Notional Fixed Rate Update πŸ—“οΈ September 2022

Teddy Woodward
Teddy Woodward

*Phuture<>Notional Savings Vaults are almost here* Welcome to the latest edition of the Notional Monthly Update! Β Follow the latest news on Twitter or join the Notional community on Discord. β€Œβ€Œβ€Œβ€Œ

πŸ—’ Summary Notes β€Œβ€Œβ€Œβ€Œ

β€Œβ€Œβ€Œβ€Œβ€Œβ€Œβ€Œβ€Œ-Phuture USDC Savings Vaults Launch
-Two Leveraged Vault Strategies Incoming!
β€Œ-Read: ImmuneFi Payout Post-mortem
-Audits: 100k audit contest ongoing w/ Sherlock until Oct. 10
-πŸŽ‰πŸ’°: Notional received a $75k BAL grant to defray audit costs on the leveraged vault Balancer/Aura strategies

β€ŒπŸ“Š Monthly Protocol Statsβ€Œβ€Œβ€Œβ€Œ

β€Œβ€Œβ€Œβ€Œβ€Œβ€Œβ€Œβ€Œ-TVL: $82,337,465 (-21.9% vs Aug.)
β€Œβ€Œ-Sep. Loan Volume: $62,370,000 (11.5x vs Aug.)
β€Œβ€Œ-Protocol Revenue: $42,245 in trading fees (7.06x vs Aug.) and $31,456 in COMP incentives (+12% vs July). Β Total: $73,701
β€Œβ€Œβ€Œβ€Œ-Current Lend (USDC 12m) APY: 4.03%β€Œ
β€Œβ€Œβ€Œβ€Œ-Current LP (USDC) APY: 6.38%β€Œ

Integration: USDC Savings Vaults from Phuture (USV)

Savings vaults from Phuture will be live THIS WEEK! We're excited about this integration because it makes accessing Notional's fixed rate yields EVEN easier.

What's unique about USV?

The USDC Savings Vault offers an optimized interest rate because Phuture invests into a blend of Notional's three and six month maturities. By dynamically allocating capital to whichever maturity has the highest interest rate at the time, investors can be sure their capital is being managed effectively.

Depositing into USV removes the cost and complexity of managing maturities for users, AND with the dynamic allocation of funds into the best-performing maturity, users know they are getting maximum capital efficiency. What else to expect?

Premium performance:
Borrowers are willing to pay a premium to borrow USDC at a fixed rate on Notional, so Phuture can pass this onto USV investors to offer them yields several percent higher than the variable rate lending platforms.

Access to funds at anytime:
USV is a decentralized, on-chain product. Users can withdraw and redeem USV for USDC regardless of the market conditions.

Suitable for all investors:
USV supports high deposit volumes with little impact on rates. It provides low entry costs, with no minimum investment or preferential treatment.

This is just the start of several more bond-like integrations coming live - others are coming soon from IndexCoop & SpoolFi...

Leveraged Vaults: Fixed borrowing costs, leveraged returns

We introduced leveraged vaults last month - here's a recap and a few more details on the 2 launch strategies

Leveraged vaults allow DeFi users to borrow at a fixed rate from Notional and deposit those funds directly into smart contracts executing specific yield strategies. The vault’s assets (borrowed and initial funds) are held as liquidatable collateral against the user’s loan, allowing the user to borrow 2-20x their initial deposit depending on the vault. Leverage gives users concentrated exposure to yield and turbocharges their returns.

Launch Strategies & Calculating Returns

Strategy: USDC is placed into the Balancer/Aura boosted stablecoin pool, the LP tokens are then staked in Aura, and the incentives are periodically harvested and reinvested.

How to Use: To initiate the position, the user brings 100k USDC initial capital and borrows 700k USDC from Notional against it at 4% fixed for three months and deposits a total of 800k USDC (100k initial capital + 700k borrowed) into the vault.

Example Returns: Over the three month term, the vault earns an average of 8% APY, turning 800k into 816k. At maturity, the user pays off the debt + interest on notional (707k USDC) and keeps the remaining 109k USDC. This nets the user a 36% APY on their 100k USDC over the three month term. *Amounts/Borrow APY/Yield estimate are illustrative

Balancer/Aura wstETH/ETH LP strategy: Users will borrow ETH from Notional to deposit into a strategy that puts the ETH into the Balancer ETH/wstETH pool, stakes the LP tokens on Aura, and periodically harvests the incentives. Max leverage: 10X

The Latest from Teddy on DeFi Rates

The merge has come and gone, and it's left the crypto community struggling to come up with a new narrative. Where do we go from here? What's next for DeFi rates? On Ethereum L1, probably not much. I think we'll continue to see low levels of stablecoin activity and a gradual deterioration in liquidity that will consolidate the position of leading protocols and squeeze out smaller and undifferentiated players. We've entered the depressive phase of the market cycle - protocols will die off with a whimper now, not a bang.

Protocols are increasingly turning to things like undercollateralized lending to generate yield for their users. For example, Ribbon recently announced a product which will see it funnel user cash to trading firms like Wintermute on an uncollateralized basis. There's clearly a market for this. Borrowers are willing to pay very high rates to borrow uncollateralized, and the collapse of half the crypto CeFi lenders has opened up space for new lenders to take their place. Continue reading the full post.

The Weekly DeFi Interest Rate Review | Notional Finance | Substack
DeFi ecosystem interest rates analysis. Click to read The Weekly DeFi Interest Rate Review, a Substack publication with hundreds of readers.


$NOTE holders can make a Notional Improvement Proposal (NIP) via the Commonwealth forum. Voting is gas-free and happens on Snapshot.

[NIP-12] Update governance parameters

The proposed parameters (15) changed Notional’s markets AMM curves to make them more appealing to borrowers. Result: Passed w/ 100% support.

β€Œβ€ŒπŸ«‚Community Events

πŸ“ž Β Twitter Space w/ Teddy & Β Phuture Finance Team

ICYMI, here's a recording of the Twitter space.

πŸ“ž Β Twitter Space w/ CTO Jeff Wu & Sherlock CEO Jack Sanford

ICYMI, here's a recording of the Twitter space.

πŸ—žοΈNotional in the News

A roundup of Notional media mentions and appearances by the core team.

Leveraged Vaults on Bankless!

CEO Teddy Woodward on Token Terminal's 15-Minute Fundamentals podcast

β€ŒAbout Notional FinanceπŸ“ˆ

Notional is the #1 Ethereum-based protocol for borrowing and lending at fixed rates and fixed terms. With more than $600M in total fixed rate lending volume, Notional is now a top 10 lending protocol providing core DeFi infrastructure.

Notional’s latest product launch, leveraged vaults, is slated for Q3 2022. A new DeFi primitive built on fixed rate borrowing, leveraged vaults execute specific yield strategies while collateralizing the vault assets, allowing users to maximize capital efficiency by taking up to 10x leverage.

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 $600M in total lending volume.

To find out more, follow Notional on Twitter @NotionalFinance, subscribe to the newsletter, join the Discord, or check out the website to learn more.β€Œβ€Œβ€Œβ€Œ

Monthly Updates

Teddy Woodward

Co-Founder and CEO