We are excited to announce that leveraged vaults are now live in public beta!
Leveraged vaults are a huge step forward for Notional and for all of DeFi lending. Leveraged vaults increase capital efficiency and turbocharge user returns with highly leveraged exposure to whitelisted DeFi yield strategies. Read more about leveraged vaults in our previous blog post.
Notional is bringing one initial leveraged vault out of private beta: the Balancer/Aura wstETH/ETH LP vault. At current interest rates, this vault yields as much as 35% APY, depending on the amount of leverage that a user takes.
This vault borrows ETH from Notional at a fixed rate, provides liquidity to the wstETH/ETH pool on Balancer, stakes the LP tokens on Aura, and then periodically harvests and reinvests the BAL and AURA token incentives.
Initial capacity will be limited to 2,500 ETH. As the vault is utilized, Notional will periodically increase the capacity.
Closed beta results
This public beta launch follows a three week closed beta period. This period allowed the Notional team to do necessary testing on Mainnet as well as significantly improve the UI in response to user feedback. The leveraged vault UI still has room for improvement and early users should anticipate some bumps, but active DeFi users should not have too many issues. The team is always available in Discord to answer users’ questions as they arise.
The results from the closed beta period also give us an idea of what to expect as leveraged vaults go fully live and capacity is opened up. Here are some usage statistics from the closed beta:
Number of users: 4
ETH deposited: 110 ETH
ETH borrowed: 693 ETH
ETH 3M interest rate change: 2.4% -> 3.3%
ETH 6M interest rate change: 2.9% -> 5.4%
These statistics demonstrate a few things. First, leveraged vaults are a high-impact product. It took only four users and 110 ETH in deposits to produce 693 ETH borrowing demand. Second, leveraged vaults mean higher interest rates for lenders. Leveraged vault borrowing demand pushes interest rates higher and gives lenders the opportunity to fix high, attractive interest rates.
These early results are encouraging and help confirm our expectation that leveraged vaults will be a significant driver of Notional’s growth and user activity going forward.
The future of leveraged vaults
More leveraged vaults are coming to Notional, including the Balancer/Aura boosted stablecoin LP vault and others that are currently in development. We are extremely excited to expand our offering and give users the opportunity to maximize their capital efficiency and earn turbocharged returns with a broad set of vaults.
Thanks for being with us on our journey to bring capital efficiency to DeFi lending and transform the financial system.
The Notional Team
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