Create a Market

Prerequisites: The Price Feed Check

Before creating a market, the underlying asset (the token you want lenders to deposit) must be whitelisted in the Price Feed Store of the current chain.

Check Availability:

1. Go to the Price Feed Store section in the interface (click on the needed chain on Instances page)

2. Search for your target token (e.g., USDC, WETH).

3. If it exists: Proceed to the steps below.

4. If it is missing: You must add it first.

   Guide: Add required Price Feeds

Configuration Walkthrough

Market Parameters

1

Asset & Identity

• Pool Version: Select the latest verified version (currently v3.1).

• Underlying Asset: Select the token lenders will deposit (e.g., USDC).

• Price Feed: Select the Oracle feed used to value this asset.

• Market Name: A descriptive name for your dashboard (e.g., "USDC Core Market").

2

Global Capacity (Total Debt Limit)

Max amount of underlying token that can be borrowed from entire pool.

• Tip: Setting this higher than your immediate target TVL will help to avoid frequent updates.

• Note: You will set more granular limits for specific strategies later.

3

Interest Rate Model (The Cost Engine)

The IRM determines the base borrowing rate based on pool utilization. Gearbox uses a Two-Kink Model to create a stable "Optimal Zone" for utilization.

Key Parameters:

• U1 (Optimal Low): The start of your target utilization range.

• U2 (Optimal High): The end of your target utilization range.

• R_base: The interest rate at 0% utilization (The minimum cost of capital).

• R_slope1 / R_slope2: The rate increase as utilization rises to U1 and U2.

• R_slope3 (Penalty): The sharp rate spike after U2. This forces borrowers to repay if liquidity becomes scarce.

Strategy Tip: A common approach is to target 80-85% utilization. Set the borrow rate at this level to be roughly 60-70% of the expected yield of the collateral strategies. This leaves a healthy spread for borrowers while attracting lenders. {% endhint %}

Important: The Curator Fee is additive. The Interest Fee (curator's & DAO's revenue) is charged on top of the rate paid to lenders.

Example: If the IRM rate is 5% and your Interest Fee is 20%, the borrower pays 6% total (5% to LPs + 1% Fee). Ensure your IRM leaves room for this markup while remaining competitive.

• Reference:

  • Desmos IRM visualizer

  • Mainnet ETH pool

  • Mainnet USDC pool

4

Rate Governance (The "Tumbler")

This determines how you manage Collateral-Specific Rates (add-on fees for specific collaterals of increased demand).

• Type: Select Tumbler. This allows the Risk Curator to manually update rates as needed.

• Epoch Length: The mandatory waiting period between rate updates.

  • Example: If set to 2 days, you can only adjust rates once every 48 hours. This gives borrowers predictability.

5

Safety (Loss Policy)

This defines the logic for handling "Bad Debt" (when a position is insolvent even after liquidation).

• Policy Type: Select Aliased.

• Function: This protects Liquidity Providers during market de-pegs. If the market price of a collateral crashes (e.g., a flash crash), the system can switch to a "Fundamental Price" (e.g., Exchange Rate) to prevent selling collateral at a massive loss, effectively pausing liquidations until the market stabilizes.

Next Steps

The Liquidity Pool is now deployed. However, users cannot borrow yet because there are no Strategies (Credit Managers) attached to it.