# Gearbox Markets Overview

> Markdown export of the Gearbox Protocol documentation page for agents and retrieval systems.

Canonical page: https://docs.gearbox.finance/developers/gm-overview
Source file: content/developers/gm-overview.mdx
Section router: https://docs.gearbox.finance/developers/llms.txt
Section full export: https://docs.gearbox.finance/developers/llms-full.txt

Gearbox Markets is a pooled lending model where multiple lenders deposit into a shared liquidity Pool, and borrowers open Credit Accounts to access leverage. It is one of two lending models built on the Gearbox [Credit Account primitive](https://docs.gearbox.finance/developers/intro-101) — the other being [Intent-Based (P2P) Lending](#alternative-intent-based-p2p-lending).

## The Wholesale Bank Model

Think of a Gearbox Market as a wholesale bank:

```mermaid
flowchart TD
    L1[Lender A] -->|"deposit"| Pool["Pool (ERC-4626)\nUSDC, WETH, etc."]
    L2[Lender B] -->|"deposit"| Pool
    L3[Lender C] -->|"deposit"| Pool

    Pool -->|"debt ceiling: 80M"| CM1["Credit Manager A\n(Blue Chip Strategy)"]
    Pool -->|"debt ceiling: 10M"| CM2["Credit Manager B\n(Emerging Assets)"]

    CM1 --> CA1[Credit Account]
    CM1 --> CA2[Credit Account]
    CM2 --> CA3[Credit Account]
```

1. **Pool** — a passive ERC-4626 vault. Many lenders deposit into the same Pool and receive **Diesel Tokens** (dUSDC, dWETH) — yield-bearing receipts whose value appreciates as borrowers pay interest.

2. **Credit Managers** — act as policy keepers. Each Credit Manager defines a specific lending strategy: which collateral tokens are accepted, which DeFi protocols can be used, what leverage is allowed. A single Pool can fund multiple Credit Managers, each with an isolated **Debt Ceiling**.

3. **Credit Accounts** — isolated smart contract wallets where borrowers deposit collateral and deploy borrowed funds. All DeFi operations happen inside the Credit Account. The Credit Manager checks solvency after every operation.

## Risk Isolation

Unlike monolithic lending protocols where bad debt in one asset drains the entire pool, Gearbox isolates risk via Debt Ceilings:

- A Pool holds \$100M USDC
- \$80M allocated to a Blue Chip strategy (low risk)
- \$10M allocated to an Emerging Assets strategy (high risk)
- If the Emerging Assets strategy fails, the loss is capped at \$10M — the remaining \$90M is mathematically isolated

Lenders earn blended yield from all strategies but are protected from tail risk of any single one.

## Quotas: Per-Token Risk Pricing

Quotas are unique to Gearbox Markets. They solve two problems at once:

**Concentration limits** — a hard cap on how much of any single collateral token can back debt across the Pool. This prevents over-concentration in volatile assets.

**Risk-priced interest** — each collateral token carries its own **Quota Rate** on top of the base Pool rate. Riskier tokens cost more to use as collateral.

```
Total Borrow APR = Base Rate (from Pool utilization) + Quota Rate (per collateral token)
```

For example, using WETH as collateral might add +1% to the borrow rate, while using a governance token adds +5%.

## Unified Yield for Lenders

Lenders don't need to choose which strategy to back. The Diesel Token abstracts everything:

- Deposit USDC into the Pool → receive dUSDC
- Interest from all Credit Managers flows back to the Pool
- dUSDC exchange rate appreciates over time
- Withdraw anytime (subject to available liquidity)

## Market Curators

Any entity — institution, DAO, individual — can permissionlessly deploy a Credit Manager and become a **Market Curator**. Curators manage *parameters*, not *funds*:

- Collateral tokens and liquidation thresholds
- Enabled DeFi adapters (Uniswap, Curve, Lido, etc.)
- Fee structure and debt limits
- Interest rate curve parameters

The system is fully non-custodial. See [Gearbox Permissionless](https://docs.gearbox.finance/developers/gp-overview) for how this works.

---

## Alternative: Intent-Based (P2P) Lending

Gearbox Markets uses pooled liquidity. But the Credit Account primitive also enables a fundamentally different model: **peer-to-peer lending** where a single lender and a single borrower agree on terms directly.

| | Gearbox Markets (Pooled) | Intent-Based (P2P) |
| --- | --- | --- |
| **Liquidity** | Many lenders → shared Pool | One lender ↔ one borrower |
| **Rates** | Dynamic (utilization-based) | Fixed or reference-based (LIBOR + 2%) |
| **Risk** | Socialized across Pool LPs | Isolated per deal |
| **Collateral** | Curator-defined allowlist | Custom per agreement |
| **Best for** | DeFi-native strategies, retail | Institutional, RWA, bespoke terms |

In both models, the borrower operates through a Credit Account — the same solvency checks, adapters, and liquidation mechanics apply. The difference is how the capital is sourced.

---

## What's in This Section

- [**Concepts**](https://docs.gearbox.finance/developers/gm-concepts) — Markets, Credit Accounts, Multicall System, Health Factor & Risk
- [**Getting Started**](https://docs.gearbox.finance/developers/gm-start) — Set up the TypeScript SDK
- [**Markets**](https://docs.gearbox.finance/developers/gm-markets) — Query pools, rates, quotas, and insurance state
- [**Credit Accounts**](https://docs.gearbox.finance/developers/gm-accounts) — Open, manage, and close positions
- [**Smart Contracts**](https://docs.gearbox.finance/developers/gm-contracts) — Contract reference (methods, events, parameters)
- [**Guides**](https://docs.gearbox.finance/developers/gm-guides) — Frontend, backend, and bot tutorials