staking and trading fee rewards!
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Leveraged stablecoin farming โ e.g. B. Borrow DAI/USDC/USDT on Gearbox, add to Curve 3Pool and stake LP tokens in Convex to farm CRV, CVX and trading fee rewards!
You can create your own custom strategies if you want, but Gearbox offers those too a selection of ready-made strategies to choose. Warning: Opportunities range from completely unprofitable to very profitable as you can see in the image below, so choose wisely and keep this in mind prices can fluctuate greatly.
Prices vary, sometimes significantly
If any of the strategies caught your eye (and if you are allowed listed/V2 open) you would click One-click Ape-In Button for your option of choice. Then you would:
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Choose your borrowed good (e.g. WETH)
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Choose your collateral (Adding multiple assets is supported)
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Choose your desired leverage amount (from 1x to 10x)
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Check out the position stats to verify everything
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And then complete your last deposit transaction to complete the process!
The Gearbox Leverage Deposit UI
So let’s say you hypothetically opened a leveraged position with Gearbox, now what? Once your funds account and position are live, you will come across a new administration interface that looks like this:
Trade or earn farms directly from your credit account
Of course, in this interface the Act The tab allows you to exchange your leveraged funds for other assets on the allow list while the Farm yard In the tab you will find an ongoing list of the biggest DeFi yield farming ops to choose from. Select, deploy, voila!
Next the Connect tab allows you to use WalletConnect to interact with DeFi protocols through their native interfaces while the Administer From this tab, you can easily add more collateral, borrow more money, reduce your debt, or close your credit account altogether.
When it comes to leverage, the main thing to note with Gearbox is that your position can be liquidated if this is the case health factor Metric falls below 1! Add more collateral as needed or pay off your debt to reduce the risk of liquidation.
DeFi leverage is certainly not for everyone.
However, for those who want leverage in a crypto-native way, a compelling and up-and-coming option is Gearbox, whose V2 solution has just arrived.
So the protocol still has a lot of room to grow from here, and it’s sure to attract more than a few newcomers once its leverage tools are available to all.
Stay tuned for when that happens, but in the meantime, Gearbox’s passive pools are decent earning opportunities for DeFi newbies and experts alike!
William M. Peaster is a professional author and creator of metaversalโ a new bankless newsletter focused on the emergence of NFTs in the crypto economy. He has also recently contributed content to Bankless, JPG and beyond!
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No financial or tax advice. This newsletter is for educational purposes only and is not investment advice or a solicitation to buy or sell any assets or make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.
disclosure. From time to time I may include links to products I use in this newsletter. I may receive a commission if you make a purchase through one of these links. Additionally, the bankless scribes hold crypto assets. See ours Investment information here.
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