[NIP-97] Update Stablecoin Prime Cash Curves

Summary

We propose to change the Prime Cash interest rate models on Notional with the aim of increasing stablecoin interest rates in response to rapidly shifting market conditions and significantly increased demand for leverage.

Proposed Changes

Increase Kink2 rates for stablecoins.

  • Current Issue: The interest rates at the current kink are not sufficiently attractive to potential depositors.
  • Proposal: Raise the target (kink2) rates to make it possible for interest rates to sit at sustainably higher levels (below kink2).
  • Expected Outcome: Higher kink2 rates will make it easier to attract depositors in the event that attractive leveraged yield strategies produce additional borrowing demand.

Proposed Parameter Changes

Parameters ETH Stablecoins LSDs wBTC
Kink Utilization 1 No Change No Change No Change No Change
Kink Utilization 2 No Change No Change No Change No Change
Kink Rate 1 No Change No Change No Change No Change
Kink Rate 2 No Change 7.85% → 9.42% No Change No Change
Max Rate No Change No Change No Change No Change

New Parameters

Parameters ETH Stablecoins LSDs wBTC
kinkUtilization1 75 (75%) 75 (75%) 55 (55%) 55 (55%)
kinkUtilization2 90 (90%) 92 (92%) 80 (80%) 70 (70%)
kinkRate1 (1/256) 6 (2.36%) 10 (3.93%) 1 (0.59%) 1 (0.59%)
kinkRate2 (1/256) 18 (7.07%) 24 (9.42%) 6 (3.52%) 6 (3.52%)
maxRate25BPS 192 (100.5%) 192 (100.5%) 225 (150%) 225 (150%)
feeRatePercent 20 (20%) 20 (20%) 20 (20% 20 (20%
minFeeRate5BPS 10 (0.50%) 10 (0.50%) 10 (0.50%) 10 (0.50%)
maxFeeRate25BPS 160 (40%) 160 (40%) 160 (40%) 160 (40%)

Conclusion

By implementing this change, we aim to enhance deposit growth and make Notional’s stablecoin markets more competitive for lenders.