Moose Meets - Gearbox v3 Update, Leveraged Restaking, PURE

In this episode of Moose Meets, which took place on February 20, CryptMoose, Ivan and Ilgiz discuss leveraged restaking, arbitrage with Whales Market, PURE, and more. Read our notes below to learn more.

Background

CryptMoose (Host) – Host of Moose Meets
Ivan (Guest) – Contributor at Gearbox
Ilgiz (Guest) – Contributor at Gearbox
Gearbox – a composable leverage protocol

Leveraged Restaking

Ilgiz says that Gearbox introduces leverage restaking as a way to composable leverage, enabling users to engage in various activities like staking, trading, and more without restrictions. Users can borrow capital through leverage restaking to maintain a delta-neutral position for activities such as farming, providing flexibility in investment strategies within the protocol.
He adds that leverage restaking on Gearbox offers users the opportunity to earn leverage points by speculating on the future value of assets rather than immediate yields, creating a unique approach to leveraging positions. While there are risks involved in leverage restaking, including higher borrowing fees based on anticipated asset value appreciation, Gearbox allows users to potentially gain 10x leverage points efficiently.
Ilgiz says that projects reallocate EigenLayer points and their own points. Exiting a position by selling is considered less risky than selling points OTC or on the secondary market. When exiting a position, consider the borrowing rate which is volatile but not static.
Ivan highlights the risks of leveraging assets based on past experiences in markets like LSD Market. Withdrawal lock periods in second layers can lead to price fluctuations. Secondary market prices of liquid restake derivatives may be volatile due to market dynamics.

Arbitrage with Whales Market

Ilgiz says that arbitrage involves exploiting price differences for the same asset across different platforms. Pure margin trading by Gearbox emphasizes real assets without synthetic elements, offering trading on secondary exchanges like Uniswap and Balancer.

PURE Update & What’s Next

Ilgiz says that PURE has over $10 million in open positions with lower rates compared to perpetual exchanges, appealing to larger traders seeking safety and compatibility. Users can farm while margin trading, leveraging positions for free through farming activities with real assets.
He adds that PURE margin trading attracts users due to its ability to farm while trading, offsetting borrow rates through farming activities. Users can simultaneously engage in margin trading while earning yields from farming activities using their credit account on Gearbox. Leveraging for free is possible with pure margin trading as users can offset borrow rates through farming positions effectively.
Ilgiz says that Gearbox introduces “steamies” as an incentive program rewarding profitable users engaging in various platform activities like collateral invites. Steamies aim to reward user loyalty through a position’s performance alongside gear rewards on top of profits earned. User acquisition challenges prompt innovative loyalty programs like steamies instead of overspending on acquiring new users.

Gearbox Gauges

Ivan says that LPs are rewarded equally regardless of the collateral used for borrowing, emphasizing the need for fair rewards based on risk strategies. Capital provided by liquidity providers can be utilized for various purposes like borrowing, trading, farming opportunities, staking, and more. Gauges allow voting to adjust borrow rates for different quotas, influencing the pricing and incentives for liquidity providers and leverage stakers.
He adds that different parties within the system have varying incentives; liquidity providers aim to increase rates while leverage stakers seek rate reductions, leading to an equilibrium that defines fair pricing. Initial rate intervals in gauges are set by governance votes but can be adjusted through subsequent voting by stakeholders, balancing upgrade and downgrade preferences.
Ivan says that votes from stakeholders determine interest rates within gauge intervals, reflecting a consensus-driven approach to setting fair rates through continuous voting processes. The possibility of influential entities with substantial voting power impacting rate decisions akin to challenges faced in other systems like $CRV; anticipates the emergence of major players shaping strategies within Gearbox.
Ilgiz says that alpha stage completion signifies finalized contracts post-audit with ongoing interface adjustments and bug fixes before transitioning toward mainnet deployment.

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Show Information

Medium: YouTube (Video)
Show: Moose Meets
Show Title: Moose Meets – Gearbox v3 Update – Leveraged Restaking, PURE Margin Trading
Show Date: February 20, 2024