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	9.42% -> 10.99%	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%)	28 (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.