This section covers liquidity pool governance parameters.
Each Notional V2 liquidity pool is a trading venue for a pair of Cash (cTokens) and fCash tokens and refers to a specific maturity (ex: a Dec 1 2021 liquidity pool would hold Dec 1 2021 fCash). Users can either provide liquidity (add Cash and fCash), borrow (receive Cash in exchange for selling fCash) or lend (receive fCash in exchange for Cash) to these liquidity pools. Learn more about how liquidity providers, borrowers and lenders interact with liquidity pools here.
Interest rates at which users provide liquidity, lend or borrow are a function of Notional's AMM curves and market dynamics. Learn more about Notional AMM curves here.
Purpose of liquidity pool governance parameters
Liquidity pool governance parameters dictate the number of active maturities for each supported currency and influence the shape of each liquidity pool's AMM curve via the following parameters:
Max market index;
Max market proportion.
The purpose of these governance parameters is to:
Activate the appropriate number of maturities per cash group;
Minimize slippage for a specific interest rate trading range;
Set interest rates at specific proportions (e.g. leverage thresholds);
Set the maximum trading proportion for every pool.