Liquidity providers deposit funds into Notional and receive trading fees from borrowers & lenders (supply-side fees).

Notional is a non-custodial fixed-rate, fixed-term lending protocol built on Ethereum. Notional was founded by Jeff Wu & Teddy Woodward and launched in 2020.

NOTE holders own and govern the protocol. They currently take a cut of the total trading fees paid by borrowers & lenders and all of the COMP incentives from funds deposited to Compound (revenue). Notional’s investors include Coinbase Ventures, Nascent Ventures, 1Confirmation, etc.

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Lending

Notional Finance

# Notional Finance Expenses Methodology

## 1. Overview

Notional expenses represents the daily USD value of NOTE token incentives distributed by the Notional protocol to users as rewards. This metric tracks the protocol's operational costs in the form of token-based user incentives, providing insight into the protocol's spending on user acquisition and retention through its reward system.

## 2. Data sources

- **Blockchain events**: Parsed Ethereum ERC-20 `Transfer` events specifically from the NOTE token contract
- **Token transfers**: Ethereum token transfer records from the Notional reward distribution contract to user addresses
- **External data**: End-of-day price feeds from CoinGecko for NOTE token pricing
- **Token metadata**: NOTE token contract address and decimal configuration for proper amount normalization

## 3. Step-by-step calculation

### Component A: NOTE token reward extraction

- **Purpose**: Identifies and extracts all NOTE token reward distributions from the Notional protocol's reward contract
- **Logic**: Filters Ethereum token transfer events for transfers originating from the specific reward contract address `0x1344a36a1b56144c3bc62e7757377d288fde0369` and involving the NOTE token contract `0xcfeaead4947f0705a14ec42ac3d44129e1ef3ed5`. Each transfer represents a reward payment to a user, capturing the timestamp, transaction details, and raw token amount. The data is classified under the 'Lending' business line and 'lending' market sector to properly categorize these protocol expenses.
- **Key fields**: `block_timestamp` for timing, `transaction_hash` and `log_index` for unique identification, `token_address` for NOTE token verification, and `value` for the raw reward amount

### Component B: Token amount normalization and USD conversion

- **Purpose**: Converts raw NOTE token amounts to standardized USD values for consistent expense reporting
- **Logic**: Takes the raw token transfer amounts and normalizes them by dividing by 1e8 to account for NOTE token's decimal precision. The normalized daily token amounts are then converted to USD using end-of-day price feeds from CoinGecko, specifically using the 'notional-finance' price identifier. This conversion provides the USD equivalent value of each day's total reward distributions.
- **Key fields**: `amount` becomes `token_incentives` after decimal adjustment, `daily_timestamp` for time aggregation, and USD conversion fields from the price feed integration

### Final aggregation

- **Combining components**: The normalized and USD-converted token reward amounts are aggregated by day, summing all reward distributions that occurred within each 24-hour period
- **Currency conversion**: USD conversion uses end-of-day CoinGecko prices with the 'notional-finance' identifier to value NOTE tokens at market rates
- **Time aggregation**: All transfers are grouped by daily timestamp boundaries using timestamp truncation to day level
- **Final calculation**: The daily sum of USD-valued NOTE token rewards represents the protocol's daily expenses through its incentive program. The final metric renames `token_incentives` to `expenses` to reflect that these reward payments constitute operational expenses for the Notional protocol. Time series gaps are filled with zeros to ensure continuous daily reporting, and chain availability filters ensure data quality across the time range.

*This methodology was automatically generated by Token Terminal's methodology analyzer.*

Total project operating and incentive expenses.

Notional FinanceNOTE

Expenses

Expenses

Competitive landscape

Chain breakdown