Gearbox DAO

Author: amplice

Summary:

Incentivize crvUSD stablecoin pool (if/when it is added) with GEAR to bootstrap initial liquidity into the pool.

Motivation

One of our goals at Gearbox is to grow TVL as large as possible, which means doing whatever we can to attract more DeFi users to either provide liquidity on the lending side, or use leverage on Gearbox (or both). The Curve ecosystem is one of the largest in DeFi, with a proven track record of being able to attract users. Curve’s crvUSD is growing in popularity and is one of the largest decentralized stablecoins on the market at the moment. Given the instatiable demand we have seen for leverage on stablecoins (to use in our Ethena leveraged points strategy), it makes sense to add a crvUSD pool as a Gearbox lending pool asset, especially as Curve have expressed an interest in helping to bootstrap such a pool.

Curve founder Michael Egorov has stated he will incentivize a crvUSD pool provided Gearbox matches the incentives that are provided. We believe with both sets of incentives + the extremely high demand we have seen for leverage on Ethena (points farming), these crvUSD passive pools could have market leading APYs, which means that it is likely that we will be able to attract a good amount of liquidity. This also helps our friends/partners at Curve increase adoption of crvUSD, so its a win-win scenario.

Technical specification

This incentivization period is initially planned for 3 months, and the initial goal for the size of the pool is roughly 10m.

We have proposed 4,500,000 GEAR (roughly $120k) as a starting point for incentives for this pool. Michael at Curve has agreed to additionally offer 265,000 of CRV, matching Gearbox DAO’s incentives. Note that these numbers could change somewhat if token prices of either move drastically between now and deployment of the incentives, the basic idea is Curve and Gearbox provide (roughly) equal incentives in $ terms.

With a target TVL for the pool of 10m, 120k per quarter --> 480k annualized, or almost 5% APY. With Curve’s matching incentives, that’s roughly 10% APY of incentives over 3 months for the pool. This is on top of the strong organic yield that Gearbox has been able to offer on its stablecoin pools (fluctuating between 18-22%, right now averaging at about 20% across all pools).

We believe the combination of the risk profile of our lending pools + ~20% organic APY + 10% additional incentives (at 10m TVL) makes this proposed new crvUSD pool extremely attractive to Curve ecosystem users and crvUSD holders.

Note that this is an optimistic proposal that only executes if crvUSD is successfully onboarded as a lending asset in Gearbox. The technical details about pool implementation and risk parameters will be put forth in a separate proposal.

Next Steps

Curve have also expressed an interest in doing some comarketing around this pool and more broadly - this is a net positive for Gearbox as Curve is a trusted brand in DeFi that has been around for a long time and is also one of the most successful protocols out there.

If/when a crvUSD pool gets approved and added to Gearbox, this proposal will be executed upon.