Lending and borrowing rates on all the top decentralized finance (DeFi) platforms are dizzyingly variable.
Enter Notional, 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. The startup also announced Monday a $1.3 million funding round from a total of eight investors, including Coinbase Ventures, 1confirmation and Polychain.
“Today, DeFi is a jungle full of high net-worth speculators, self-identified degenerates and meme chasers,” said co-founder Teddy Woodward. “With Notional, you can take advantage of volatility instead of getting hurt by it.”
How fCash works
“It’s a token like any other but it’s got one specialty,” Woodward told CoinDesk in an interview, “which is that upon a certain date, its maturity date, it can be converted or redeemed for one unit, or even have an associated currency.”
For now, fCash represents DAI at a future date in time. By trading between DAI and fDAI, “the rate at which I exchange DAI today for DAI in the future implies an interest rate that is fixed over the period of time until its maturity date,” he added.
Investor Nick Tomaino, founder of 1confirmation, told CoinDesk in an email, “We’re excited about bringing fixed-rate loans to people in a current Ethereum lending environment where variable-rate loans dominate.”
“Ultimately, we want to move DeFi forward,” Woodward said, adding:
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.