🗒 Summary Notes
-$NOTE Staking Module is under audit with Code Arena!
-IndexCoop proposal to launch a suite of $FIXED rate tokens w/ Notional
-Q4 Market Report w/ rates & treasury info
-Read: How liquidations & settlements work
-ETH Denver - Come say hello!
📊 Monthly Protocol Stats
-Total Value Locked: $344,949,372
-Total Loan Volume: $10,235,449
-Current Lend (USDC 6m) APY: 9.356%
-Current LP (USDC) APY: 8.516% (2.373% variable + 6.413% NOTE)
-Protocol Revenue: $228,574
$NOTE Staking Proposal Under Audit - 75K USDC Prize Pool
Progress on the creation of a staking module for NOTE holders is moving forward with the relevant codebase currently undergoing an audit contest with Code 4rena. We were particularly impressed with the strong response from our v2 audit contest and are happy to work with their vibrant community of code 'wardens'.
ICYMI, the staking module will enable NOTE holders to earn returns on their tokens while simultaneously providing liquidity for NOTE and insurance for funds on the protocol. Part of the protocol's revenue will be used to buy back NOTE and give it to the sNOTE holders as rewards.
👉 Join the Code 423n4 Discord for contest details 👈
$FIXED: IndexCoop Proposal to Launch Fixed Rate Tokens
This month, IndexCoop released an exciting proposal that would see Notional's yields incorporated into a tokenized fixed rate yield product. This would be a first for DeFi and could be an important driver for protocol usage moving forward. IndexCoop believes it would abstract away the 'difficulty' of interacting directly with the protocol and help socialize the gas costs associated with maintaining fixed rate positions in the long term, among other benefits. The IndexCoop tokens would serve as a bond ETF-style product that investors could 'set and forget'.
In decentralized finance, Set Protocol and the Index Coop have already introduced ETF investing. Tokens that represent thematic portfolios are tradeable across decentralized exchanges, granting investors easy access to the most promising projects in crypto. However, these products are subject to high volatility, with risk/return profiles more similar to stocks than bonds.
In DeFi today, there are no bond investment vehicles or exchange tradeable tokens. The best alternative is to deposit stablecoins into variable interest rate protocols or exit DeFi altogether for centralized services like BlockFi. This gap is due to the absence of fixed-rate functionality in DeFi, which is a prerequisite for originating bonds. At the most fundamental level, a bond must have a defined date for repayment and a stated interest rate, but DeFi hasn’t had these features.
The author of the proposal at IndexCoop also wrote a great piece, titled Why Defi Needs Bond Products - that delves into the huge total addressable market that these products serve - check it out!
Quarterly Market Review
Building on the year-end quarterly review we released last month, we are also going to be producing a market and treasury report quarterly. Check it out below!
You can also download the full PDF here:
How Liquidations & Settlements work
Timely settlements and liquidations are essential to the overall health of the protocol, ensuring that funds owed to lenders are always available.
Settlements refer to a third party rolling an account’s unpaid debt forward upon maturity while liquidations refer to a third party buying an under-collateralized account’s collateral at a discount in order to recapitalize it.
Our resident Risk Analyst, Pierre-Yves Gendron, covers how settlements and liquidations work in Notional v2, and how liquidators can profit from the various opportunities offered by the protocol.
Read the full post here.
Coming to ETH Denver?
If you're going to be in Denver for the conference, leave a comment on the thread below, or hit reply, and we'll let you know the details of our happy hour with free food and drink, courtesy of Notional, Euler Protocol & Aztec. We can't wait to meet some friendly faces!
📞 Community Calls
We had our last community call on 1/21 - if you missed it, check out the recording below. We'll post on Twitter as soon as we have a date set for our February call!
Meme of the Month
🗞️Notional in the News
A roundup of Notional media mentions and appearances by the core team.
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 $350M in total value locked.
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