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Notional Finance DeFi Raises $10M for Fixed Rate Lending

·2 min read

Decentralized finance (DeFi) protocol Notional Finance is the latest to attract big venture capital investments with the announcement of a $10 million seed round.

Notional Finance announced the completion of its Series A funding round on April 30, stating that it was led by Pantera Capital. Other names in crypto venture capital included Parafi, Spartan Group, 1Confirmation, Nascent, and Nima Capital.

The protocol added that it aims to expand on what is already possible within the DeFi ecosystem via fixed rates, adding to the largely variable rate lending and borrowing platforms already running.

“With the longer term stability that borrowing and lending at fixed rates brings, Notional enables new and exciting fully decentralized use cases for DeFi.”

CEO Teddy Woodward stated that Notional has executed $10 million in loans and attracted $17 million in TVL since its launch in January 2021.

DeFi Mortgages

Notional’s model is a fixed rate lending product on Ethereum that gives users the certainty needed to plan for the future without relying on entrenched and exploitative financial institutions.

Woodward elaborated:

“When you introduce the ability to borrow and lend at fixed rates for long periods of time, all of a sudden you can do so much more than just trade and speculate.”

Parafi Capital founder Ben Forman noted that fixed rate debt is 25 times larger than floating rate debt in traditional finance, yet in DeFi this ratio is reversed.

Users can borrow against their crypto collateral to invest in real-world assets and ventures such as businesses, real estate, and even mortgages. In early February, The Defiant reported that one Australian crypto investor had done just that—paying off his mortgage with a loan from Notional Finance making it a first for the DeFi sector.

The protocol stated that the funding will go towards upgrading the platform to version 2 and building the team.

In early April, Element Finance announced the raising of investments of $4.4 million for fixed-rate DeFi liquidity and yields in a round led by Andreessen Horowitz.

Bumper raises $10M

Another DeFi protocol to announce a $10 million funding round this week is Bumper Finance. The protocol acts as a type of insurance against crypto market volatility by allowing users to set a floor price for ETH and not get cashed out as they would with a stop loss.

Investors Alphabit, Autonomy, Beachhead, and ChainLayer were among those participating in the private token sale for BUMP tokens which will be launched on June 8 along with staking incentives.