Gearbox DAO

Author: van0k.eth

Summary

This proposal aims to raise the quota limit caps for most popular assets on Gearbox (namely, LRTs and Ethena), as well as modify the price feeds for LRTs to improve security and user experience.

Motivation

The technical multisig has currently reached all quota limit caps defined in previous GIPs for LRTs and USDe / sUSDe. This means that any further increases require a vote by the DAO. At the same time, liquidity for LRTs / Ethena Gearbox caps are steadily improving and demand for leverage of these assets remains strong. As the passive lender side keeps growing, increasing limits will allow to both satisfy borrower demand and retain the industry-leading rates for lenders.

At the same time, Chainlink has recently onboarded weETH/ETH, ezETH/ETH and rsETH/ETH feeds. Gearbox currently uses ETH/USD as the reserve feed for LRT assets, which makes partial withdrawals complicated (as for partial withdrawal purposes LRTs are valued as plain ETH). Utilizing Chainlink oracles in addition to Redstone oracles will improve partial withdrawals and security of the system in respect to some of Gearbox’s most popular assets.

Technical specification

Limits

We propose the following changes to quota limits and caps:

WETH Pool

Asset	Current limit	New limit	New limit cap*
ezETH	35000	40000	50000
rsETH	3000	10000	20000
weETH	20000	20000**	30000

DAI Pool

Asset	Current limit	New limit	New limit cap*
sUSDe	0	2’000’000	2’000’000

USDT Pool

Asset	Current limit	New limit	New limit cap*
sUSDe	0	2’000’000	2’000’000

GHO Pool

Asset	Current limit	New limit	New limit cap*
sUSDe	0	1’000’000	1’000’000

* The technical multisig will be able to increase the limit up to the defined cap without additional voting, if following conditions are met: 1) >90% of current limit is filled 2) the on-chain liquidity for the asset is at least 1/3 of the new limit. On-chain liquidity is defined as the amount of asset that can be swapped into underlying with <2% slippage in pools supported by Gearbox.

** The Balancer weETH/rETH pool that is primarily used by Gearbox to open/close weETH positions is currently somewhat imbalanced and only 80% of the current limit is used. Hence the limit cannot and does not need to be raised right now, but it is useful to give the technical multisig an ability to raise it in the future, if needed.

Oracles

The main price feeds for weETH, ezETH and rsETH will be changed to Composite feeds based on Chainlink. The following price feeds will be used for Asset/ETH prices:

ezETH/ETH: https://data.chain.link/feeds/ethereum/mainnet/ezeth-eth weETH/ETH: https://data.chain.link/feeds/ethereum/mainnet/weeth-eth rsETH/ETH: https://data.chain.link/feeds/ethereum/mainnet/rseth-eth

These oracles will then be multiplied by ETH/USD (https://data.chain.link/feeds/ethereum/mainnet/eth-usd) to compute the final asset price against USD.

The currently used composite feeds based on Redstone ezETH/ETH, weETH/ETH and rsETH/ETH price feeds will be set as reserve price feeds.

Security and liquidity

ezETH has 10.5k liquidity in the Balancer ezETH/WETH pools and ~3k liquidity in the triLRT pool at the time of writing. rsETH has 3.5k liquidity in the Balancer rsETH/WETH pool at the time of writing. Hence liquidity for these assets satisfies the risk committee requirement of limit <= 3 * on-chain liquidity.

Next steps and timelock

If the proposal is accepted, shortly after voting end transactions to update price feeds will be submitted to technical multisig. They will become executable in ~36 hours under the main timelock rules (may be a few hours more, as the transaction ETA is usually set with a buffer for signing time).

Limit increases will be performed through ControllerTimelock, which has a 12 hour delay after the multisig signs the transaction. As such, limits should be increased within 24 hours after the vote ends.