Tenors

A tenor refers to the amount of time between the inception of a financial contract, and that contract's maturity. For example, a loan with a three month tenor executed on May 5th 2021 would mature three months later on August 5th 2021. But on June 5th 2021, we would still say that this loan had a three month tenor even though it would be only two months away from maturity.

Tenor Cadence

Each currency type in Notional refers to the same global tenor cadence.

The tenor cadence is a string of tenors that dictates the maturities of active liquidity pools in each currency. Notional's tenor cadence is as follows:

Active Tenors

Governance parameters will indicate which tenors are open for lending and borrowing for a particular currency type. Not all tenors will be active for every currency type. For example, a currency may only have three active tenors out of the possible seven. In this case, users could lend or borrow for three months, six months, and one year.

Governance can change the number of active tenors for a currency type but the tenor cadence remains constant. This means that a currency with three active tenors will always support the first three tenors in the cadence - currently three month, six month, and one year.

Active Maturities

The actual maturities of the active liquidity pools are calculated as offsets from a reference time. The lengths of the offsets correspond to the tenors.

The current block time does not necessarily correspond to the reference time. This means that the length of time until a liquidity pool's maturity won't necessarily match that liquidity pool's tenor. For example, if the reference time is March 1st and the current time is March 15th, the three month maturity will still be June 1st even though June 1st is less than three months away from the current time.

Quarterly Rolls

Every three months, the reference time used to calculate the active liquidity pool maturities rolls forward three months. This occurs when the current block time surpasses what was the three month maturity. Rolling the reference time forward updates the active maturities and rolls the liquidity pools forward as well. All active liquidity pools become inactive upon a roll and new pools are instantiated at the new set of active maturities.

The nToken account automatically withdraws all its liquidity from each inactive liquidity pool and distributes the sum total of its cTokens to the newly active liquidity pools per the nToken's deposit shares. This ensures that the new liquidity pools will be liquid and tradable from the moment they open up.