Introducing Notional Exponent

Today we are excited to announce the next step in Notional’s journey and the world’s first leveraged yield protocol: Notional Exponent.

Notional Exponent does two things:

1. Tokenizes new yield strategies specifically designed for leveraged yield users.
2. Builds on top of lending protocols like Morpho to give leveraged users access to deep borrow liquidity.

Notional Exponent will enable new leveraged yield strategies that were never possible before and give users access to deep liquidity and attractive rates for their leverage.

What this means for you

If you like leveraged yield strategies on Notional V3, you’ll love Notional Exponent. Here’s what you’ll get:

• New leveraged yield strategies that weren’t previously possible.
• Deeper borrow liquidity, higher strategy capacities.
• Lower borrow rates, higher total APYs.
• More strategy options, faster strategy listings.
• The most advanced leveraged yield strategy UX in DeFi.

Core innovations

Notional Exponent launches with three core innovations:

1. Smart redemption. Smart redemption makes it possible to redeem a staked token for its underlying (ex sUSDe -> USDe) in a Notional vault without taking the vault shares off the lending protocol. This enables:
   1. Costless exits. You can now unwind a leveraged position by redeeming your collateral instead of market selling it and paying fees and slippage.
   2. New leveraged yield strategies. Smart redemption makes it possible to liquidate yield tokens that have redemption delays and don’t have tradable liquidity. This makes it possible to list these yield tokens as collateral!
2. Cross-protocol leverage optimization. Notional Exponent will allow users to easily migrate their leveraged position between lending protocols (starting with Morpho) where the tokenized yield strategy is listed as collateral. If the available borrow rate on a user’s strategy is lower on a different protocol, the user can migrate their borrow to that protocol in one click without any disruption to their strategy.
   
3. Leveraged staked LP token strategies. Notional Exponent will enable users to do leveraged yield strategies using LP tokens that are staked on yield boosters like Convex. These strategies exist on Notional V3 today, but have never been possible before on larger lending protocols that have much deeper liquidity. Notional Exponent will make it possible to do these strategies in size at low borrowing costs.

These core innovations translate to new, high returning strategies with a UX that’s optimized for the leveraged yield user. 

Launch timeline

Initial development of Notional Exponent is complete, and we’re targeting a public launch of the protocol this fall. Our audit schedule is locked in - Notional Exponent will undergo a full protocol audit contest with Sherlock starting on July 2nd and another full protocol audit with MixBytes shortly after that.

In the meantime, stay close and get ready. We’ll be steadily publishing info related to the launch of Notional Exponent over the summer, including details of our exciting kickoff incentive campaign! 

A Change in Strategy

Notional Exponent represents a major evolution of Notional’s core product. Notional was founded in 2020 to bring fixed rate lending to DeFi and we’ve been working on lending products ever since. 

But after years of work and iteration, we’ve found more product market fit with leveraged yield strategies than we ever have with fixed rate lending.

Notional Exponent narrows our focus on what we do best. Our leveraged yield products are unique, they have clear product market fit, and we have built deep expertise in this niche. 

This shift in focus means that we can devote all our time and resources to building new strategy types and improving the UX of a single product without any distractions.

We believe that refocusing our efforts entirely on leveraged yield strategies will enable us to build a truly best-in-class product for our users.

What’s happening to Notional V3?

Notional V3 will continue running indefinitely but the Notional team will gradually withdraw support for the V3 protocol over time.

• Notional will continue to host the UI and maintain liquidation infrastructure for the long term, even as we shift focus to Notional Exponent.
• Notional will continue to list new leveraged vaults to service Notional V3 users for the rest of 2025.
• $NOTE liquidity incentives will be wound down to zero by the end of 2025.

Notional V3 NOTE liquidity incentive schedule (annual emission rates):

What about fixed rates?

Fixed rates are critical for leveraged yield strategies and they are deeply ingrained in Notional’s DNA. While fixed rate borrowing won’t immediately be an option when we launch Notional Exponent, work is underway to make fixed rate borrowing options available in the near future. 

Don’t worry anon, we’re not leaving fixed rates behind. Stay tuned for announcements!

What’s happening to the $NOTE token?

NOTE is and always will be Notional’s central value accrual mechanism. When Notional succeeds, NOTE succeeds. This move won’t change that.

Notional V3 revenues will continue to support NOTE buybacks and yield for NOTE stakers. Notional Exponent will also contribute to NOTE value accrual - more details on this in the coming months.

Notional Exponent kickoff incentives

We’re starting Notional Exponent off with a bang. Expect an exciting incentive campaign to get Exponent off to a fast start after launch.

APYs on Notional Exponent leveraged yield strategies should be good already - our kickoff campaign will make them even better! 

We’ll publish details on our initial yield strategies and launch campaign later this summer.

A New Chapter for Notional

Notional Exponent marks the beginning of a new chapter for Notional. We’re honing in on what we do best - leveraged yield - and building with clarity and conviction. Make sure to follow us on Twitter and subscribe to our newsletter to stay up to date on the rollout of Notional Exponent.

We’re incredibly excited about what’s ahead and grateful to our community for sticking with us through this evolution. Get ready for the best leveraged yield product you’ve ever seen. The best is yet to come!