Gearbox Protocol: Shifting DeFi Into the Next GEAR

Introduction

When used correctly, leverage can be a powerful tool. It helps amplify one’s exposure to market opportunities and take advantage of small inefficiencies to bring markets closer to equilibrium. DeFi is yet to see an efficient model for spot leverage. Over-collateralized money markets are relatively safe venues, but the one thing they lack is capital efficiency.

The launch of Gearbox v2 on Ethereum could potentially change this. Gearbox introduces a new primitive, called credit accounts, which are essentially smart contract-based wallets with certain built-in features. Between credit accounts and its own independent money markets, Gearbox brings a more efficient approach to leverage.