Liquid Restaking Leverage

Levered points. Liquid restaking is one of the most popular ways Airdrop Hunters are positioning themselves to make the most of restaking summer. Which protocol is elevating your ability to position yourself for these airdrops to an unprecedented level, and should you ape the token?

Gearbox (GEAR) pools capital from lenders, creating a market for degens to borrow deposits and deploy them to whitelisted smart contracts to farm yields with leverage or trade on margin.

The Protocol’s latest product allows users to lever their exposure to liquid restaking tokens (LRTs) by up to 10x!

 The initial 2.5k ETH borrow limit for Gearbox’s ether.fi weETH pool was hit within 24 hours of deployment, increasing the amount of ETH borrowed from Gearbox by 126% and sending natural yields on deposits surging to 8.5%!

In response to explosive demand for ETH leverage to long LSTs, Gearbox is raising the borrow cap on their weETH pool to 15k ETH and adding support for Renzo’s ezETH with a 15k ETH borrow cap on February 24!

Gearbox’s 25 ETH minimum borrow size for LRT markets will undoubtedly preclude smaller actors from levering up, but it is undeniable that many crypto market participants will be hungry to utilize the Protocol to increase their exposure to restaking points.

While GEAR has nearly doubled in price since Gearbox launched support for leveraged LRT trading, the token appears primed for further upside in the immediate term, as upcoming demand for LRT leverage should boost yields, attracting more TVL to the Protocol and hopefully generate a positive impact on price.

Once airdrops occur from EigenLayer and its associated LRT protocols, however, it is important to keep in mind that traders’ expectations for yield that can be generated on LRTs will fall, reducing their demand for leverage and decreasing the rate they are willing to pay for it, which will compress yields for lenders and could result in TVL outflows from Gearbox.