Notional Monthly Update 🗓️ April 2022
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.
🗒 Summary Notes
-FIATDAO onboarding fCash
-Staking Visualization Dashboard
-How Notional supports the crypto-native economy
-Notable Impressions content ambassador program launched ($$)
-Deep Dive: How nToken returns work
-ICYMI: Q1 Treasury Report, Protocol Framework (mStable) for Using Fixed Rates
📊 Monthly Protocol Stats
-Total Loan Volume: $49,936,000
-Protocol Revenue: $208,662 ($54,026 in trading fees + $154,636 in COMP incentives)
-Current Lend (USDC 6m) APY: 4.59%
-Current LP (USDC) APY: 5.57% (1.18% variable + 4.39% NOTE)
FIATDAO Onboarding fCash as Collateral
As expected, we're starting to see Notional's fCash get onboarded as collateral around the DeFi ecosystem. fCash tokens are the building blocks of the Notional system - transferable tokens that represent a claim on a positive or negative cash flow at a specific point in the future.
We recently saw Yield integrate fCash collateral, which meant users could take advantage of very low borrowing rates on Yield using their lend positions on Notional as collateral. The result? Juicy APR for anyone willing to do a little recursive lending and borrowing work!
Next we're seeing FIATDAO vote to integrate fCash, which should open up interesting opportunities for users to earn yield by lending fixed on Notional, then minting $FIAT against their lends to access immediate liquidity to pursue other investment opportunities.
Where will fCash pop up next? Take a look at our developer docs and roll up your sleeves at your favorite protocol to get started building on top of Notional's fixed rate infrastructure.
$NOTE Staking Treasury Visualizations
Reinvestments and rewards have already started flowing back to $NOTE stakers, and currently more than 1/3 of all circulating NOTE is staked and earning roughly 100% APY. Not bad!
The ShipooorDAO team that put together our dashboard page has also put together a great new info tab on sNOTE where anyone can track the buybacks, incentives, and pool values.
Due to the fact that funds are in Balancer Pool Tokens (80/20 NOTE/WETH), we understand there is some confusion about how to value the rewards earned. Please check out your portfolio page where you'll see "NOTE INTEREST EARNED". Here you can see the increase in value to your portfolio denominated in NOTE terms. Hop into our Discord if you have any questions or technical issues!
As a reminder, returns for sNOTE come from three sources:
-Protocol revenue re-investments. Notional earns transaction fees each time a user lends or borrows and COMP incentives. COMP incentives will be used for buybacks.
-Additional incentives. At launch, the community will allocate 30,000 NOTE per week in additional incentives to sNOTE holders for a minimum of 6 weeks.
-Trading fees on the Balancer pool. The Balancer pool earns a .5% trading fee any time a user swaps between NOTE and wETH. Trading fees increase the value of the LP tokens held in the sNOTE pool.
Notional & the Crypto Economy of the Future
Notional is closing in on nearly $500M in total borrowing and lending volume in just six months since the v2 launch! This result confirms one of our main theses: DeFi’s true promise is not integrating with the financial system of the past, but dominating the financial system of the future.
Conventional wisdom says that real world assets and institutions will bring the next wave of capital and innovation into defi. But is that really the case? In the short- and medium-term, we see immense opportunity in being a leader in serving the crypto-native economy's investment banking needs.
Why? Crypto assets make better collateral than physical assets. Crypto-native assets are cheap to store and trade, and have no geographical constraints on transfer. Anyone in the world can bid on your collateral during liquidation with the click of a button. By contrast, physical assets are expensive to liquidate and harder to borrow against.
For example, the average home foreclosure costs lenders 26% of the value of the loan according to S&P. That means the highest-quality physical asset you’ll ever own has a 26% liquidation discount. The inefficiencies of physical assets limit what traditional lenders can profitably lend against. In practice, this means that you can only borrow against assets that are highly valuable (like your home), and at expensive rates relative to your risk of default.
In contrast, we are at the very early stages of a new crypto economy composed of crypto-native actors like DeFi superusers, protocols & DAOs, which have ballooning assets and treasuries. According to Messari, DAOs currently hold $11 billion in assets, up 40x in just one year (Jan 2021-2022). Crypto-native users need a crypto-native financial system.
This new financial system will be built to blockchain specifications, not the specifications of legacy financial frameworks. For this reason, Notional is crypto-first. We are committing to building products to meet the needs of crypto-native users like protocols and DAOs, not traditional financial institutions.
The next product we launch will position Notional squarely in the middle of the DeFi ecosystem. What exactly is coming? Stay tuned...
Notable Impressions - Content Creator Ambassador Program
Are you a threadooor? An educatoooor? But most of all, a fixed ratooooor??? If so, we want you to share you knowledge and passion for Notional - and we'll pay you for it based on the impressions your educational tweets that feature Notional receive.
Interested in our staking program? Or perhaps you can explain how Notional is the most capital efficient of any fixed rate protocol? Or maybe you've just got some dank memes that highlight Notional's value prop. Whatever you bring to the table, we've got a spot (and cash) for you.
Check out more info on our community hub page, and we'll see you on CT.
Deep Dive Read: How nToken Returns Work
nTokens are an innovative mechanism for providing liquidity on Notional. Although they can appear quite complex, nTokens offer an overlooked source of profits with limited risk.
nTokens in a Nutshell
Users provide liquidity to Notional by minting nTokens. nTokens enable users to passively earn returns from providing liquidity to Notional across all active maturities in a simple way. To mint nTokens, users deposit any of the four accepted assets (ETH, DAI, USDT, WBTC) into Notional. The protocol will then automatically wrap the tokens supplied into the corresponding cTokens (users can also directly provide cTokens). It will then split the cTokens between the active liquidity pools (40% for the 3-month contract, 40% for 6-months and 20% for the 1-year contract).
Return Drivers for nTokens
We can decompose returns into four parts: 1) Variable APY 2) NOTE Incentives Yield 3) Trading fees 4) Impermanent Loss.
To continue reading the full post, click here.
Meme of the Month:
🗞️Notional in the News
A roundup of Notional media mentions and appearances by the core team.
Upcoming: May 6, 2022 at 4pm CET
Token Metrics: Macro Trends & Future DeFi Rates
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 & nearly $500M in borrowing and 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.
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