In recent months, the DeFi landscape has increasingly focused on Euler Finance and Maple.
However, another key player is making a notable comeback: Gearbox Protocol. Once regarded as a pioneering platform for leveraged credit strategies, Gearbox is re-establishing its presence in the DeFi space.
The protocol’s resurgence is fueled by a series of strategic initiatives, innovative product launches, and expanded outreach across blockchain networks, all working to rejuvenate and broaden its offerings.
A Turbulent Journey: From Liquid-Staking Loops to a Struggle
Initially, Gearbox’s growth was driven by a surge of interest in leveraged restaking strategies, particularly with liquid-staking tokens (LSTs) like rsETH and ezETH. Users would utilize these tokens as collateral to borrow ETH, looping their positions to maximize restaking rewards. This strategy gained significant traction, propelling the protocol’s total value locked (TVL) to an impressive $553 million by May 2024.
However, this upward trend was short-lived. As ezETH lost its peg and the appeal of restaking dwindled, capital withdrawal ensued. By March 2025, Gearbox’s TVL had plummeted to just $83 million—a staggering 85% drop, casting doubt on the protocol’s long-term viability. This decline reflected a broader sentiment in the market, highlighting that excessively leveraged DeFi strategies were unsustainable without a solid yield foundation.
Curated Strategy Vaults Lead to a Revival
Gearbox’s recovery began with the introduction of its ‘curator framework’—a system of approved pathways governed by authorized managers who can launch their own strategy vaults. These vaults come with defined risk parameters and performance fee structures, allowing for greater transparency and accountability regarding performance.
Some noteworthy new offerings include:
- Mellow/Lido Strategy Vaults, leveraging wstETH positions to earn Mellow and Symbiotic rewards.
- Yield Vaults focused on stablecoins, designed for structured carry trades involving USDS, sUSDe from Ethena, and Pendle principal tokens (PTs).
The careful curation of these strategies has successfully rekindled borrowing demand, with users returning in search of more sophisticated yield opportunities. Over recent months, our total value locked has more than quadrupled, and outstanding loans have grown steadily—clear indicators of the impact this strategic shift has had.
Importantly, these new vaults transition away from the unstable, looping strategies that characterized Gearbox’s earlier phase, positioning the protocol as a controlled environment for DeFi-native leverage—an enticing prospect for both yield seekers and risk-aware investors.
Cross-Chain Expansion and Aligning with GEAR Token Holders
In keeping with its innovative spirit, Gearbox has also taken significant strides in product design. On May 26, 2025, the protocol’s governance approved an ambitious move: a simultaneous deployment across 23 different networks, including Base, Blast, Mode, HyperEVM, and testnets like Monad/MegaETH. This bold step stands out as one of the most daring initiatives in Gearbox’s relatively short history.
From an incentive structure standpoint, Gearbox is also aligning its growth with the interests of GEAR token holders. A substantial 25% of all protocol revenue is earmarked for GEAR token buybacks—a strategic move that could enhance value for long-term holders as the protocol scales up.
With a fairly modest fully diluted valuation (FDV) of around $53 million, Gearbox is positioning itself as a promising, revenue-generating DeFi platform in a maturing market.
In Conclusion:
DeFi lending is evolving beyond simple money markets, and Gearbox is establishing itself as a hub for leveraged, modular strategies with institutional-grade risk controls. After experiencing a meteoric rise followed by a rapid decline, the protocol is now undergoing a deliberate recovery. With new deployments, increased loan demands, and a more robust vault infrastructure, Gearbox is once again a player to watch in the DeFi credit landscape.