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This little thing is designed to help the shifting to be smoother and trouble-free. It was designed primarily for MTB bikes and what it does is to create a direct routing just before the cable enters the rear derailleur body. That eliminates a big loop of cable housing and prevents an unwanted kink in the shifting cable. It is even more helpful when the shifting cable is routed alongside the seat stay. That means by many MTB or cyclocross bikes. And naturally, as a piece of 90s equipment, it is available in many flashy colours!
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