Notional Finance Implements Major Changes
Notional Finance, a fixed-rate lending protocol, is set to implement major changes following the recent Balancer exploit, which has resulted in significant financial losses. Reports indicate that the exploit has led to a total of 641.4 ETH in bad debt on the Ethereum mainnet and 80.2 ETH on the Arbitrum network.
Impact on Users
This situation will have dire consequences for users who have invested in the affected Balancer/Aura leverage pools, as they are expected to lose the entirety of their positions’ value. Furthermore, both Ethereum borrowers and liquidity providers on the affected networks are bracing for substantial declines in their account valuations, particularly those who utilized ETH as collateral.
However, it is important to note that other users’ accounts will remain unaffected by this issue.
Operational Changes
Due to the enormity of the bad debt incurred, Notional V3 will halt its operations on both networks. This operational cessation means that Notional cannot sustain normal activity moving forward.
In the next phase, the company plans to communicate detailed procedures for user withdrawals. Additionally, users with cross-currency lending positions will have their accounts transitioned to the Aave platform.
Challenges Ahead
As Notional V3 approaches full closure, users may experience challenges with understanding their liquidation risks, and position management capabilities will be unavailable during this period.
