? Gearbox Protocol
Gearbox is a credit DeFi primitive - a leverage protocol that lets users open isolated, user-controlled Credit Accounts funded by borrowed capital. Unlike Aave's shared lending pool, Gearbox gives you the keys to your own account: you pick the strategy, manage the positions, and control the leverage. The protocol routes capital through Curve, Uniswap, and Yearn - earning yield while you amplify it.
Gearbox by the Numbers
Credit Accounts
Isolated leveraged positions users control - how CAs work, fund, and interact with the Gearbox pool
Liquidation Mechanics
Health factors, liquidation thresholds, and how keepers clear underwater credit accounts
Connected Protocols
Curve LP, Uniswap v3, Yearn strategies - the DeFi primitives Gearbox routes capital through
GEAR Governance
How GEAR holders vote on protocol upgrades, fee parameters, and risk parameters
Credit Account Lifecycle
A Credit Account moves through four stages: deposit collateral, borrow from the pool, deploy into DeFi strategies, and manage or close. Unlike a lending pool position, you control every step - the protocol just tracks the health of your account.
Leverage P&L Simulator
Adjust the leverage multiplier to see how borrowed capital amplifies both gains and losses. All values are illustrative; actual returns depend on strategy performance and borrow costs.
? Liquidation Trigger: Health Factor
The health factor is your collateral value (adjusted by the collateral factor) divided by your total borrows. When it drops below 1.0, your account can be liquidated. Keep your health factor above 1.5 as a safety buffer.
Strategy Flow: Gearbox Capital Routing
Gearbox acts as middleware between liquidity providers and DeFi strategies. The pool supplies capital to Credit Accounts, which route it through approved connected protocols.
How Gearbox works in 90 seconds
Gearbox is a credit DeFi primitive that provides leverage through isolated, user-controlled Credit Accounts. Unlike Aave's shared lending pool where the protocol manages all positions, Gearbox gives each user their own smart contract account that they operate directly - choosing strategies, managing positions, and controlling leverage.
Liquidity providers deposit assets into the Gearbox pool and earn the variable borrow rate paid by Credit Account users. They bear almost no directional risk: the pool is protected by collateral factors, liquidation thresholds, and a liquidation penalty that lets keepers clear underwater accounts before provider deposits are at risk.
Credit Account users - the active side - deposit collateral (ETH, wBTC, stablecoins), borrow additional capital up to the collateral factor, and deploy the combined position into approved DeFi strategies running on Curve, Uniswap v3, or Yearn vaults. Any strategy that uses the whitelisted connected protocols is possible. The Credit Manager tracks the aggregate health of the account across all open positions in real time.
Key concepts
- Credit Account (CA)
- An isolated smart contract that holds a user's collateral, borrowed funds, and open DeFi positions. Unlike an aToken balance on Aave, the Credit Account is user-controlled - you call the DeFi protocols directly, and Gearbox validates the transaction and tracks your health factor.
- Collateral Factor
- The percentage of an asset's value that can be borrowed against it. A 90% collateral factor on ETH means $100 of ETH can support $90 of borrowing. Each asset has its own factor set by GEAR governance, reflecting the asset's volatility and liquidity risk.
- Health Factor
- The ratio of effective collateral (collateral value collateral factor) to total borrows. When this drops below 1.0 the account is liquidatable; above 1.5 is the practical safe zone for volatile collateral. The Credit Manager recomputes this on every state-changing call from the account.
- Credit Manager
- The contract that mediates between Credit Accounts and the pool. It validates every action a Credit Account takes, maintains the account's open position list, checks health factors, and triggers liquidations. The Credit Manager also controls the whitelist of approved DeFi protocols and function signatures.
- Connected Protocols
- The DeFi primitives Gearbox has integrated with - currently Curve (LP), Uniswap v3 (concentrated liquidity), and Yearn (auto-compounding vaults). These are the only protocols Credit Accounts may interact with, constrained to a limited set of function signatures to reduce attack surface.
- Liquidation Penalty
- When a Credit Account drops below health factor 1.0, keepers seize the collateral and repay a portion of the debt at a discount. The difference - the liquidation penalty - compensates keepers for the risk of executing an atomic close on DeFi positions. This penalty is typically 5-10% depending on the asset.
Why Gearbox matters
DeFi has two dominant credit models: Aave-style lending pools (low leverage, protocol-managed) and isolated margin accounts (high leverage, per-exchange). Gearbox is the only protocol that gives retail and institutional traders a composable leverage primitive - the ability to apply leverage to any DeFi strategy that runs through its approved connected protocols. You are not limited to perpetuals or options; you can lever into Curve LP positions, Uniswap v3 concentrated liquidity, or Yearn vault strategies.
As of April 2026, Gearbox has over $400M in TVL across its active Credit Accounts, with leverage ranging from 2x to 10x depending on the asset pair. The GEAR governance token aligns token holders with the protocol's credit health, and the interest income from Credit Accounts - flowing through the pool to LPs - creates a sustainable economic model that does not depend on token emissions alone.
Frequently asked questions
- What is Gearbox Protocol and how does it differ from Aave?
- Aave is a lending pool: you deposit, earn interest, and borrowers draw from the same shared liquidity. Gearbox is a credit-account system: each user gets their own isolated smart contract account that they control directly. Users deposit collateral, borrow funds, and then choose and operate DeFi strategies themselves - the protocol acts as the banker, not the strategy manager.
- What is a Credit Account (CA)?
- A Credit Account is an isolated smart contract that holds a user's collateral, their borrowed funds, and their open DeFi positions. Unlike a lending pool position, which is aggregated and managed by the protocol, a Credit Account is user-controlled. The user deploys capital into strategies - for example Curve LP or Uniswap v3 positions - while the protocol tracks the account's total health across all positions.
- How does Gearbox achieve up to 10x leverage?
- Gearbox applies a collateral factor to deposited assets - for example, supplying $100 of ETH with a 90% collateral factor lets a user borrow $900 of additional ETH. That $1,000 total can be deployed into a DeFi strategy. If the strategy earns a return, the borrowed funds amplify it. If the strategy loses, the loss is also amplified. Max leverage varies by asset pair and is determined by the collateral factor and the underlying asset's risk parameters.
- What triggers a Gearbox liquidation?
- Like Aave, Gearbox computes a health factor - the ratio of total collateral (adjusted by the collateral factor) to total borrows. When this ratio drops below 1.0, the Credit Account becomes liquidatable. Keepers may seize the collateral and repay a portion of the debt, claiming a liquidation bonus in return. The protocol's connected integrations let keepers exercise the DeFi positions inside the Credit Account atomically.
- What does the GEAR token do?
- GEAR is Gearbox's governance token. It lets holders vote on protocol upgrades, risk parameter changes such as collateral factors and liquidation thresholds, and fee parameters including the interest rate model. GEAR stakers also receive a share of the protocol's interest income, aligning token holders with the protocol's credit health.
- What are the main strategies users run on Gearbox?
- The most common strategies include: (1) Long ETH via Curve - deposit ETH, borrow stablecoins, LP in ETH Curve pools; (2) Delta-neutral strategies - go long volatility while earning Curve and Uniswap fees with minimal directional exposure; (3) Leverage farming - borrow low-rate stablecoins and deploy into high-yield farms on Yearn or other protocols. The protocol supports any composed strategy that uses its approved connected integrations.
- Who are liquidity providers on Gearbox and how do they earn?
- Liquidity providers deposit assets into Gearbox's pool and receive interest income from borrowers. This is the passive side of the protocol. Providers do not take on leverage or manage strategies - they simply supply liquidity and earn the variable borrow rate paid by Credit Account users. The pool is partitioned so provider deposits are not directly exposed to individual Credit Account losses; the collateral factors and liquidation mechanism protect the pool first.
- What is the Credit Manager in Gearbox?
- The Credit Manager is the contract that mediates between Credit Accounts and the pool. It validates user actions (such as borrowing more or closing a position), tracks health factors, and triggers liquidations when accounts go underwater. It also whitelists which DeFi protocols and function signatures a Credit Account may interact with, constraining the attack surface while keeping the system permissionless.