Context & Goals

Incentives

Gearbox Protocol is transitioning to a Permissionless model. This means that independent Curators will be able to launch their own lending pools, manage risk parameters, and onboard new assets. In essence, they become owners of their own lending businesses — with full control over the risk side of their pools.

As part of this model, Gearbox will receive a fee split from the pool’s protocol revenue, shared between the protocol and the Risk Curator. This creates an economic alignment, but it must be reinforced with a robust long-term incentive structure. The idea here is that Gearbox becomes a technical stack for many different BD units (Curators) - instead of being a sole BD unit as we are now. Despite sharing revenues with Curators (so at same TVL we only get ½ of the revenue we had before), this model has the potential to make revenues multiples times more due to being more scalable. More assets, more chains, more Curators - eventually getting us to a win.

The goal of this incentive redesign is to:

• Align Curators with the long-term success of the protocol (TVL growth + sustainable revenue).
• Discourage purely short-term “mercenary” behavior from Curators (e.g., farming GEAR rewards and leaving).
• Encourage proactivity, competitiveness, and faster asset onboarding.

Old markets’ risk parameters

The transition to Permissionless model will deprecate 3.0 markets currently curated by DAO and advised by Chaos Labs. Incentive structure will incentivize existing users to migrate both their Supply-side positions and Credit Accounts to the new markets.

To ensure the migration process goes seamless and secure, old markets should be modified to:

• Stay resilient to liquidity shocks caused by LP withdrawals.
• Switch into migrate-only mode, limiting creation of new positions.

Liquidity migration

To improve migration UX it’s proposed to connect Migration Adapters to Credit Managers in legacy pools governed by DAO and Chaos Labs. Migration Adapters will allow to move existing Credit Accounts from old pools to new ones curated permissionlessly.

Incentives and Long-Term Alignment

Curators Bootstrapping Program

To support this transition, Gearbox is allocating 300M GEAR tokens (3%) over the next 6 months to incentivize Curators and the liquidity they bring (instead of the existing Liquidity Mining program). This includes both the baseline and performance-based rewards. In reality, that’s just about 3x of the current LM numbers anyway, but in this case the dilution will be much more closely aligned with revenue & thus buybacks. 260M GEAR will be reserved for incentives distributed via the structure described in this document, with transparent and measurable criteria. The remaining 40M GEAR can be used by the DAO for flexible incentive experiments — such as extra achievements or unforeseen strategic opportunities. This creates room for both structured alignment and creative incentivization.

Incentive Structure Proposal

Revenue-Focused (non-gamified direct alignment) = organic

Monthly Budget: 15M GEAR
Rewards proportional to generated revenue.
This model introduces a lag (onboarding → usage → fees) that rewards consistent effort and discourages short-term farming.

TVL achieved Bonus (for new pool or new onboarded asset) = speed over other protocols’ growth

Budget:

• $5M TVL → 500k GEAR
• $10M TVL → +500k GEAR
  (eligible for first 5 new assets per month)
  One-time bonus for new pools or assets, creating urgency among Curators to act first.

Motivation:
The limited bonus creates urgency for curators—if they don’t act quickly, others will claim the rewards.

Time-weighted TVL (regular LM essentially) = nice metrics

Monthly Budget: 15M GEAR
Rewards based on time-weighted TVL to help Curators bootstrap passive lending.
Even if short-term revenue is small (e.g. wstETH), TVL creates long-term strategic moat.

Additional Rules:

• Undistributed rewards go to DAO flexible budget (managed by VIBES)
• Incentives apply only to mainnet; L2s may receive small bootstrap support
• If the curator publicly declares a reward distribution wallet, rewards can be sent directly to curator, otherwise DAO will distribute them based on the current tools (staking contract / Merkl).
• Also, if a curator manages different correlated assets (for ex, two different stablecoin markets), they can change the ratio of rewards within these pools if they think it necessary.
• For the first month, the calculation is based on the TVL/Revenue of the current Gearbox pools: 12M GEAR for wstETH pool. 8.5M GEAR for WETH pool, 9.5M GEAR for stable pools (exact split can be defined by DAO contributors).

Frontend Onboarding Rules

While the Gearbox Protocol itself is fully permissionless — meaning anyone can create new pools and markets — the frontend hosted on app.gearbox.fi remains permissioned. This allows us to manage user experience and maintain a clear, high-quality interface for borrowers and LPs.

Goals:

• Avoid UI noise and confusion. Each Curator will have a dedicated page showing all their pools, strategies, and metrics.
• The main interface displays only a limited set of pools and strategies.
  • Only Curators achieving TVL Bonuses for one-click strategies
  • Max two Curators per borrowable asset; once both slots are filled, the market locks. Others remain accessible via Curator pages.

This ensures decentralization with clean UX and encourages early, proactive Curators.

Liquidity Migration Program

Legacy pools will be sunset and replaced by Curator pools. A migration program will incentivize lenders and borrowers to move to the new model.

Migration of Pools

• Legacy pools will stop receiving LM rewards. Users are encouraged to move liquidity to new Curator pools, which will receive rewards, resulting in higher short-term yields and sustainable long-term ones.

Migration of Credit Accounts

• Users migrating Credit Accounts receive a fixed reward based on TVL at snapshot:
  • 1k–300k: 30k GEAR
  • 300k–1.5M: 50k GEAR

  • 1.5M: 80k GEAR

• Migration involves no swaps or slippage; users only repay accrued interest.
• 15M GEAR allocated for these rewards.

Old markets’ risk parameters

Configure IRMs to prepare for LP migration

The goal is to design interest rate models (IRM) that remain resilient during LP exits, limiting borrower losses from utilization spikes. Flatten the curves so max rates are marginally higher than current equilibrium.

| | WETH v3 | wstETH v3 | USDC v3 | USDT v3 | DAI v3 | GHO v3 | DOLA v3 | crvUSD v3 | WBTC v3 | tBTC v3 | | --------------------------- | ------- | --------- | ------- | ------- | ------ | ------ | ------- | --------- | ------- | ------- | | U_1 | 70% | 70% | 70% | 70% | 70% | 70% | 70% | 70% | 70% | 70% | | U_2 | 90% | 90% | 90% | 90% | 90% | 90% | 90% | 90% | 90% | 90% | | R_base | 2% | 0.17% | 5.50% | 3.80% | 4.00% | 3.80% | 3.60% | 1.50% | 0.80% | 0.80% | | R_slope1 | 0.01% | 0.01% | 0.01% | 0.01% | 0.01% | 0.01% | 0.01% | 0.01% | 0.01% | 0.01% | | R_slope2 | 0.01% | 0.01% | 0.01% | 0.01% | 0.01% | 0.01% | 0.01% | 0.01% | 0.01% | 0.01% | | R_slope3 | 0.20% | 0.05% | 0.80% | 0.80% | 0.80% | 0.80% | 0.80% | 0.80% | 0.10% | 0.10% | | _isBorrowingMoreU2Forbidden | TRUE | TRUE | TRUE | TRUE | TRUE | TRUE | TRUE | TRUE | TRUE | TRUE |

Modify debt limits to disallow growing exposure to unused tokens

Some tokens in legacy pools show zero utilization. Their debt limits should be set to 0 to minimize unnecessary risk and simplify monitoring.

Chaos Labs dWBTCV3 market:
WETH, stETH, DAI, FRAX, USDT, UNI, LINK, LDO, CRV, CVX, sDAI, USDC, PT-EBTC-26DEC2024, PT-LBTC-27MAR2025, PT-corn-pumpBTC-26DEC2024, PT-cornLBTC-26DEC2024, PT-corn-eBTC-27MAR2025

Chaos Labs dDOLAV3 market:
WETH, stETH, sDAI, USDe, sUSDe, crvUSD, USDS, sUSDS, stkUSDS, PT-sUSDE-26DEC2024, scrvUSD, PT-sUSDE-27MAR2025, csUSDL, WBTC

Chaos Labs dtBTCV3 market:
WETH, stETH, USDC, LBTC, PT-LBTC-27MAR2025, PT-corn-eBTC-27MAR2025

Chaos Labs dUSDCV3 market:
stETH, DAI, FRAX, USDT, UNI, LINK, LDO, CRV, CVX, sDAI, USDe, crvUSD, USDS, sUSDS, stkUSDS, PT-sUSDE-26DEC2024, scrvUSD, PT-sUSDE-27MAR2025, csUSDL

Chaos Labs dWETHV3 market:
DAI, FRAX, USDT, UNI, LINK, LDO, CRV, CVX, sDAI, USDC, rETH, osETH, pufETH, amphrETH, PT-weETH-26DEC2024, PT-ezETH-26DEC2024, beraSTONE

Chaos Labs dGHOV3 market:
DAI, USDT, sDAI, USDe, crvUSD, USDS, sUSDS, stkUSDS, PT-sUSDE-26DEC2024, scrvUSD, PT-sUSDE-27MAR2025, csUSDL, USDC

Chaos Labs dcrvUSDV3 market:
DAI, USDT, sDAI, USDe, sUSDe, USDC

Chaos Labs dUSDTV3 market:
sDAI, sUSDe, crvUSD, USDS, sUSDS, stkUSDS, PT-sUSDE-26DEC2024, scrvUSD, PT-sUSDE-27MAR2025, csUSDL

Chaos Labs dDAIV3 market:
sDAI, USDe, sUSDe, crvUSD, USDS, sUSDS, stkUSDS, PT-sUSDE-26DEC2024, scrvUSD, PT-sUSDE-27MAR2025, csUSDL

Forbid creating new exposure in markets on Optimism, Arbitrum and Sonic

Optimism: Set total debt limit to 0 in WETH, USDC and USDC.e pools
Arbitrum: Set total debt limit to 0 in WETH, USDC and USDC.e pools
Sonic: Set total debt limit to 0 in S and USDC.e pools

Txs log

Txs log can be found here Md5 checksums are: 3ee09f750a33ddadb1ee2794fc499732, 30ce2441719310e36fab8e0e438b3857, 6b0ff2d66ab8199518dc8b10a3f39f89, a7c529fa40ab97c26de39449a968e8c4