How to Use Notional Finance Fixed Rate in 2026

Most DeFi lending markets pay a rate that moves every block, which makes planning hard. Notional Finance takes a different approach by letting you lock in a rate for a set period. This guide explains how Notional V3 works and walks you through lending and borrowing at a fixed rate step by step.

What Notional Finance is and what fixed rate means

Notional Finance is a DeFi protocol for fixed-rate, fixed-term lending and borrowing. The current release is Notional V3, and the protocol's governance token is NOTE. Instead of a rate that drifts up and down, Notional lets you pick a maturity date and lock in an interest rate that stays the same until the loan matures.

Fixed rate means the interest you earn or pay is set when you open the position and does not change. Fixed term means the position is tied to a specific maturity date that you choose from the available markets. Together they give you predictable cash flows, which is useful for treasury planning, hedging, or simply knowing your exact cost of borrowing.

This predictability is the main reason traders and DAOs use Notional. You always know what you will receive at the end of the term, regardless of how variable rates move in the meantime.

What fCash is

The building block that makes fixed rates possible is fCash. fCash behaves like a zero-coupon bond. It is defined by a currency and a maturity date, and it represents a claim on a fixed amount of that currency at that future date.

When you lend, you buy fCash from the protocol's liquidity providers. A positive fCash balance is an asset that entitles you to redeem a known amount at maturity. A negative fCash balance is an obligation, which is what a borrower holds. The exchange rate between the underlying token and fCash is what sets your fixed interest rate.

One detail that makes Notional flexible is that fCash can be used as collateral. Because a lending position is a claim on future tokens, you can lend at a fixed rate and then borrow against that fCash, building layered strategies inside the same protocol.

Before you start

• Connect a Web3 wallet such as MetaMask to the Notional app.
• Make sure the wallet holds the asset you want to supply plus a little ETH for gas.
• Confirm you are on the correct network supported by Notional V3.
• Review the available maturities so you know which terms are open.

How to lend at a fixed rate

Lending earns you a fixed yield by buying fCash. The flow is short and only takes a few clicks once your wallet is connected.

1. Open the Lend dashboard. Go to the lending section of the Notional app and connect your wallet.
2. Choose your market. Select the asset you want to lend, for example USDC.
3. Select a maturity. Pick the term that matches your time horizon. The app shows the fixed rate available for each maturity.
4. Enter the amount. Type the number of tokens you want to supply. The interface displays the fCash you will receive and the amount you can redeem at maturity.
5. Submit and confirm. Click Submit, then approve the transaction in your wallet.

After the transaction settles, you hold fCash for that maturity. You can hold it to maturity, transfer it, or redeem it early by selling it back to the liquidity pool, where the amount you receive depends on the time left and the prevailing market rate.

How to borrow at a fixed rate

Borrowing on Notional is always overcollateralized, so you deposit collateral worth more than what you borrow. ETH is a common collateral choice. The steps mirror the lending flow with the added collateral input.

1. Open the Borrow dashboard. Head to the borrowing section and connect your wallet.
2. Choose your market. Select the asset you want to borrow.
3. Select a maturity. Pick the term, which fixes your borrowing rate until that date.
4. Set the borrow amount. Enter the tokens you want to supply, which is the size of the loan.
5. Add ETH collateral. Enter the ETH collateral amount. The app shows your collateral ratio and health factor so you can keep a safe buffer.
6. Confirm and Submit Trade. Click Confirm, then Submit Trade, and approve in your wallet.

Once confirmed, you receive the borrowed tokens and hold a negative fCash obligation for that maturity. Keep an eye on your collateral ratio, because if the value of your collateral falls too far, your position can be liquidated to protect lenders.

What happens at maturity

Maturity is the date your fixed term ends, and the behavior differs for lenders and borrowers.

• If you borrowed and do nothing, the loan is automatically rolled forward to the next maturity. It is re-fixed at a penalty, roughly 2.5 percent above the market rate, so it pays to manage the position rather than ignore it.
• If you lent and do nothing, the matured fixed position switches to earning Notional's variable rate. It keeps earning at that floating rate until you redeem it or roll it into a new fixed term.

The practical takeaway is to set a reminder for your maturity dates. Borrowers usually want to repay or roll on their own terms to avoid the penalty, and lenders may prefer to lock a new fixed rate rather than drift into the variable rate.

Fees on Notional

Notional charges a small upfront fee that scales with the length of the term. As a rough guide, lending 1,000 USDC at a fixed rate for one year costs about a 3 USDC upfront fee, which is roughly 0.3 percent per year. Fixing the same amount for six months would cost about 1.5 USDC.

Because the fee is proportional to the term, shorter fixes cost less in absolute terms. Always check the figures shown in the app before you submit, since the interface estimates the cost for your exact size and maturity. Network gas is separate and depends on conditions at the time of the transaction.

Risks and safety

Fixed rates remove rate uncertainty, but they do not remove all risk. Keep the following in mind before committing funds.

• Liquidation risk. Borrowing is overcollateralized, so a sharp drop in collateral value can trigger liquidation. Maintain a comfortable buffer.
• Maturity management. Ignoring a matured borrow leads to a penalty roll, and an ignored lend drifts to the variable rate. Track your dates.
• Smart contract risk. Like any DeFi protocol, Notional relies on code that could contain bugs despite audits.
• Early exit price risk. Selling fCash before maturity gives you a price that depends on market rates at that moment, which may be more or less favorable than holding.
• Market and liquidity risk. Available maturities and rates depend on liquidity, which can vary by market and over time.

To stay safe, start with a small test amount, verify you are on the official Notional app, and never invest more than you can afford to lose.

Conclusion

Notional Finance V3 brings predictable, fixed-rate lending and borrowing to DeFi using fCash as its core building block. Lenders buy fCash to lock in a yield, borrowers post collateral such as ETH to lock in a cost, and both choose a maturity that fits their plan. Understanding how maturity, fees, and collateral work lets you use the protocol with confidence. Always confirm the current details on the official Notional site and documentation before you transact.

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Frequently Asked Questions

What is Notional Finance?

Notional Finance is a DeFi protocol that lets users lend and borrow crypto at fixed interest rates. This gives lenders and borrowers more predictable terms compared to variable-rate platforms.

What is fixed-rate lending in DeFi?

Fixed-rate lending locks in an interest rate for the duration of the loan rather than letting it fluctuate with the market. This provides certainty about the cost of borrowing or the yield from lending over the term.

What is fCash on Notional Finance?

fCash represents a claim to a fixed amount of an asset at a specific maturity date within the protocol. Holding it generally entitles the holder to receive that amount when the term ends.

What happens at maturity on a fixed-rate loan?

At maturity, the agreed amount becomes due, and positions can typically be settled or rolled into a new term depending on the protocol. Users should review fees and options before the maturity date arrives.