DeFi Fixed-Rate Lending: Notional Investment Brief 2024

Frequently Asked Questions

01.What is DeFi fixed-rate lending?

DeFi fixed-rate lending locks a borrow or lend rate for a set term at trade time, unlike variable-rate pools where rates float with utilisation every block. Notional implements this through fCash, a zero-coupon token that represents a fixed cash flow at a specific future maturity date, priced through an on-chain liquidity pool rather than a rate-setting committee.

02.How does Notional differ from a variable-rate lending pool?

A variable-rate pool like a two-slope Aave reserve reprices every block from current utilisation, so a lender's yield changes daily. Notional instead lets a lender buy fCash at a discount to face value, locking a known return to a known maturity date, closer to a discount bond than a floating deposit account.

03.Who is the target audience for this fixed-rate lending brief?

This brief is written for family offices, venture principals, and treasury allocators evaluating on-chain term structure products as a transparent alternative to variable-rate DeFi lending ahead of committing capital in 2024.