Max market index
Each cash group in Notional V2 corresponds to a different currency (e.g., DAI, ETH or, WBTC). For every supported cash group, the max market index parameter defines a cash group’s number of active tenors from the following tenor cadence:
- 3 month
- 6 month
- 1 year
- 2 year
- 5 year
- 10 year
- 20 year
As an example, a max market index parameter of 2 would imply that both the 3 month and 6 month tenors are active for a specific cash group, whereas a max market index parameter of 5 would mean that the 3 month, 6 month, 1 year, 2 year and 5 year maturity pools are active for a specific cash group. Learn more about tenors here.
We selected a max market index value of 3 (3 month, 6 month and 1-year tenors) for USDC & DAI and a max market index value of 2 (3 month and 6 month tenors) for the ETH and WBTC cash groups.
This decision aims to better understand the market demand for the 1-year tenor relative to the 3 and 6 month tenors for the stablecoin cash groups and from there assess the market demand for other longer-dated maturities (e.g. 2 year tenor). This approach is prudent, as activating longer-dated tenors from launch would require to direct part of the nToken account’s liquidity to these tenors (see Deposit shares section). Moreover, longer-dated tenors can drastically increase the amount of ifCash residuals the nToken has to hold therefore making nTokens less liquid.
As for the ETH and WBTC pools, activating only the 3 month and 6 month tenors aims to better understand the market dynamics (interest rates, volumes etc.) for these cash groups before rolling out longer-dated liquidity pools.
Any asset added to the protocol will initially start trading with a max market index of 2 (3 month and 6 month tenors).