Notional Finance, a protocol on Ethereum that facilitates fixed-rate, fixed-term crypto-asset lending and borrowing through a novel financial instrument called fCash, today announced the completion of a $10 million Series A funding round from institutional investors.
This funding round will be used to build up the Notional Finance team which will enable the company to strengthen its offering in fixed interest rate borrowing and lending on Ethereum.
In the three months since launching in mid-January 2021, the protocol has attracted more than $17M in TVL and executed $9.5M in loans. The use cases for fixed-rate products are well-known.
People borrow money so they can buy a house or a car. Businesses borrow money to invest in their expansion. In either case, they might pay off their debt over years or even decades.
“We believe that it won’t take long for fixed-rate borrowing to eclipse variable-rate borrowing in DeFi, the same way it does in traditional financial markets. Notional enables fixed-rate debt on Ethereum using an entirely new on-chain automated market maker with dynamic curve sensitivity.”
– Teddy Woodward, CEO & Co-Founder of Notional
In order to plan for the long-term, people need to know what their costs will be – they need fixed rates. Notional’s fixed-rate lending protocol on Ethereum gives users the certainty needed to plan for the future without relying on entrenched and exploitative legacy financial institutions.
Notional users are borrowing against their crypto to invest in their businesses, purchase land, and even ditch their mortgage altogether by becoming their own lenders. This was a monumental first for DeFi and other traditional use cases are already being enabled by Notional.
“Fixed-rate debt is 25x the size of floating rate debt in traditional capital markets. Yet in DeFi, this ratio is inverted, as the vast majority of debt protocols are floating rates. By creating a marketplace for fixed-rate, long-duration debt, Notional will bring the next cohort of institutions into DeFi. ParaFi is excited to double down on our Notional investment ahead of the v2 launch.”
– Ben Forman, Founder of Parafi Capital