Notional Finance is a decentralized protocol built on the Ethereum blockchain that provides a platform for fixed-rate, fixed-term lending and borrowing of crypto assets. It leverages smart contracts to offer predictable and reliable financial services in the DeFi space, addressing the volatility issues typically associated with variable interest rates.
Notional Finance operates on the Ethereum blockchain, utilizing a financial instrument called fCash, which is an ERC-1155 token. This token represents future cash flows, enabling fixed interest rates for both borrowers and lenders. Users engage with specialized liquidity pools where they can trade between cash and fCash, with the exchange rate determining a fixed interest rate. The protocol also uses smart contracts for governance and management of financial operations, managed through the NOTE token.
Notional Finance has several use cases, including:
Notional Finance was co-founded by Teddy Woodward (CEO) and Jeff Wu (CTO). It launched on the Ethereum blockchain and later expanded to Arbitrum, a layer-2 network, to enhance its services. Significant milestones include securing a 500,000 ARB grant for liquidity incentives and releasing Notional V3, which improved security features. The protocol has integrated deeply into the DeFi ecosystem, focusing on leveraging yield strategies and liquidity provision while ensuring robust smart contract security.