Gearbox: Composable Leverage and Capital Efficiency

As with other financial markets, credit markets are foundational infrastructure in DeFi. Lending protocols like Maker, Compound, and Aave were some of the earliest successful DeFi protocols and currently rank among the largest in terms of TVL. 

DeFi lending protocols owe a large part of their success to date to the ease of use associated with a trustless loan - users simply deposit collateral and withdraw funds. This is enabled by the over-collateralization that is enforced by smart contracts. If the value of collateral falls below a threshold putting the loan at risk, it can be liquidated by a keeper. The trade-off being made, of course, is trustlessness and ease-of-use in exchange for lower capital efficiency.