Summary

We propose to change the Prime Cash interest rate models on Notional with the aim of decreasing stablecoin and eth interest rates in response to shifting market conditions and decreased demand for leverage.

Proposed Changes

Increase Kink2 rates for stablecoins.

• Current Issue: Interest rates are restrictive relative to available yields across DeFi.
• Proposal: Lower the target (kink2) rates to make it possible for interest rates to sit at sustainably higher utilization levels (below kink2).
• Expected Outcome: Lower kink2 rates will better balance supply and 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	7.07% -> 4.71%	10.99% -> 9.03%	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)	12 (4.71%)	23 (9.03%)	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.