A comparison of protocols Timeswap and Notional Finance

Hello everyone! I want to take a look at the 2 DeFi protocols Timeswap and Notional Finance to see how they differ from User’s perspective and in terms of protocol design. Let’s get started!

User’s perspective

Notional Protocol

Notional Finance’s interface. 1 — features, 2 — making order with Supported Currencies, 3 — Explore Lending & Borrowing Markets with rates

Timeswap Protocol

Timeswap’s interface. 1 — features, 2 — Pools with rates and available pairs

On both platforms, users can borrow, lend and provide liquidity. The Notional protocol has its own NOTE token, which also allows you to stake it (Stake tab)

Protocol designs

Blockchains

First of all, the protocols are built on different blockchains. Timeswap protocol is based on Polygon and Notional protocol is based on Ethereum.

APY/APR

Timeswap protocol has a flexible APR which allows the user to choose the desired yield with a flexible degree of risk.

Notional protocol has Fixed APY, which is calculated depending on the selected amount and on the term of the lending or borrowing (3,6 and 12 months). This APY is fixed and does not change until the end of the order.

Сollateral/CDP

To borrow on Timeswap, you need to lock a certain amount of funds as collateral. The CDP ratio, like the APY ratio, is flexible and customizable according to the user’s wishes.

CDP=109% means that in order to borrow $100 the user will need to lock a collateral of $109 (~143.75 MATIC at current market price).

To borrow on Notional the user needs to deposit a certain amount of collateral, which depends on the asset and type of collateral. For example, the minimum collateralization ratio for a USDC loan against ETH is 145%. If the user’s collateralization ratio falls below the minimum 145%, the user becomes eligible for liquidation. Unlike a Timeswap loan, a user needs to keep track of the value of collateral deposited.

To borrow $100, the user must have ~0.164 ETH in his wallet. In this case, liquidation will occur when the price of ETH reaches $855.

Maturity

Timeswap protocol maturity is fixed. Liquidity providers and lenders will not be able to withdraw their funds before the end of the pool term. However, borrowers can close their positions at any time and withdraw their collateral.

This Timeswap pool will have a maturity date of August 5.

Notional protocol offers users the choice of maturity time, but users can also close out their loan and withdraw their funds at any time prior to maturity without penalty.

Oracles

Timeswap protocol works without the need of oracles as lending and borrowing of assets is determined by the unique constant 3 product equation XYZ = K the APR & collateral factor are dynamically derived by user interaction with the AMM.

Notional V2 liquidity pools track two different interest rates, the last traded rate and the oracle rate.

The oracle rate is designed to mitigate the risk of price manipulation by providing a lagged, dampened price feed that converges to the last traded rate over a time window set by governance.

If the user’s collateral ratio falls below the minimum set value, he becomes eligible for liquidation.

Conclusion

In my opinion, those are the main differences in these protocols. Use quality tools and remember that TIME is MONEY.