Notional Finance

Notional provides fixed-rate, fixed-term lending and borrowing via fCash — tokenized claims on a fixed amount of an asset at a future maturity, traded on an on-chain AMM.

True fixed-rate/fixed-term loans through fCash, rather than variable money-market rates — predictable cost of capital for borrowers and lenders.

- fCash fixed-rate markets: Notional's core product. fCash is an ERC-1155 token representing a claim to a fixed amount of an underlying asset at a specific future maturity. Lenders buy positive fCash at a discount and redeem it 1:1 at maturity for a fixed return; borrowers mint negative fCash to receive cash today and repay a fixed amount later. fCash trades against Prime Cash in maturity-specific AMM liquidity pools where the ratio of Prime Cash to fCash sets the fixed interest rate. This is how Notional delivers fixed-rate, fixed-term lending and borrowing on-chain. - Prime money market (variable-rate lending): Introduced in V3, the prime money market lets users lend and borrow at variable rates, integrating with the fixed-rate markets. Deposits are represented as Prime Cash. Fixed-rate debt automatically converts to variable-rate debt at maturity with no settlement penalty, and variable positions serve as the underlying liquidity that fixed-rate pools trade against. - Leveraged vaults: Whitelisted external smart contracts that execute pre-approved yield strategies (e.g. Curve, Balancer, Uniswap LP or staking strategies) funded by fixed- or variable-rate borrowing from Notional. A user deposits collateral, borrows against it, and the combined capital is deployed into the vault; vault assets are recognized as collateral against the debt, enabling leveraged (up to ~10x on some strategies) exposure while paying interest only on the borrowed portion. Positions are overcollateralized and subject to liquidation. - NOTE governance token: NOTE is the ERC-20 governance token of the Notional protocol. Holders propose, vote on, and implement changes to system parameters and smart contracts (one vote per NOTE) via Notional Improvement Proposals through on-chain governance. NOTE is also used to incentivize liquidity providers and, historically, could be staked (sNOTE) to backstop the protocol.

- NOTE (NOTE) — Token, Governance & utility token - fCash / nTokens (fCash) — Receipt, Fixed-rate lending positions

- Collateral: All borrowing and leveraged-vault positions are overcollateralized in volatile crypto assets (ETH, wstETH, cbETH, wBTC, ARB, etc.). A sharp drop in collateral value can push a position below its required collateralization ratio and trigger liquidation, causing loss to the borrower. - Smart Contract: Notional relies on complex custom contracts (fCash ERC-1155 accounting, maturity-specific AMM pools, external leveraged vaults). Despite 17+ audits, bugs in these contracts or in the whitelisted vault strategy code could lead to loss of funds. - Oracle: Collateral valuation and liquidation for borrowers and leveraged vaults depend on price oracles. Manipulated, stale, or inaccurate oracle prices could cause faulty liquidations or allow undercollateralized borrowing. - Counterparty: Leveraged vaults deploy borrowed capital into external protocols (e.g. Curve, Balancer, Uniswap, liquid-staking tokens). A failure, exploit, or depeg in one of those external strategy protocols would directly impair vault positions and the loans backing them. - Governance: Protocol parameters, collateral listings, vault whitelisting and contract upgrades are controlled by NOTE-token governance. Concentrated NOTE holdings or a malicious/erroneous proposal could change risk parameters or upgrade contracts in ways that harm users.

- Fixed-income bond / zero-coupon note: similar — fCash behaves like a zero-coupon bond: it is bought at a discount today and redeems for a fixed face value at a known maturity date, delivering a predictable fixed yield over a defined term, just like a discount bond.; differs — fCash is a fully on-chain, permissionless, tradable token collateralized by overcollateralized crypto borrowers rather than a corporate/sovereign issuer; there is no credit-rating or centralized custodian, and positions can be exited early by trading on an AMM rather than waiting for maturity or a secondary bond market. - Term deposit / certificate of deposit (CD): similar — Lending on Notional at a fixed rate for a fixed term mirrors a bank CD: you commit funds for a set period in exchange for a known, locked-in interest rate.; differs — Notional is non-custodial and uninsured (no FDIC-style protection), rates are set by market supply/demand in an AMM rather than by a bank, and lenders are protected by on-chain overcollateralization instead of a bank balance sheet.