Variable rate lenders earn returns by lending to over-collateralized, variable rate borrowers. Variable rate lending provides users an easy and passive way to earn interest with free redeemability and no impermanent loss risk.
Who is variable rate lending for
Variable rate lending is for DeFi users who want easy, simple access to attractive yields with the option to withdraw at any time at no cost.
Where does the yield come from
Lenders earn interest paid by over-collateralized variable-rate borrowers.
What are the risks
When you lend at a variable rate on Notional, you have two main risks:
Smart contract risk. A hack of Notional’s smart contracts or the smart contracts of any protocol where Notional holds funds could result in loss.
Bad debt risk. All borrowing on Notional is over-collateralized. If the value of a borrower's collateral falls and liquidators don’t purchase the collateral quickly enough, Notional could be left with bad debt.
There is no fee to lend at a variable rate or to withdraw your cash.
Collateral - Variable rate lending is accepted as collateral on Notional.