Summary
Notional proposes to add a veBAL gauge for the NOTE/WETH 80/20 pool, Notional’s staked NOTE Balancer pool.
The incentivization of the 80/20 pool would:
- Help deepen NOTE liquidity on Balancer;
- Reinforce Balancer’s position as the prime DEX to trade NOTE tokens;
- Encourage NOTE token holders to stake their NOTE in the 80/20 sNOTE pool.
References/Useful links
Protocol description
Notional is a protocol on Ethereum that facilitates fixed-rate, fixed-term crypto-asset lending and borrowing through a novel financial instrument called fCash. fCash offers a simple and reliable mechanism for Notional users to commit to transfers of value at specific points in the future. Trading fCash allows users to efficiently move value back and forth through time.
Notional v2 launched in November 2021 and has since then facilitated more than $450M in fCash trading volume to become the leading player in fixed rates lending and borrowing on Ethereum.
The Notional protocol is governed by NOTE token holders. The NOTE price history can be viewed on coingecko
Motivation
This proposal seeks to add a veBAL gauge for the NOTE/WETH 80/20 pool. BAL incentives would help deepen NOTE liquidity, attract more capital to Notional’s staking module, and increase NOTE trading volume on Balancer.
Specification
Governance
The Notional protocol is governed by NOTE token holders. NOTE token holders can vote on governance proposals (governance parameter changes, adding new modules etc.) through Notional’s snapshot.
The Notional forum is also used to discuss potential protocol changes and improvements.
It is worth noting that an admin multisig controls certain portions of the protocol.
Oracles
Notional relies on chainlink oracles to assess if an account is sufficiently capitalized. More specifically Notional relies on the following oracles:
Audits:
Notional’s smart contracts have undergone multiple audits and are subject to a bug bounty program:
- ABDK audit;
- Certora formal verification;
- Code4rena;
- Immunefi $1M bug bounty program
- Consensys audit
Centralization vectors
Notional’s governance mechanisms are still in the early stages of decentralizing. At the moment, key portions of the protocol are governed by a 3 of 5 multisig where all signatories are fully doxxed. The multisig’s admin powers are intended to be phased out and it is something the team is actively working towards.
As a side note, Notional liquidations can be performed by anyone as the flash liquidation contract is open-source.
Market history
NOTE
The NOTE token has been trading on Balancer via the NOTE/WETH 50/50 pool since mid-November 2021. Over that time period, the Balancer NOTE/WETH 50/50 pool facilitated over $75M in trading volume. Following its listing, the NOTE token price was highly volatile reaching an all-time high of $22. Over time and as liquidity improved, the NOTE token price has proven to be less volatile, although it would still highly benefit from deeper liquidity.
sNOTE
On April 4th, Notional launched staked NOTE (sNOTE). When a user stakes his NOTE tokens they are converted to 80/20 NOTE/ETH Balancer LP tokens. The 80/20 balancer pool allows users to stake with 100% of NOTE tokens, proportional shares of NOTE and ETH, or 100% ETH to buy NOTE and stake all at once. As sNOTE holders earn rewards from buybacks, sNOTE tokens become redeemable for an ever-increasing number of Balancer LP tokens.
As of April 8th, the NOTE/WETH 80/20 pool already attracted $4M in TVL and $800K in trading volume. Let’s note that most of the liquidity previously sitting in the NOTE/WETH 50/50 pool has already migrated to the new sNOTE 80/20 pool making the 80/20 pool a prime candidate for a Balancer veBAL Gauge.