In recent months, the decentralized finance (DeFi) landscape has seen a resurgence of interest in various protocols, particularly Euler Finance and Maple. Yet, a quieter player, Gearbox Protocol, is making notable strides that merit attention. Once recognized for its innovative approach to leveraged credit strategies, Gearbox has revitalized its presence in DeFi by implementing strategic enhancements and launching new products while extending its reach across multiple blockchain networks.
Gearbox’s initial rise to prominence was fueled by the growing popularity of leveraged restaking strategies, particularly involving liquid-staking tokens (LSTs) such as rsETH and ezETH. Users could supply these tokens as collateral to borrow ETH, subsequently looping their positions to earn restaking rewards. This approach garnered significant traction, propelling the protocol’s total value locked (TVL) to an impressive $553 million by May 2024. However, the euphoria was short-lived. When ezETH lost its peg and the incentive to restake began diminishing, users quickly withdrew their capital. By March 2025, Gearbox’s TVL had plummeted to a mere $83 million, marking an 85% decline and prompting widespread speculation about the protocol’s viability. This sharp downturn mirrored a broader trend in the market, where DeFi leverage practices were increasingly regarded as unsustainable due to a lack of foundational yield mechanisms.
In response to these challenges, Gearbox introduced its ‘curator framework’, designed to guide users in launching bespoke strategy vaults that adhere to predefined risk parameters and performance fee structures. This structured model enables managers with proper authorization to curate investment paths that not only facilitate transparency but also create a pathway for value recovery following the earlier downturn. Among the noteworthy new product offerings are the Mellow/Lido Strategy Vaults, which utilize leveraged wstETH positions, and Yield Vaults dedicated to stablecoins aiming to execute structured carry trades with tokens like USDS and Pendle principal tokens (PTs). The renewed demand for borrowing has demonstrated the efficacy of these curated strategies, with Gearbox’s TVL increasing more than fourfold in recent months and outstanding loans steadily rising.
Crucially, these new vaults mark a departure from Gearbox’s previous focus on high-volatility, loop-centric products. Instead, the protocol has established itself as a carefully managed environment for DeFi-native leverage, appealing to both yield-seeking investors and those prioritizing risk management. This recalibration reflects a thoughtful adaptation to the evolving landscape of DeFi lending, which is transitioning from basic money markets toward more sophisticated investment solutions.
Gearbox has also embarked on an aggressive expansion strategy, exemplified by its governance decision on May 26, 2025, to deploy across 23 different networks in a single move. This ambitious initiative encompasses various platforms, including Base, Blast, and HyperEVM, alongside testnets like Monad and MegaETH. Such a broad deployment not only positions Gearbox among the more forward-thinking protocols in DeFi but also signifies a commitment to diversify its operational ecosystem.
In terms of incentives, Gearbox has aligned the protocol’s growth trajectory with the interests of its token holders by allocating 25% of all revenue towards buybacks of its GEAR token. This mechanism promises to enhance value for long-term holders, particularly as the protocol scales its operations. With a fully diluted valuation (FDV) hovering around $53 million, Gearbox is carving out space as a potentially high-upside, revenue-generating platform in a maturing DeFi sector.
As Gearbox navigates the complexities of the DeFi environment, its evolution from a meteoric rise to a significant decline, followed by a methodical recovery, underscores the shifting dynamics within the industry. This narrative illustrates the resilience of the protocol as it adapts its offerings to meet the demands of a more discerning investor base. With new deployments and a revitalized interest in loans signaling a return to growth, Gearbox Protocol is once again positioned as a key player in the DeFi credit space.
The developments surrounding Gearbox raise important questions about the future of DeFi lending. As the market continues to evolve, the effectiveness of innovative mechanisms like the curator framework will be critical in addressing investor concerns over sustainability and risk. Investors, industry players, and other stakeholders will undoubtedly keep a close watch on how Gearbox capitalizes on its strategic pivots amid an increasingly competitive landscape.
As the financial landscape evolves rapidly, stakeholders and analysts alike will be eager to assess the implications of these changes. Gearbox’s journey exemplifies the complexities and potential within the DeFi sector, highlighting the need for ongoing innovation and robust risk management practices in an environment characterized by volatility and rapid change. For those interested in understanding these dynamics, staying informed will be essential as the DeFi credit ecosystem continues to unfold.
This evolving landscape not only impacts existing participants but also poses a broader question about the future of decentralized finance as a whole. What strategies and innovations will emerge next? The answers could redefine how individuals and institutions engage with digital assets and leverage opportunities in this burgeoning space. Follow CashNews.co to stay informed with serious, timely analysis every day.