Floating Rate Note

A floating rate note is a debt instrument with a variable interest rate that is periodically adjusted based on a reference benchmark. These notes are commonly used in financial markets to protect against interest rate fluctuations.

In the crypto space, some protocols issue tokens or synthetic assets that function similarly to floating rate notes, where the yield fluctuates based on market demand or protocol revenue. Investors holding these notes benefit when interest rates rise, as the payments increase accordingly.

Conversely, when rates fall, the payments decrease. They provide a flexible investment option for those who want to participate in debt markets without locking into a fixed return.