Gearbox

Gearbox is a generalized leverage protocol: users open Credit Accounts to borrow against collateral and deploy leveraged positions into integrated DeFi strategies (Curve, Convex, Lido, Yearn).

Credit Accounts compose leverage across protocols rather than a single isolated farm — up to ~10x with a unified margin position.

- Credit Accounts: Isolated smart-contract accounts that hold a borrower's collateral and debt together and can interact with integrated DeFi protocols. Users effectively get a 'leveraged wallet' via account abstraction, borrowing pool liquidity to trade or farm with up to ~10x leverage while collateral and positions stay ring-fenced per account. - Passive lending pools: Single-asset liquidity pools where passive lenders deposit and earn APY funded by borrower interest and fees. Depositors receive Diesel Tokens (dTokens; ERC-4626 vault shares in V3) that accrue interest proportional to their share. V3 introduced quotas, collateral/exposure limits and risk-segmented pools. - GEAR token: Governance token of the Gearbox DAO with a 10 billion total supply. GEAR is used to vote on supported assets, integrations and parameters; V3 tokenomics add staking and gauge/quota voting that influences borrowing fees per asset and revenue distribution. - Adapters & integrations: Whitelisted adapter contracts that let Credit Accounts route leveraged capital into external DeFi protocols (e.g. Uniswap, Curve, Convex, Balancer, Pendle, Lido/staking). Adapters are what make Gearbox leverage 'composable' — the same borrowed liquidity can be deployed across many integrated strategies.

- Collateral: Borrowers run leveraged positions (up to ~10x) inside Credit Accounts. A sharp adverse move in collateral value can push a Credit Account below its liquidation threshold; if liquidations lag or fail in volatile/illiquid conditions, the lending pool can accrue bad debt that impairs passive lenders. - Systemic: Composability risk: Credit Accounts deploy borrowed liquidity into external protocols (Curve, Convex, Pendle, Lido, etc.) via adapters. A failure, exploit or depeg in any integrated protocol propagates into Gearbox positions and can cascade into the shared lending pools. - Oracle: Credit Account health factors and liquidations depend on price oracles for collateral and integrated assets. Oracle latency, manipulation or misconfiguration on medium/long-tail or L2 assets (which V3 explicitly supports) could allow undercollateralized borrowing or unfair liquidations. - Smart Contract: The protocol relies on complex Credit Manager, pool and adapter contracts across V1/V2/V3 and multiple chains. Despite extensive audits, undiscovered bugs in adapters or the account-abstraction layer could lead to loss of pool or user funds. - Governance: Which assets, protocols and risk parameters (collateral limits, quotas, borrow fees) are allowed is set by GEAR-based DAO governance and executed via a treasury multisig that originally held ~51% of supply. Concentrated voting power or a malicious/erroneous parameter change could raise systemic risk for lenders.

- Prime brokerage / margin account: similar — Like a prime broker or margin account, Gearbox extends borrowed capital against posted collateral so a user can take leveraged positions far larger than their own equity, with the position monitored and force-liquidated if collateral falls below maintenance requirements.; differs — Gearbox is non-custodial and permissionless: leverage is enforced by isolated on-chain Credit Accounts and whitelisted adapters rather than a broker's balance sheet, credit checks or centralized risk desk. Borrowed funds can only be deployed into governance-approved protocols and cannot be freely withdrawn.