Notional Monthly Update πŸ—“οΈ June 2022

Teddy Woodward
Teddy Woodward

Welcome to the latest edition of the Notional Monthly Update! You can also follow the latest news on Twitter or join the Notional community on Discord. β€Œβ€Œβ€Œ

πŸ—’ Summary Notes β€Œβ€Œβ€Œ
β€Œβ€Œβ€Œ-$500M in loan volume milestone hit in May - now up to ~$550M end of June
-New NRC: Reduce LP incentives by 15%
-Market notes from Teddy
-New product audits update
-Historical data exporter tool now live
-Read: Treasury Reinvestment Strategy Review

β€ŒπŸ“Š Monthly Protocol Statsβ€Œβ€Œβ€Œ
β€Œβ€Œβ€Œ-TVL: $86,304,930 (-58% vs May)
β€Œ-Total Loan Volume: $61,200,000 (+360% vs May)
β€Œ-Protocol Revenue: $56,343 in trading fees (+58% vs May) and $68,090 in COMP incentives (+82% vs May)
β€Œβ€Œβ€Œ-Current Lend (DAI 12m) APY: 5.15%
β€Œβ€Œβ€Œ-Current LP (USDC) APY: 7.88% (-.07% variable + 7.95% NOTE)β€Œβ€Œβ€Œ

A Note From Teddy on Market Volatility

Peak fear has passed. Just a few weeks ago it felt like every new day brought fresh and shocking revelations of some insolvency, or some overlooked systemic risk that was in the process of imploding, or some other thing that was going to send it all to zero. We've been through a lot.

But my guess is that the tide has turned. Yes, further CeFi lender insolvencies could crop up. And yes, there could be additional forced liquidations from these guys. But I think that's more or less been priced in. I wouldn't expect more of these kinds of headlines to produce further waves of panic. My guess is that what we've got ahead of us here from a market's perspective is just a protracted period of time that's going to feel like stagnation.

So what does this all mean for DeFi rates? For the foreseeable future, more of the same I'm afraid. I wouldn't expect rates to move much from here. DeFi might just be about to get *gasp* boring for a while.

Ultimately I think the question that remains to be seen is, are users willing to lend their money into the crypto ecosystem, either via DeFi or CeFi, at unsubsidized interest rates? Because the reality is that the unsubsidized rate of return in crypto might actually be far lower than users have come to expect. The capital is still in the system for now, but as this CeFi lending drama plays out and we extend further into a bear market, we'll see how much of it sticks around.

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And now, for a little hopium:

fCash Wrapper out of Audit -> Levered Vaults Under Audit

Bear markets are for building, but truth be told our pace hasn't changed. We are continuing to ship, and we're excited for our latest tool to be out of the Code Arena audit process: the fCash wrapper. The wrapper bridges the fCash ERC1155 standard to ERC20 and ERC4626 tokens. This is a key tool that will allow integrations to happen at a much quicker pace. For a refresher on the importance of fCash in the Notional system, read up here.

Among many others, here are a few potential use cases on the (near) horizon:

  • Integration with Set Token infrastructure to build the FIXED product suite.
  • ERC4626 allows dead simple lending for DAOs and yield aggregators to get exposure to high yielding fixed income.
  • Trading fCash on Uniswap v3 or Balancer (Balancer fCash boosted pool anyone?)

Separately, our levered vaults collateralized yield strategies product just went under audit on July 4 - we'll have more news in the next update when we have a clearer timeline for release!

New Historical Data Exporter Tool

Notional has a new feature on the info dashboard. To celebrate and help get the word out, we launched a Notional Blitz bounty to encourage web3 data analysts to check it out and explore interesting data, trends, & correlations in the fixed rate market. We'll be sharing those on social media over the next few weeks, so keep your eyes out for them.

Check out an example of how to use the tool below!


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

Request For Comment: Incentives Reduction Proposal

The latest NRC is up - after an initial discussion period, we expect this to go to a vote shortly, and if passed be implemented within the next 1-2 weeks.

We propose to reduce NOTE incentives for LPs by -15%. More specifically, we propose to lower the NOTE annual incentives rates by -12% for ETH & USDC, and by -18% for WBTC & DAI:

We propose to lower the DAI incentive rate slightly more than the USDC incentives rate as we have historically seen more USDC trading volume ($300M) than DAI trading volume ($200M) on Notional. Thus we believe it is a better use of capital to incentivize higher liquidity for USDC trading pools.

We also propose to lower the WBTC incentive rate slightly more than the ETH incentive rate since the current nWBTC incentive yield (7.5%) is higher than the nETH incentive yield (5.5%).


  • Less NOTE dilution (more NOTEs being held by the DAO’s treasury);
  • Lower NOTE selling pressure from yield farmers.


  • Possible loss of liquidity from short-term focussed LPs.

Even by reducing the incentive emission rates slightly, we believe most LPs will continue to provide capital to Notional as the NOTE incentive yields will still remain highly attractive compared to other opportunities in the markets (ex: Lending on Compound, providing liquidity on Curve). Ultimately, this reduction in incentives is an important step toward making Notional sustainable.

Read the full post here.

ICYMI: Levered Vaults are Notional's Next Product Innovation

The next upgrade that the Notional team is working on are levered vaults. Levered vaults will allow users to borrow from Notional and deposit the cash they borrow directly into a whitelisted smart contract that executes a specific yield strategy.

The key innovation here is that the assets in the yield strategy will act as collateral for the loan and will be potentially eligible for liquidation by Notional. This will enable the user to earn the difference between the returns of the strategy and the fixed borrowing cost on Notional while requiring a minimal amount of capital from the user.

We believe that the net effect of this will be substantial borrowing demand on Notional, consistently high interest rates available to lenders, and increased fees for LPs and NOTE holders. Let’s take a look at an example. One of the first levered vaults we launch might be the Balancer boosted stablecoin LP vault. With this vault, a user will be able to borrow from Notional to put that capital directly into a strategy that provides liquidity to Balancer’s boosted stablecoin pool.

For a full example breakdown of how the economics and mechanics work, check the full post here.β€Œ

β€ŒπŸ«‚Community Events

Rook Treasury Panel Discussion w/ CEO Teddy Woodward

Teddy sits down with other Defi Buidlers on the Rook Treasury Tuesday Panel - link:

πŸ“ž Onboarding 101

Come hang out with us on Friday July 8 & Thursday July 21st at 3:00pm EST and let us introduce you to Notional! We'll be going over all the basics of how Notional works, walking you through lending, borrowing, minting of nTokens (LPing), and staking NOTE. This is your chance to ask us any questions you might have and become a Notional pro :). Direct event link.

πŸ—žοΈNotional in the News

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

Notional on Bankless

Notional listed on Blockspot

β€ŒAbout Notional FinanceπŸ“ˆ

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 $500M 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€Œ

Monthly Updates

Teddy Woodward

Co-Founder and CEO