Principle Ventures

Borrow rates on Gearbox are largely determined by GEAR stakers, who vote to either reduce or increase rates, through so-called gauges. These rates stay the same intra-week, meaning more predictability for borrowers! Easier to manage, less headache… Yesterday's epoch worked as intended for the majority of the assets but had an interesting outcome for USDe on Arbitrum, with votes to increase rates outnumbering votes to lower rates. How do borrow rates for USDe go back below 10% APYs? What are GEAR wars on gauges? How can you monitor future rates? Quick summary! 👇 To begin with, if you are holding a USDe position, make sure you take into account the increased borrow rate for this week when you manage your position. How do the rates go back to sub 10% by the next epoch, though? The answer is, again, gauges. Such a model has beneficial outcomes for UX in terms of predictable rates intra-week, however, it requires involvement from stakers. Given that Arbitrum deployment is new, not many have had the chance to stake their GEAR yet, so a disbalance of rates occurred for USDe. Check back in a week to see the rates, probably, come back to normal! What Gauges do... Gauges democratise how rates work. Users stake their GEAR to increase or decrease rates as they deem fit. If they vote to increase rates, the rates for the week move towards the upper end of the range. If they vote to decrease, the rates move towards the lower end. The final rates depend on the ratio of the votes to increase and decrease rates. Moving the power of managing rates to GEAR holders. Epochs end at 12PM UTC every Monday, and the rates are updated across assets right after. Rates on Gearbox are designed to be predictable and thus usually remain in a close range between two epochs. The GEAR staked in gauges has an unstaking period of 28 days. How to use Gauges... Gauges use a rolling vote. You vote once, and that vote carries forward until you decide to change it. Voting for the rate of an asset is fairly simple, head over to: app.gearbox.fi/gauge Choose the network you want to vote on and the asset you want to vote for from the list and click on it. Select whether you want to increase or decrease rates using your staked GEAR. The UI projects the APY for the upcoming epoch and your impact on it to make sure you vote with your GEAR accordingly. This also enables users to monitor rates and avoid any surprise spikes. You can do this for any asset you can access leverage on. GEAR wars... Gauges enable lenders and borrowers to change the rates in their favour. With some power users calling it "Rate Warfare". While lenders and borrowers have opposite goals, one should think of this mechanism more as a negotiation than a war. If lenders were to significantly increase rates, the borrow demand would plummet and lead to lower utilisation and interest earned. Similarly, if borrowers were to reduce the rates too much, it'd lead to lenders withdrawing and borrow rates spiking. Voting for balanced rates thus remains the ideal action. The art of GEAR wars, now on Arbitrum: app.gearbox.fi/gauge ⚙️🧰

"Alpha" or "news" in DAOs usually exist only because people don’t read. Can’t blame them though; who reads dozens of pages of thought processes?! Some who do though, find the alpha... It's not hidden, it's not centralized planning. Just lower awareness 👀 So let's fix it 🧵 1/N