What is Notional?
Founded in 2020 by Jeff Wu and Teddy Woodward, Notional Finance is a new Ethereum protocol that allows crypto traders to borrow and lend digital assets at pre-determined rates. For cryptocurrency users, the procedure of crypto lending with a fixed percentage yield has grown into a vast sector. Traders, particularly in the United States, have been able to lend and borrow with complete assurance and confidence as a result of this capacity. There's no need to be concerned about the extra loan installments.
sizeable national Finance's loan and borrowing processes are exceedingly user-friendly, particularly for those who are already familiar with Defi lending markets. The only crypto that may be borrowed is DAI, which has a maximum limit of 997 DAI because the platform is still in beta.
A loan's maturity date is to be chosen by the user, which ranges from three weeks to three months and a half. Users then select and confirm the amount of collateral they desire to deposit, with a minimum of 140 percent required.
The borrowed amount is promptly paid out to the Ethereum wallet as soon as the loan is validated, just like any other Defi lending platform. The loan position can be seen on the Notional dashboard. It's also worth noting that, while interest rates are fixed, the collateral level isn't guaranteed to stay the same.
By ensuring that borrowers pay back their debts at maturity, Notional ensures that lenders obtain the profits they expect. Every borrower must first secure high-quality assets such as Ether and wrapped Bitcoin as collateral, similar to how a bank may use your home as seizeable property on a mortgage. This means that if a user wants to borrow 100 USDC, they must have collateral worth at least 150 USDC - a minimum collateralization level of 150 percent.
Borrowers are obliged to retain varying amounts of collateral against their debts, depending on the risk level of their collateral: DAI only requires 120 percent collateralization, while ETH requires 150 percent.
Notional Finance currently offers fixed-rate debt on ETH via an on-chain AMM with dynamic curve sensitivity. This is an excellent chance for Defi traders who want to lock in their borrowing expenses and get the most out of it.