Notional (NOTE)

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According to its website it is a fixed rate lending and borrowing protocol on Ethereum (30-10-2020).


"Notional Finance has come out of stealth with $3M in liquidity following a closed beta over the past quarter. Notional users can lend and borrow the stablecoins DAI and USDC at fixed rates using ETH or WBTC as collateral."


"Teddy Woodward and Jeff Wu conceived Notional Finance in November 2019 at a hackathon event in San Francisco. In January 2020, they launched the project on Ethereum."

"Notional is a new protocol that lets users lend and borrow crypto at fixed rates. After 10 months in stealth, the platform launches in beta on Ethereum today."

Audits & Exploits

"Over the past month, we have been helping @NotionalFinance on their quest to full decentralization. Our teams combined efforts to raise the protocol's initial score by 20%!

In the beginning, we noticed that Notional puts an emphasis on rigorously documenting the functions and architecture of its software. Likewise, the team clearly takes development very seriously, as shown by an active GitHub and an excellent ratio of Python tests to code. The protocol further demonstrates its commitment to well-developed software with multiple pre-deployment audits by ABDK Consulting. An additional formal verification by @CertoraInc ensures that the software's algorithms are correct and work as intended.

Even so, we noticed that Notional had room to improve the accessibility of its more important documentation; smart contract addresses (this was resolved very quickly) and admin controls. Admin control docs are especially non-trivial to us, and we made sure to focus on this. Subsequently, Notional's @wuprotocol did a tremendous job at detailing the upgradeability of the protocol's smart contracts, their ownership parameters, and their plan to gradually move towards a system that is fully decentralized.

Still, there is work to do. For now, we will continue to work together on improving the admin control documentation. In the medium to long term, Notional will also deploy a combination of Timelock and Governor Alpha that will result in a substantial scoring increase. In addition, Notional is currently working on deploying code coverage reports as an expansion of their current testing suite. We are looking forward to these additions!"

  • Previously scored a 79% (10-2-2021); "Notional has been audited by OpenZeppelin on December 22nd, 2020. Notional Finance was released October 7th, 2020" With the comment: Lets call it "Fixed" quality right across the board.  Way to go guys."
  • Received a full audit report from Open Zeppelin (13-1-2021).
  • It was in unaudited beta (30-10-2020).


  • From Blockthreat (4-2-2022):

"Notional patched a critical double counting bug after it was responsibly disclosed by 0x60511e57 using Immunefi."

"Notional Finance post mortem, verification missed vulnerability due to logic error."


  • From their docs (10-2020):

"Notional is currently governed by its founding team. The team holds admin keys to the contracts and hosts the user interface. The Notional team is committed to decentralization. We will pursue a strategy of progressive decentralization in which we will give up our admin keys, relinquish control of the protocol, and hand it off to the community."

Admin Keys

"Notional is described as fully upgradeable here. Notional's ownership and administrative control consists of a 3 of 5 MultiSig architecture. Notional's Pause Guardian was clearly detailed here. Notional mentions that their upgradeable structure does not include a timelock, but this decision is not further justified."



"Token holders will have full control over the on-chain treasury"



Token allocation


"Token holders will have full control over the on-chain treasury, the protocol’s risk and collateralization parameters, and any smart contract upgrades."

Token Details

"The lending protocol has community governance with NOTE tokens serving as proportional voting power. As a monetizing mechanism, Notional users can stake NOTE tokens, which are then converted into 80/20 NOTE/ETH Balancer LP tokens. In return, stakers receive sNOTE tokens as rewards, redeemable for Balancer LP tokens. Although this can change with community voting, on a weekly basis, Notional allocated 30,000 NOTE tokens to incentives sNOTE holders. The total NOTE supply is 100M, nearly all of them in circulation. In the case of unexpected liquidations, Notional will tap into NOTE reserves to pay back lenders."

  • From their docs (2-2021):

"fCash tokens are the building blocks of the Notional system. fCash are transferable tokens that represent a claim on a positive or negative cash flow at a specific point in the future." fCash are ERC1155 tokens.



"With 752 commits and 49 branches this is a healthy development history"


How it works

"Cash allows users to move capital through time. Let’s say you want to borrow $10,000 worth of DAI from Notional. Accounting for the interest rate, you agree to pay 10,500 DAI at a future date, typically between 3 weeks to one year for stablecoins and up to six months for ETH and WBTC.

The borrower then receives the tokenized form of that debt obligation, expressed as -10,500 fCash, accounting for that future payment and redeemable for 10,500 DAI on maturity date. This is why there is a prefix “f” before Cash, wherein the value difference between DAI and fDAI is the accumulated interest rate. In other words, when borrowers deposit their collateral, they mint fCash tokens, which lenders receive as fCash.

In turn, these fCash tokens can be exchanged for other cryptocurrency, such as ETH, WBTC, USDC, or DAI. At the end of the line, borrowers receive the asset they want, keeping in mind to pay it off on maturity date. If they fail to repay the loan, borrowers risk liquidation of their overcollateralized assets. Of course, because of their stable nature, stablecoins have a lower overcollateralization at 120%, while WBTC and ETH have an overcollateralization level at 150%. Outside of repaying the loan, borrowers can extend the future maturity date, which is called rolling on their contract.

An alternative way to provide liquidity is through nTokens. When lenders provide liquidity into liquidity pools, they receive nTokens as ERC-20 assets. They represent tokenized maturities for the deposited cryptocurrency, redeemable for “a share of Notional’s total liquidity in a given currency across all active maturities.”

For example, if LP provided DAI stablecoin into a liquidity pool, they receive nDAI. Likewise, for nETH and nUSDC. nTokens themselves can be used as a collateral for borrowing. Furthermore, LPs earn passive income with their nTokens for simply holding them, on trading fees (when people borrow their assets), on fCash interest rate, and when receiving NOTE incentives."

  • From their docs (2-2021):

"Lenders trade cash for fCash and earn a fixed interest rate. Liquidity providers capitalize Notional’s liquidity pools and earn variable trading fees. Each time a lender lends or a borrower borrows, they pay a transaction fee to liquidity providers in that pool.

Notional liquidity pools are similar to Uniswap pools in that there are buyers, sellers, and liquidity providers that facilitate trading. In the case of Notional, buyers and sellers are lenders and borrowers. Liquidity providers facilitate that lending and borrowing and earn transaction fees as compensation."

"Lenders can provide capital with a guaranteed return at specific maturity dates, while borrowers can take out a loan knowing exactly what their interest payment will be. Notional is betting its custom AMM, designed to keep slippage low no matter how far away maturity is."



"Notion presents the protocol’s V2 system, which among other things introduces longer-dated maturities."


Liquidity Mining



Other Details

Oracle Method

"The protocol's oracle source is documented at this location. The contracts dependent are identified. Notional does not detail any front-running mitigation strategies. However, its fixed rate and liquidity architectures inherently mitigate front running liquidation opportunities. This protocol documents flashloan countermeasures at this location."

Privacy Method


Their Other Projects


  • Can be found [Insert link here].


"Roughly 280k Dai was supplied to Notional’s first fixed-interest earning token, called fDai, according to this Tweet."

Projects that use or built on it


"Projects including UMA, Yield Protocol and Mainframe are also testing the fixed lending market, all with different approaches to ensure tokens will trade at par upon maturity. Larger DeFi protocols like Aave offer fixed borrowing rates but are yet to support fixed lending rates, although this is likely to be a part of Aave V2 in the coming months."

Coin Distribution

Pros and Cons



Team, Funding, Partnerships, etc.


  • Full team can be found [here].
  • Teddy Woodward and Jeff Wu


"The startup announced Monday a $1.3 million funding round from a total of eight investors, including Coinbase Ventures, 1confirmation and Polychain."

"[Got] support from investors including 1confirmation, IDEO, Parafi, Nascent, Coinbase and Polychain."