Is Notional Finance Safe?
Risk Grade: B- (28/100)
Notional Finance is rated as moderate risk — some novel mechanisms, generally well-understood.
Lower risk — well-designed fixed-rate lending with a clean track record, but low liquidity keeps manipulation risk real
A fixed-rate lending protocol that lets you lock in interest rates for 3, 6, or 12 months, bringing traditional bond-like products to DeFi. It manages $50M in deposits and raised $10M. Its B grade reflects a clean track record and well-designed interest rate mechanics, offset by low liquidity that makes the rate-setting market vulnerable to manipulation.
TVL
$3M
Mechanisms
7
Interactions
5
Value Grade
C+
Key Risks for Notional Finance Users
Fixed rates are set by a trading pool with limited liquidity. A single large trader can push rates to artificial levels, causing other users to get bad deals.
Leveraged vaults borrow at fixed rates and invest in variable-rate strategies. If variable yields drop below the fixed borrowing cost, the vault becomes insolvent.
All fixed-rate loans mature quarterly. On maturity dates, a large number of positions settle at once, creating temporary liquidity crunches and price swings.
Top Risk Factors
- •Fixed-rate fCash tokens create interest rate mismatch risk if variable rates diverge significantly
- •AMM-based fixed rate discovery can be manipulated through concentrated liquidity provision
- •Maturity rollover creates periodic liquidity gaps as fixed-term positions expire simultaneously
Risk Score Breakdown
Notional Finance's highest risk area is Vitality Risk (6/10). Here's how each dimension contributes to the overall 28/100 score:
Read the Full Notional Finance Risk Report
This protocol has 2 collapse scenarios. 2 high-severity interaction risks identified. See the full mechanism classification, interaction matrix, and deep-dive recommendations.
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