Fixed interest rates and yield in DeFi present an opportunity to give your clients exposure to attractive returns on stablecoin and crypto assets. You already know how to identify and mitigate risk in traditional markets, but with DeFi, this new technology also brings with it unique market dynamics and risks. Volatile rates and DeFi hacks are the biggest potential impediments to confidently investing you and your clients’ money.
There are two protocols that have solved for unstable interests and exposure to risk on-chain–both have quickly dominated in their respective market sectors. Notional Finance’s fixed rates paired with Protocol Cover from Nexus Mutual is quickly becoming the closest thing to a risk-free rate in DeFi.
Beat the Market (Even) With Fixed Rates
The long-term yield on the US Treasury coupon bonds is generally accepted as the risk-free rate–but with endless money printing driving inflation through the roof, risk-free increasingly means negative real returns.
While the majority of over-collateralized borrowing in DeFi is subject to variable interest rate loans, Notional provides fixed rate products to DAOs, institutions, and individuals who want to plan for future obligations with fixed-term, fixed-rate loans.
With fixed rates lending on Notional, anyone can lock in their rates on ETH, USDC, WBTC and DAI for up to one year. This “organic” yield comes directly from what borrowers are paying on the platform to lock in their rates - so if the market experiences short-term price volatility, this cannot affect yields.
With yields on USDC hovering around 4-6% and 5-7% for different maturities on DAI, fixed rates don’t have to mean sacrificing yield. Because most other fixed DeFi protocols do not also serve borrowers, yields on Notional consistently outperform and stand alone in the DeFi ecosystem.
Time-Tested DeFi Coverage
Notional gives users the ability to lend assets at fixed-rate, fixed-term, which allows you to confidently make projections when you are advising clients. Notional provides the best fixed-rate product in DeFi, but you still need to minimize your exposure to the unique risks present in DeFi.
Nexus Mutual gives people a way to hedge against the unique risks in on-chain markets. With Protocol Cover from Nexus Mutual, you can protect against the major risks present in DeFi.
A Protocol Cover policy protects against:
- Code being used in an unintended way (e.g., exploits, hacks)
- Economic design failure
- Severe oracle failure
- Governance attacks
Purchasing cover from Nexus Mutual is the best way to secure your productive assets and protect against a loss of funds when you are earning interest in DeFi protocols. Since launch in 2019, Nexus Mutual has paid out more than $4.5m in claims to members affected by past exploits. The claims process is fully transparent, and anyone can review the past claim decisions.
Institutions and individuals make up the mutual’s membership. The mutual currently protects over $425m in productive assets for members with active cover policies. No other coverage provider on-chain offers more comprehensive protection, nor do they have the ability to underwrite such large cover policies as the mutual does.
When you are advising your clients on the best opportunities in DeFi, be sure to protect their productive assets and your interests by securing their deposits with Protocol Cover from Nexus Mutual. Becoming a member and buying cover for your on-chain assets will allow you to maximize yield with a deposit in Notional Finance, while minimizing your exposure to smart contract and technical risks in DeFi.
Notional Finance and Nexus Mutual are proud sponsors of the 2022 Plannerdao Crossroads conference , the premier event for forward-thinking financial planners looking to increase their knowledge and practical experience with the crypto industry. This year's conference will be held in Kansas city April 25-26. Find out more about the conference here.
About Notional Finance📈
Notional is the first decentralized, Ethereum-based protocol for borrowing and lending at fixed rates and fixed terms. With variable rate lending, DeFi can only serve a small segment of the crypto lending market because variable interest rates don’t provide the certainty that lenders and borrowers require. Notional fixes this by creating a true market for lenders and borrowers that empowers individual investors, business owners and institutional investors.
After raising a $10 million Series A in May 2021 from some of the top VC firms, including Coinbase Ventures, Notional’s protocol was relaunched on 11/1 with a host of new features as well as the NOTE governance token. Notional is now a top 10 DeFi lending protocol, with more than $395M in total value locked and nearly $500M in lending volume.
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