V3 Risk Parameters
  • Notional V3
  • Risks
    • Economic Risks
    • Technological Risks
  • Prime Cash Markets
    • Prime Cash Interest Rate Model
  • fCash Markets
    • fCash Markets
    • fCash Maturities
    • fCash Interest Rate Model
  • nTokens (LP)
    • nTokens
    • Deposit Shares
    • Leverage Thresholds
    • nToken ifCash Residuals
    • Incentives
  • Collateral Framework & Liquidations
    • Overcollateralization structure
    • Exchange Rate Risk
    • Prime Cash risk adjustments
    • fCash risk adjustments
    • nToken risk adjustments
  • Asset Liquidity Risk
    • Prime Cash Supply Caps
  • Leveraged Vaults
    • Collateral structure & leverage
    • Vault Shares Valuation
    • Liquidations
    • Maximum Pool Share
    • Fees
  • Notional's Backstop
    • Treasury
    • sNOTE
  • Notional Finance
  • Notional V3 Docs
  • Technical Docs
  • Collateral Onboarding Docs
  • Notional Dune Dashboard
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  1. Asset Liquidity Risk

Prime Cash Supply Caps

Notional's governance can set Prime Cash supply caps that effectively limit the maximum amount of Prime Cash that can be minted in a given currency. Governance can set the maxUnderlyingSupply for all listed currencies. The maxUnderlyingSupply sets the maximum amount of Prime Cash that can be minted based on a value in underlying terms.

Supply caps are important because they can put a practical limit on the total value of a given currency that can be used as Prime Cash collateral. This allows Notional's governance to be able to list less liquid assets in a capital-efficient manner by limiting the protocol's exposure.

Parameter selection considerations

When setting Prime Cash supply caps, Notional's governance should consider the asset's on-chain liquidity profile and the demand from Notional users for that asset.

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Last updated 1 year ago