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Oracle Design (Morpho)

All Notional Exponent Morpho markets list the Notional Exponent vault as its own price oracle.

The vault returns the vaultShare price to Morpho by combining the yieldToken/USD and asset/USD exchange rates that come from the oracles listed on the Trading Modulearrow-up-right.

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Step by step method

On price()arrow-up-right:

  1. Vault gets vaultShare/yieldToken exchange rate. This slowly decreases over time as Notional accrues fees.

  2. Vault gets yieldToken/asset exchange rate by calling getOraclePrice(yieldToken, asset)arrow-up-right on the Trading Modulearrow-up-right.

  3. Trading Module gets yieldToken/USD exchange rate and asset/USD exchange rate from listed price oracles.

  4. Trading Module calculates and returns yieldToken/asset price.

  5. Vault calculates and returns vaultShare/asset price.

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Example calculation

Set up

  • vaultShare = n-sUSDe

  • yieldToken = sUSDe

  • asset = USDC

Step by step

  1. n-sUSDe/sUSDe exchange rate = 0.9999

  2. sUSDe/USD exchange rate = 1.2105

  3. USDC/USD exchange rate = 0.9978

  4. sUSDe/USDC exchange rate = 1.2137

  5. n-sUSDe/USDC exchange rate = 1.2136

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Auditing

Validation

Morpho’s oracle validation tool will not successfully validate Notional Exponent oracles because they do not follow Morpho’s standard format.

To validate Notional Exponent oracles, make the following checks:

  1. Validate the price

    1. Call price() on the oracle

    2. Compare the result to the price you expect. NOTE - Notional’s vault share price will be slightly lower than the yield token price due to protocol fee accrual

  2. Validate the decimals

    1. The oracle decimals is equal to (36 + loan token decimals - collateral token decimals)

    2. Divide the price() return value by the decimals and check that it is correct

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