The DeFi userbase grows as the fixed rate revolution brings stability and certainty for the next wave of institutional investors
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DeFi Slate Fam,
Fixed Borrowing & Lending Volume is ABSOLUTELY MOONING!
Within 5 months of Notional V2’s launch, Notional Finance has facilitated over $450M in total fixed rate loan volume. To put this into perspective… this volume is OVER 10x of what was transacted in the first 18 months of v1.
It’s as clear as day… The fixed rate revolution is bringing stability and certainty for the next wave of institutional investors which is CRITICAL in order to grow the DeFi user base.
Read more about Fixed borrowing & Lending, Innovative Infrastructure Integrations, Version 2.1 Upgrades + Staking, and AAVE 3 support in this post written by our good friend Kyle Long, Head of Marketing for Notional Finance over at Notional.
DeFi Slate Team
How Notional V2.1 Lays The Groundwork For Fixed Rates All Over DeFi
Guest post by Kyle Long, Head of Marketing for Notional Finance
Fixed Borrowing & Lending Volume is Mooning
In just the five months since the launch of v2 in November 2021, Notional Finance has facilitated more than $450M in total fixed rate loan volume. This represents more than 10x the volume transacted in the entire first 18 months of v1. We are seeing the general thesis for why DeFi needs Notional start to play out: Fixed rates are the innovation that brings stability and certainty for the next wave of institutional investors.
Capital allocators in traditional finance depend on the stability of bond products. The total global bond market reached $128 trillion in 2020, and even in a low-to-negative rate environment, global bond issuance grew 19.9% year-over-year. The global bond market was worth $17.7 trillion more than the global stock market in 2020, demonstrating the continued demand for stable, income-generating assets. In order to grow its user base, DeFi also needs straightforward products that offer this same stability.
Innovative Infrastructure Integrations
Easy-to-use bond products are about to hit DeFi in a huge way thanks to a new partnership between Notional and IndexCoop with their upcoming suite of $FIXED token products. These tokens will allow investors to allocate into Notional’s fixed rates with the same ease of buying any other ERC-20 token.
The suite of exchange-traded bond products will give token holders exposure to high, stable yields while also automating the management of the underlying positions. The tokens also give holders immediate liquidity through secondary markets and don’t require direct gas costs or user management around maturity rolls.
Thanks to extensive market research by the Indexcoop team, we believe that many of the first users of the DAI FIXED product will likely be DAOs who want to earn yield on their treasuries but don’t want to divert precious time and team resources to actively managing these positions. We know that crypto-native institutions need crypto-native financial solutions and we’re already providing the most important financial infrastructure that they need to succeed.
Maybe the next wave of institutional crypto adoption WON'T be hedge funds and tradfi – but simply crypto institutions themselves more fully adopting DeFi strategies.
We're excited DAO treasuries are already starting to allocate to Notional. Why fixed rates for DAOs? 🤏🧵👇
— Notional (@NotionalFinance) March 7, 2022
As core, base level infrastructure for Defi, another driver of demand for Notional’s fixed rates is already coming from the composable nature of the protocol. Recently, Yearn Finance allocated $50M+ to Notional to boost the returns in the DAI and USDC vaults. Yields on Notional are 100% organic and do not depend on token prices, making the returns dependable not matter what the broader market is doing.
The yvUSDC vault on @iearnfinance allocates to four protocols:
Not bad company 😎
— Teddy Woodward (🥩 , 🥩) (@teddywoodward) February 28, 2022
The certainty that fixed rates deliver provides the essential foundation for Notional’s composability throughout DeFi.
“DeFi cannot just be for degens — it must accommodate all risk tolerances and user groups. We need on-chain bond products that offer stable, high returns for investors, DAOs, and institutions who want to keep their capital in crypto and grow it in a sustainable, risk-adjusted way.” – Allan Gulley, IndexCoop
Version 2.1 Upgrades + Staking
Notional’s latest release adds a much-requested staking module that will start to pass revenues to NOTE token holders. Notional V2 has been generating significant revenues since launch. As one of the largest lenders on Compound, Notional has accrued COMP tokens worth $1M+ at time of writing.
Notional V2 has also accrued reserves in ETH, DAI, USDC and WBTC as the result of revenues from lending and borrowing. The newly-deployed treasury management module enables these profits to be extracted into the Notional treasury and sold strategically to benefit Staked NOTE holders.
NOTE holders are able to stake 80/20 NOTE/WETH Balancer LP tokens to receive sNOTE. The use of 80/20 weights instead of 50/50 weights in the previous pool minimizes potential impermanent loss for sNOTE holders. Rewards come from the reinvestment of protocol revenues, trading fees on the Balancer pool, and additional NOTE incentives and accrue as additional LP tokens.
In the event of a collateral shortfall, up to 50% of sNOTE capital can be used to recapitalize the Notional system. This provides extra insurance to Notional users and strengthens the protocol.
The NOTE staking module went live April 4th.
Aave v3 Support
The release also adds the ability for Notional to list aTokens in Aave v3. Aave support will enable Notional to list a wide variety of assets for lending and borrowing that are not currently available on Compound. In addition, this upgrade lays the groundwork to deploy Notional on Layer 2 blockchains where Aave is available (Compound is currently only available on mainnet). Aave v3 support will become active pending the Aave v3 deployment to Ethereum mainnet.
What will be the next collateral type accepted on Notional? Want to see your community’s token listed for borrowing and lending? Make your voice heard and make a proposal in Notional’s governance forum. We’re fixing the future of finance, and fixed rates need your voice.
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