Lenders deposit funds into Gearbox and receive interest payments from borrowers.

Gearbox is a non-custodial lending protocol built on Ethereum. Gearbox was founded by Mikhail Lazarev and launched in 2021.

GEAR tokenholders own and govern the protocol. They currently take a cut of the total interest paid by borrowers (revenue).

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Lending

Gearbox

# Gearbox Expenses Methodology

## 1. Overview

Expenses measures the total cost incurred by Gearbox to operate its business. Included in this metric are asset incentives paid to liquidity providers and traders, as well as bad debt absorbed by the protocol treasury. GEAR asset incentives are distributed via direct distributors, Merkl, and marketing campaigns. Bad debt expenses are represented by the portion of liquidation losses covered by the treasury's pool shares rather than being passed on to lenders.

## 2. Data sources

- **Blockchain events**: `Claimed` events from `Distributor` contracts, `Repay` and `IncurUncoveredLoss` events from `PoolV3` contracts, and ERC-20 `Transfer` events, covering Ethereum, Monad, and Plasma
- **External data**: End-of-day price feeds for the GEAR asset and pool denomination assets

## 3. Step-by-step calculation

### Component A: Asset incentives from distributor claims and trader rewards

- **Purpose**: GEAR asset distributions from Gearbox V1 and Gearbox V3 reward contracts and marketing campaigns are captured
- **Logic**: ERC-20 `Transfer` events are parsed where the sender is a recognized distributor contract or the marketing multisig (for specific trader-reward transaction hashes), the recipient is not the treasury, and the transferred asset is the GEAR asset. These transfers are aggregated to determine the total native GEAR asset incentives distributed directly by the protocol.
- **Key fields**: `value` (amount), `to_address` (recipient), `token_address` (asset)

### Component B: Asset incentives from Merkl claims

- **Purpose**: GEAR asset distributions managed through Merkl are captured
- **Logic**: `Claimed` events from the Merkl `Distributor` contract are parsed where the claimed asset is the GEAR asset. The raw claim amounts are extracted and aggregated.
- **Key fields**: `amount` (claim amount), `token` (asset)

### Component C: Treasury-absorbed bad debt calculation

- **Purpose**: Liquidation losses absorbed by the protocol treasury for Gearbox V3 pools are calculated
- **Logic**: `Repay` and `IncurUncoveredLoss` events from `PoolV3` contracts are parsed to extract total losses and uncovered losses. The treasury-absorbed loss is calculated as the total loss minus the uncovered loss (bounded at a minimum of zero). This absorbed loss is then multiplied by the protocol's treasury share (which is 100% for V3.0 pools, 0% for specific curator pools, and 50% or the on-chain split for V3.1 pools) to determine the protocol's share of the bad debt.
- **Key fields**: `loss` (total loss), `uncovered_loss` (uncovered loss), `pool_address` (pool identification)

### Component D: USD conversion and final aggregation

- **Purpose**: All expense components are normalized to USD and aggregated
- **Logic**: Native asset incentive amounts and bad debt amounts are normalized by their respective decimal precisions. These normalized amounts are multiplied by end-of-day asset prices to convert them to USD. The USD values for asset incentives and bad debt are summed daily to produce the final Expenses metric. Cost of revenue is treated as zero since splitter payments are distributed directly to curators.
- **Key fields**: `timestamp` (timing), `price_usd` (asset price)

*This methodology was automatically generated by Token Terminal's methodology analyzer.*

Total project operating and incentive expenses.

GearboxGEAR

Expenses

Expenses

Competitive landscape

Chain breakdown