Notional

Notional operates an Ethereum-based platform that enables users to lend or borrow cryptocurrency assets at a fixed rate of interest. With Notional, users can borrow, lend, stake, and provide liquidity for several Ethereum-based currencies, including DAI, ETH, USDC, and WBTC. Notional has also introduced a tokenization system for assets and repayment obligations called fCash.

Notional overview (promotional material)

fCash is a financial instrument that allows Notional to tokenize payments in different cryptocurrencies, such as ETH or USDC, at designated points in the future.

fCash is also used to track users' debts. For instance, fCash is employed when two parties enter into a contract in which a lender gives 100 USDC to a borrower, who agrees to repay 105 USDC at a later date. fCash is how Notional defines the future payment of 105 USDC from the borrower to the lender. Future payment from borrower to lender using fCash is tracked in the following way:

• The lender receives +105 fUSDC (an asset redeemable for 105 USDC on the date agreed to by the two parties).
• The borrower receives -105 fUSDC (an obligation of 105 USDC due on the date agreed to by the two parties).
• The exchange rate between USDC and fUSDC at the specific maturity represents the fixed interest rate that users receive on Notional.

Notional's alternative way to provide liquidity is through nTokens. When lenders provide liquidity into liquidity pools, they receive nTokens as ERC-20 assets. nTokens represent tokenized maturities for the deposited cryptocurrency and can be redeemed for a share of Notional’s total liquidity in a given currency. For example, if a liquidity provider (LP) puts ETH into a liquidity pool, they receive nETH.

nTokens can be utilized as collateral for borrowing. Furthermore, liquidity providers earn passive income with nTokens for holding them, on trading fees (when people borrow their assets), on fCash interest rate, and when receiving NOTE incentives.

Notional introduced cTokens in the second version of the protocol as interest-bearing assets that represent settlement upon maturity. These tokens increase returns for liquidity providers in a similar manner to nTokens. Since liquidity providers can deposit cTokens into liquidity pools instead of the underlying currency, their investment returns are higher. Additionally, cTokens enable fixed-rate loans to accumulate variable cToken rates as soon as they reach maturity.

Interview with Notional's co-founder Teddy Woodward

Immunefi hosts a bug bounty program concerning Notional's smart contracts focused on preventing the following issues:

• Loss of funds
• Voting manipulation
• Functions not in line with the intended behavior of the smart contracts
• Redirection of funds
• Injection of text

Rewards are distributed according to the impact of the vulnerability based on the Immunefi Vulnerability Severity Classification System, a simplified 5-level scale. There are separate scales for websites/apps and smart contracts/blockchains, involving factors such as the consequence of exploitation and the likelihood of the exploitation's success.

Critical web and low and medium smart contract bug reports are required to come with a proof of concept in order to be eligible for a reward. Critical smart contract vulnerabilities are paid at 10% of economic damage, primarily based on funds at risk. Other aspects, such as PR and branding effects, may also be taken into consideration. For critical-level vulnerabilities, there is a minimum reward of 50,000 USD. The four vulnerability levels and their respective rewards are listed below:

• Critical level - Up to 250,000 USD
• High level - 50,000 USD
• Medium level - 5,000 USD (proof of concept required)
• Low level - 1,000 USD (proof of concept required)

Participants must file W9 and W2BEN forms in order to receive bounty rewards. Payouts are handled directly by Notional and may be made in USDC, DAI, ETH, USDT, or the project token.