Gearbox enters the restaking赛道, how to maximize points earnings by borrowing assets?
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Gearbox enters the restaking赛道, how to maximize points earnings by borrowing assets?
This article focuses on how to leverage positions on Gearbox to earn points.
Navigating Web3 tides with focused insightsAuthor: Mugglesect
Translated by: TechFlow
Introduction
Starting with Ether.Fi, the most efficient LRT strategy for earning EigenLayer and other points is now live. This article focuses on leveraging points acquisition on Gearbox and provides you with a points cost calculator.
How to leverage points on Gearbox?
Gearbox creates leverage by allowing users to borrow real assets of up to 10x their collateral. Since these assets are real, they can be further deployed into DeFi protocols, making any permitted activity leveraged. For restaking, borrowed assets can simply be swapped into weETH (Ether.Fi) to earn leveraged EIGEN and Ether.Fi points. Subsequently, through other integrations, you can build upon this to earn even more.
This is made possible by Gearbox's innovation—the Credit Account (CA), which acts as a leveraged smart contract wallet. The funds you borrow and the assets you deposit are sent to a CA that you open. The CA is programmed to allow those funds to be used only for specific assets, protocols, and pools, ensuring borrowed funds are never at risk.
If losses occur and a user’s losses deplete their collateral, the position will be liquidated, and borrowed funds will automatically return to the lending pool. This ensures lenders on Gearbox never face bad debt.
However, this isn't limited to restaking.
Gearbox is the leverage layer for DeFi. Whatever protocol Gearbox integrates with automatically becomes leveragable—this is the evolution of on-chain credit and composability.
Including Yearn, Convex, Balancer, Aura, and more
What is the cost of points?
On Gearbox, EIGEN points cost as low as $0.022. This is at a 17% borrowing rate. Any increase in interest rates makes points more expensive, while any decrease makes them cheaper. But at the current 16.45% rate, Gearbox offers the cheapest EIGEN points and best whale arbitrage.
You can determine the exact cost of your EIGEN points by entering your leverage and updating parameters (borrowing rate and ETH price) in the calculator below. Click here to access the calculator.
How is this calculation done?
To calculate the cost of points, we need two things: 1. Net borrowing cost 2. Total points earned
The net borrowing cost depends on:
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Borrowing rate on Gearbox
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Staking APY from restaking
Subtract the staking APY from the borrowing rate—that’s your net interest rate. Multiply that by the value you’ve borrowed, and that’s your annualized cost.
To find out how many points you earn, restaking 1 ETH pays 1 EIGEN point per hour, or 8,760 points annually. Multiply 8,760 by your leverage factor, and that’s how many EIGEN points you’ll earn each year.
Simply divide these points by the cost, and you have your answer.
Note: Both points and borrowing costs are linear over time. This means costs remain constant (aside from interest rate fluctuations) and do not depend on duration.
How do I open a position?
First, visit https://app.gearbox.fi/accounts
Then:
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Select the Leveraged Restaking option: Currently limited to Ether.Fi, with more options coming later.
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Mint the DegenNFT: For security, only wallets with a history and granted access can onboard. If you’ve already requested access, after visiting the strategy page, you should be able to mint the NFT from a pop-up window. If not, you can request access here. If you hold an old DegenNFT from V2, you should also be able to use it. The DegenNFT is an SBT that enables specific users to open a credit account.
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Choose your leverage: Customize your position based on your risk tolerance. The page also displays information such as borrowing rate and liquidation price to help you make informed decisions. All details are under your control—all parameters are yours to decide!
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Scroll to the bottom of the page and click "Open position".
That’s it! With the help of account abstraction, Multicall will now execute all required transactions in one go.
But what if you want to close your position?
You can exit anytime!
The beauty of Gearbox’s leveraged restaking and leveraged points is that you can exit anytime—whether you’ve staked for a week, a month, or just five hours, you can close your credit account and be done.
Here are a few things to keep in mind:
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These leveraged restaking derivatives (weETH, ezETH, etc.) are novel and don’t yet have hundreds of millions in liquidity, so some volatility may occur. Make sure you understand your liquidation price and monitor it closely. This is especially important when comparing entry and exit prices. If you enter during slight de-pegging and exit once parity is restored, you’ll earn more ETH.
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The borrowing rate you pay to Gearbox isn’t fixed but doesn’t fluctuate wildly either. Just stay aware to understand your cost basis and avoid leaving your leveraged position idle for months.
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Rewards from EigenLayer and other points earned will be claimable via your credit account. If you close it prematurely, someone else may claim those rewards. You can simply reduce your debt to the minimum (currently $50,000) and pay a very small fee while waiting for reward distributions. Technically, you can fully unwind a leveraged restaking position. While waiting for reward distributions from relevant protocols, you could alternatively park some StETH or Yearn at the end.
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