Leveraged Eigenlayer Restaking with Gearbox Explained

Transcript

welcome back to the rollup High Roller Community as always nothing on the rollup is to be construed as Financial advice we are just an Educators in the defi space toss us a quick like give us a share a repost send it to a friend who may want to watch this and finally give us a sub or a follow it means the world to help support credibly neutral educational content in def5 we're here to educate Empower and enrich you and let's jump in what's going on guys welcome to the rollup today we have a an array of characters full of alpha on uh points reaking updated gearbox V3 and more to come so without further Ado we're gonna

pass it over to our lovely friends Ivan and ampus um and yeah it's not your first time here so maybe just a a recap of what you guys have accomplished since you know you've last been on which I think may have been like September of last year um and what's popping over in the reaking gearbox V3 world s hey guys thanks for having us on again uh appreciate taking the time so yeah a lot of things have happened since then back when we spoke we were almost on the verge of launching V3 that launched at the end of last year so basically instead of having time with Christmas with our families devs were launching V3 they successfully launched it and we

started first with margin trading as we call it pure because leverage right like you trade essentially you trade with leverage on top of Unis Swap and other dexes so there is no house to trade against you don't have any funding rates you margin trade with real liquidity so it's like essentially per on spot uh which makes it much more safe predictable and without those jumping rates so anyway that was the first one that we launched with V3 it has been in the alpha stage and coming out of the alpha stage in a couple of weeks from now or even before then and we're going to be launching a point program but we don't like calling the points program it's more so a loyalty program for users to get engaged with the product and for best traders to win even more than they

can uh but anyway that's on the margin training side the protocol is the same though every contract and the needs is the same it's just about how we can modularize it and adapt to different lever use cases so the sexy Topic in town for the past few weeks has been leverage raken right leverage reaken gave that boost a new into def that has been Boomer dead for about two years with protocol shrinking let's call it how it is but with the new rates with the new fun stuff coming in people look into defi again and we see rates and other protocols going ballistic so we're joining the game basically the game being a not the nice word but rather an integration

spree yeah def is back man so so what can uh what can what can users do on on gearbox with reaking that they couldn't do otherwise um just you know you know depositing into like ether fire or something well you can get like up to 10 times leverage on your deposit so that means 10 times the points whether it's I layer points or ether Five Points you know and of course the the the staking yield I mean you you have to subtract your your the cost of borrow obviously but essentially like you can leave up on on your points farming your your staking and yeah yeah and so how are you guys

running that under the hood are you guys only working like like which what type of um kind of reaking protocols have you thought with regards to to working with and there's a lot of stti sted eth rappers out there I saw puffer just dep pegged um let's let's talk about how you guys are operating this under the hood and then can also talk about some you know some of the uh risks to rewards for some of the users out out there good questions so the thing is that similar to how you have burs and margin trading right you have different ways of getting leverage technically it's going to be absolutely different risks are going to be different but your exposure will be similar right and of course you can have Arbitrage and better rates here and

there but conceptually it's different products that help you achieve a similar thing with gearbox leverage restak I think we are offering a much more safe and a much more liquid product compared to Alternatives so the ones that are popular today as far as we know of course there are more popping up is let's start from the beginning right the is I layer if you want to leverage it you can't really because there is the 7 day unstaking window right so if you want to offer leverage in a liquid l in a liquid way unless it is not under collateralized you can't really do it right because of that restriction so you need to have some derivatives in between for example like previously St has been for leverage staken leverage liquid staken right of Lidos there was a

derivative and then then it had some Peg on the markets it never really strongly de pegged because there was was one of the first right there was ample liquidity but some of those fears have been around some other pegged assets for liquid re uh liquid normal taken have deed right so now we have a similar situation with those liquid reaking protocols so you have puffer you have Renzo you have ethery and a few others and they essentially help obfuscate that unstaking WI of seven days making it more liquid now liquidity is a question right sometimes deep sometimes it's not as you mentioned yourself as us say power has deped a bit previously those

liquid derivatives have also deped as well so that's one of the risks coming into this when you are entering something like that you have to understand because rates you're making a high temporarily you can also be having IL liquidity uh issues um but of course it is much more liquid compared to the alternative when you have to wait seven days so what do you want to start with there are a few interesting things to uncover here yeah I mean um the there's a lot there I think it's an interesting thesis basically like you guys are almost saying look you guys should should uh increase your exposure to points um in in you know obviously in paying borrowing fees for kind of looping uh

but you're going to get a bunch of point points which you know if if Ian L launches out like 20 billion fdv then these points are going to be worth a bunch um and so it's kind of like an interesting it's an interesting uh thesis that uh um yeah it's like it's like it's like farming points to the max yes so that's where the cool part of gearbox is in the way gearbox does it what you technically do is you open that leverage wallet right then you just get more e for example X5 or X7 however safe you want want to be and then you mark it by rra ethery or rra Renzo right e rra Renzo e and essentially what these protocols do because all of these are

points right it's not like liquid farming back in the days these are fully database based things right you kind of just have to trust everybody to deliver them so but what it enables is the agility of those protocols to repurpose those points depending on where they see the most fit so for example if the way gearbox does it you actually can have one to one I layer point so if you're X7 leveraging you get X7 the amount of points right that's basically what the cool part is that's why it's leverage rake no leverage points and another thing we are doing with ethery so ethery is the one we starting with the first major one is that you get 2x ether five points for holding their rap e so essentially there is a much larger

incentive even compared to Alternatives now which is a very cool offering and the good party here is not just more points which is probably enough for most right but the cool part is that is liquid so in the cases of like Pendle or Wales Market you pretty much pay for points right there is a price you can calculate it for because the YT is this yield tokens or the Wales Market points you buy you essentially pay for them right it's like buying a token in ex change here you pay a borrow rate which is prata over the year so even if it's a high rate you only pay up until the amount up until the time you farm and that's it you can exit the position so you can sell your wrapped ether f e or you can sell sell your wrapped Renzo East and then as a result you can exit

the position of course the as you said yourself Andy uh it's not as liquid as St for example right this are newer things so they could be a bit of slep at your price impact again but those are temporary unless those protocols get hacked you are getting close out one to one so the only thing you pay really is the borrower rate and right now what are some of the uh like do you have any data or any of the math um like what are the numbers saying about like the current borrow rate and then the current incentive rate for getting uh like points and then the staking yield good question so it literally just launched like an hour ago uh I'll try to open the interface as we speak but basically the amount of I layer points

you get depends on The Leverage you choose so X5 means 5x the I layer points right pretty straightforward and E Five Points is the same but two x of that uh because of the special thing we are running together with them so if you would have FX leverage you get FX I layer points 5x ether points ether Five Points Plus 2x so 10 and 5x right that's what you are getting um compared to what are the costs now for this right and the cost can kind of be deduced by looking at the borrow rate so let's say if the borrow rate on eth on gearbox is about 15 to 20% your cost basis is a few times lower compared to what the Alternatives now offer in the market now all of these things are volatile right so it can change at any point but gearboxes

started with the a much more interesting offer uh compared to the other players in the market right now but could correct me there is even more of a DJ so I would love to hear what he thinks well I I haven't aped into the restak The Leverage restak yet but um there's a third party uh Twitter person who did some math and by her his her I think her her math um like gearbox right now at least is the most cost- effective way to farm Aran layer points uh she calculated the cost per point at about uh 4 cents to farm one point and one point on Welles Market is currently selling for like um 14 cents yeah 14 really one point on

Wales is 14 cents currently that's crazy and the cost to farm it is like four cents on gearbox according to her math like I haven't double checked it sneak yeah yeah so change and all that but like right now at least it should be one of the more cost effective ways to get your hands on those juicy juicy I layer points so do you guys more cost effective do you think that Igan lir is gonna launch at like 20 billion FTV I mean so seem like it I'm gonna be angry like uh I mean if you just look at how how the Market's playing out the Celestia thing I mean yeah I don't know it seems Seems like it's going to I mean

it seems like like people are projecting what 20 billion is give or take yeah if you in the cap of screw fdbs market cap is the only thing that matters then Infinity is the limit right uh but of course it's up to everybody to figure out what the price point they think is correct and it's I says that but he knows he knows as a veteran in this market that uh fdv is is a meme only in the bull market yeah but we just started the bull market so let's [ __ ] go yeah that's crazy that these points are going for this much I didn't even realize um I've this is actually my first time on Wales so I feel like a total Noob um but uh very very cool um so you guys also have put in something

where um you know you're you're basically testing this out with only people who are uh you know willing to to deposit I think 20,000 or some some arbitrary amount what's the what's the thought process behind that and are you going to open this up or is it already opened up for all or kind of is this just like a phase launch before you open the gates for everybody it's probably gonna stay like this for a while so it's not a gated launch in anyway it's more so that um for safety purposes there is no purpose to open it up fully so anybody who has not collateral they're free to get in uh like a day later after they submit the address so it's fairly straightforward um the thing with the high minimum borrow limits is that it is main that right gas fees are not low

slipage could be a thing so to make sure that the passive side of gearbox protocol doesn't hit any bad depth it's better to be safer than to be sorry right with protocols you need to be ultimate safe and gearbox over the past year that's why we have been I guess last year we have been slow with Integrations we haven't almost delivered any interest in one uh because we were focusing so much insecurity on audit on the monitoring systems and everything else yeah that's kind of what I figur it doesn't really make sense to uh have people get liquidated or something if they have like $100 and then gas and all of that um very interesting so then why did you guys choose ether fi um and kind of what's the uh what's the ongoing um situation there as far as extra points

and um yeah what about ether is appealing to to gearbox um it's one of the largest ones and they have been around for a while so that seemed like a safe enough option plus they already had a redstone Oracle life so Redstone is one of the ways we gearbox is able to add newer assets quicker comparatively to others because chain link as we know is too big so they deal with other things uh speed matters sometimes chain link doesn't add for example not like to diss on them right they have a lot of work to do but they cannot add everything so alternative Oracle Solutions help with speed and composability in our case so ether five had the Redstone Oracle one of the first they're pretty enough liquid the D voted

on it so it doesn't seem like an issue plus obviously they have enough second Market liquidity to justify leverage integration so does Renzo for instance uh puffer seems to be coming close soon as well right so potentially that's the beauty of gearbox because it is modular and composable H modular thesis right uh we able to add leverage for practically anything that was the thesis from 2021 when we started at the beginning of 21 and we've been slowly oh not slowly rather gradually and safely building towards that uh so this year we already started super aggressively with margin trading on Main that with now adding leverage restak and leverage points and going to layer twoos closer to the end of q1 so all of that is made possible

thanks to that modular architecture yeah yeah Ivan is like talked about the Redstone oracles this is the thing that like I'm most excited by because let's say like let's say you think like reaking is a big risk to ethereum and like jeopardizes the whole network whatever blah blah blah you don't want to participate um with the the cool thing about like gearbox V3 coming out of Alpha and the Redstone articles integration is like we're going to be like integrating things way way way faster compared to last year because we've got all the security things figured out we've got the quotas figured out um and now we have the Articles figured out so like if this isn't your thing just like stay tuned because our

goal is to let you leverage every like everything and anything that's safe in defi that's the end goal um so that's what I'm excited about yeah and I think this is particularly important whether you're a reaking bull or a reaking bear because my understanding of Leverage is that it essentially pours gasoline onto these things and that means that it's going to if you're a bull you know if if reaking is in fact good and it's going to lead to like all of this new scalability and abundant block space we'll get there much quicker because leverage will lead to price uh exploration much much faster but if you're a beay you can expect that Leverage is going to drive you know these things they're going to drive them

into the into zero or the ground if you have that thesis and if that's the way that it ends up going so I I tend to think that you know and I I I look at like puffer eth as the example here since they D pegged one one thesis is that leverage could help puffer eth regain its Peg much much quicker than if there wasn't leverage available because now you're able to uh kind of like Arbitrage that price difference and drive that price back to equ equilibrium because there's so much more liquidity in the ecosystem is that a is that a fair like mental model to think about like how prices might react in The Leverage reaking ecosystem I think in the short run uh

like if you we're talking if we're talking specifically about gearbox and its current Integrations and stuff then I'm not 100% sure like there we don't have enough of these things integrated to like support a strong ARB Market or whatever right but yeah in the long run 100% like um Leverage is is definitely the way to Arbitrage for example stablecoin deegs or like if Lio stake e deegs um you could definitely use gearbox to ARB that and the same applies with um leverage rest staking in the future as we integrate more things um when there are DPS if there are DPS if you want to like punt on a dpeg happening even these are all things that in theory you should be able to do as we

integrate more and more things with gearbox yeah I don't think ether 5 is De pegging anytime soon no not Financial advice but they're actually uh true native reaking um so the problem with some of these is like a lot of these are spun up with points programs and things and then they're just staked e rappers so um obviously it's possible for ether F and other ones that are native to have issues but more or less I think that that's a good a good a good bet for uh for those users who want to participate and generally it seems like it seems like going on gearbox to do reaking especially um if you meet the capital requirement is like more or less a no-brainer if you're Ultra bullish on igen layer which I mean if if if it's 15

cents a point or 14 cents a point and you expect a uh a 20 billion fdv then I mean my goodness like the math is there so um yeah it's pretty exciting stuff I think we can kind of come to a close here if that's all from you guys any kind of closing Thoughts with regards to uh again how our community can get involved or um you know any uh any last words yeah sure there is one interesting thing that all of those Integrations what when we make leverage anything possible what happens is every asset every different integration comes with the ability for gear stakers care holders to St and vote on what those reor R should be whether they should be

higher for example they think the protocol should be earning more and making up for its risk exposure for example lenders can vote more to have borrowers pay more right or borrowers instead can be holders of gear and stakers and decided that no some of the Integrations that are there should be paid for Less because they are safer than the others and all of those revenue streams are basically coming together on chain now there is no mechanism yet to like funnel them distribute or things like that but there is an onchain engine now where gears takers can decide on those rates so whatever we at however we at all of that is decided by the da and essentially the raids themselves that have money streams are influenced by them as well yeah man I uh I think ien L is going to be the

biggest launch in the history of crypto so um yeah high expectations for sure back up the backs ready to go yeah didn't didn't make the angel round in that one but uh shout out to those who did same shout out to you guys [ __ ] hate you but yes uh thanks Ian thanks ampless for coming on um and really excited to uh to kind of see this grow more and get some leverage points thank you for having us on happy to chat to you anytime and yeah uh whatever explanation users or yourself might want to hear on the points risks liquidity and other things always happy to chat on Discord and

telegram to answer it all yeah and also stay tuned for layer twos o Boomer it's boring Lea 2023 we restake now man any both both are coming oh man love it thanks guys