The last few months have seen the spotlight of DeFi shine brightly on Euler Finance and Maple.
But another player has been quietly making a notable return. Gearbox Protocol, long viewed as an innovative venue for leveraged credit strategies, has once again become very active in the DeFi space.
What is now propelling Gearbox to the DeFi frontlines is a series of strategic moves, fresh product introductions, and extended deployments across blockchain networks that are collectively reinvigorating and expanding the protocol.
From Liquid-Staking Loops to Collapse: A Rocky First Act
The early growth of Gearbox was propelled by a wave of enthusiasm surrounding leveraged restaking strategies. These strategies were especially involving liquid-staking tokens (LSTs) like rsETH and ezETH. Users would supply these LSTs as collateral, take out loans in ETH, and then loop their positions to farm restaking points. The strategy really caught on and helped to push the protocol’s total value locked (TVL) to a stunning $553 million by May 2024.
The good times, however, didn’t last. When ezETH lost its peg and the restaking incentives began to wane, capital fled the protocol. By March 2025, Gearbox’s TVL had plummeted to just $83 million — an 85% drawdown that called into question the pretty certain death of the long-term DeFi protocol. This decline wasn’t just a Gearbox phenomenon. It reflected the broader sentiment in the market: DeFi leverage was unsustainable and overextended because it wasn’t underpinned by a fundamental yield engine.
Curated Strategy Vaults Spark a Turnaround
The way back from the edge was through Gearbox’s ‘curator framework’—a system full of permitted pathways. Appropriately authorized managers can now use that frame to launch strategy vaults of their own curation. Each vault has predefined risk parameters, and performance fee schedules that we understand. If the vaults perform poorly, we have a frame through which to see and understand the poor performance.
Some of these new offerings that are most remarkable include:
- Mellow/Lido Strategy Vaults use leveraged wstETH positions to farm Mellow and Symbiotic rewards.
- Yield Vaults for Stablecoins. Designed to perform structured carry trades with USDS, sUSDe from Ethena, and Pendle principal tokens (PTs).
The borrowing demand has been rekindled successfully thanks to these carefully curated strategies. Protocol users have come back to the borrowing market in search of more “sophisticated” yield opportunities. Over the past few months, our total value locked has more than quadrupled, and the amount of outstanding loans has increased steadily. Those are pretty good indicators of how impactful this pivot has been.
Significantly, these new vaults shift from the more volatile, loop-heavy products that defined Gearbox’s earlier phase. Now, the protocol sets itself up as a controlled environment for DeFi-native leverage — an environment appealing to both yield-maximizers and risk-managed allocators.
Cross-Chain Expansion and Long-Term Alignment with GEAR
Even in product design, Gearbox has carved out a path very much its own, and that appeared to be exactly what it intended. Then something unexpected happened. On May 26, 2025, the protocol’s governance approved what is now one of its most audacious moves yet: a single deployment across 23 different networks at once. This includes Base, Blast, Mode, HyperEVM, and testnets like Monad/MegaETH. From a governance standpoint, this might just be the most ambitious thing that Gearbox could do (and has done) in its short lifespan.
From an incentive perspective, Gearbox is also aligning the growth of the protocol with the interests of its token holders. A full 25% of all protocol revenue is now set aside for GEAR token buybacks— a meaningful mechanism that could accrue value to long-term holders, particularly as the protocol scales.
With a relatively modest fully diluted valuation (FDV) of approximately $53 million, Gearbox is positioning itself as a high-upside, revenue-generating DeFi platform in a maturing sector.
Final Thoughts:
DeFi lending is progressing, moving on from merely being about money markets, and Gearbox is carving out a space for itself as a venue for leveraged, modular strategies with institutional-quality risk controls. After an astonishing rise and then a pretty sharp fall, now a methodical rebound, and with the protocol having made fresh deployments, demands for loans from the protocol having grown, and it seeming to have a much smarter vault infrastructure, it is once again a name to watch in this world of DeFi credit.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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