1. Introduction

Fluid is an innovative lending protocol launched by Instadapp, a multi-chain DeFi management platform. It aims to improve capital efficiency and optimize the DeFi experience by integrating lending and decentralized exchange (DEX) functionalities. Since its launch, Fluid has quickly gained attention in the DeFi space, standing out among lending protocols with its advanced lending mechanisms, smart collateral management, and efficient liquidation system.

2. Fluid Project Background

2.1 Instadapp Introduction

Instadapp is a DeFi management platform supporting multiple blockchain networks, including Ethereum, Polygon, Arbitrum, and Optimism. Its goal is to simplify DeFi operations, improve capital utilization, and lower entry barriers for users. Instadapp provides a one-stop DeFi solution, enabling users to manage assets across multiple protocols and enhancing interoperability within the DeFi ecosystem.

Founded by an experienced blockchain development team with expertise in smart contracts, decentralized finance (DeFi), and liquidity management, Instadapp’s Smart DeFi Accounts (SDA) facilitate cross-protocol asset management and are widely used in major DeFi protocols like Aave, Compound, MakerDAO, and Uniswap.

2.2 The Birth of Fluid

In traditional DeFi lending markets, users often need to migrate funds between protocols to achieve optimal yields. However, fragmented liquidity and low capital efficiency have become significant obstacles to DeFi growth. Fluid addresses these issues by introducing smart debt management and lending integration to optimize DeFi asset management.

During its research, Instadapp identified limitations in existing lending protocols like Aave and Compound, such as underutilized collateral assets and rigid liquidation mechanisms that expose users to high risks during market volatility.

Fluid was created to improve capital efficiency in lending markets, offering users more flexible fund management. Leveraging Instadapp’s platform advantages, Fluid developed a smarter, more dynamic lending protocol that enables users to enhance yields through liquidity mining and cross-protocol arbitrage while borrowing.

2.3 Fluid’s Core Innovations

Compared to traditional lending protocols, Fluid introduces several innovations:

1.Smart Collateral Management: Users can flexibly adjust collateral ratios to maximize asset utilization while reducing liquidation risks.
2.Smart Debt Integration: Borrowers can dynamically manage debt within the Fluid ecosystem, enabling capital flow across protocols to improve efficiency.
3.Decentralized Liquidation Mechanism: The Time-Slot Liquidation method optimizes the liquidation process, reduces gas fees, and minimizes market impact.
4.Cross-Chain Compatibility: Fluid plans to support multiple blockchain networks, allowing seamless asset transfers across chains to enhance DeFi scalability.

These innovations aim to break the limitations of traditional lending protocols and improve liquidity and capital efficiency across the DeFi ecosystem.

3. Fluid Technology Architecture

Fluid is built using smart contract technology, with its core architecture comprising the following components:

3.1 Smart Collateral Management

Fluid allows users to collateralize multiple assets and dynamically adjust collateral ratios to optimize capital utilization. Compared to traditional lending protocols, Fluid employs more flexible risk control strategies to reduce liquidation risks.

3.2 Smart Debt Mechanism

Fluid introduces the concept of ‘smart debt,’ where users’ debt can be dynamically adjusted and enhanced capital efficiency through decentralized liquidity provision (LP).

3.3 Efficient Liquidation Mechanism

Fluid adopts a Time-Slot Liquidation method similar to Uniswap v3, enabling efficient liquidation of multiple positions while reducing gas fees and market impact.

3.4 Multi-Chain compatibility

Fluid currently supports Ethereum and Layer 2 (L2) networks, with plans to expand to more chains for better liquidity integration in DeFi.

4. Key Products of Fluid

As an innovative lending protocol, Fluid offers a range of core products and services to improve capital efficiency and user experience in DeFi.

4.1 Fluid Lending

The core feature of Fluid, allowing users to deposit assets to earn interest and borrow funds. Key features include:

1.Dynamic Interest Rate Adjustment: Rates are automatically adjusted based on market supply and demand.
2.Flexible Collateral: Supports major crypto assets like ETH, DAI, and USDC.
3.Low Liquidation Threshold: Smart risk management reduces the likelihood of liquidation.

4.2 Fluid Smart Vault

Smart Vault enables users to deposit assets while participating in yield strategies from other DeFi protocols for automated fund management.

1. Automated Yield Optimization: Funds are automatically allocated to the highest-yielding lending markets.
2. Cross-Protocol Asset Integration: Works with platforms like Aave, Compound, and MakerDAO.
3. Minimized Gas Fees: Batch transactions and L2 solutions reduce on-chain costs.
4. Liquidity Mining Integration: Users can deposit assets into liquidity pools to earn trading fees and additional rewards.

4.3 Fluid Swap

Fluid Swap combines lending and liquidity pools, enabling users to trade assets with low slippage while optimizing capital utilization.

1. Seamless Cross-Asset Swaps: Borrowers can directly swap collateral assets without redemption.
2. Low-Cost Exchanges: Integrated DEX aggregators ensure the lowest transaction costs.
3. Arbitrage Opportunities: Flash Loan mechanisms provide DeFi arbitrage solutions.
4. Cross-Chain Trading: Bridge technology allows efficient asset swaps across different blockchains.

4.4 Fluid Governance

Fluid’s governance system allows token holders to vote on protocol parameters, fund allocation, and product upgrades.

1. Community-Driven Governance: Ensures platform fairness through decentralized governance.
2. Governance Token FLD: FLD holders can propose and vote on protocol developments.
3. Incentive Mechanisms: Users earn rewards for participating in governance.
4. On-Chain Execution: All governance proposals and changes are executed via smart contracts for transparency and immutability.

5. Use Cases of FLUID Token

5.1 FLUID Token Utility

The FLUID token is not only used for governance but also plays a central role in the protocol’s growth and value accumulation:

• Revenue Sharing: Up to 100% of protocol revenue is used for buybacks to support token value.
• Governance: Token holders influence key decisions like fee structures, fund usage, and future upgrades.
• Liquidity Rewards: FLUID incentivizes stablecoin lending, DEX activities, and protocol-owned liquidity for token holders.

In recent years, DeFi has seen few groundbreaking changes, with most protocols making only minor improvements. Fluid is the first to truly challenge Uniswap, becoming the third-largest DEX on Ethereum within a month, with weekly trading volume reaching $428 million.

This achievement was made with just three pools. Imagine its potential when scaled further.

Not only retail users but also DeFi institutions like Lido and Aave are lining up to collaborate with Fluid. Those who understand the space are betting big on Fluid. Fluid is not just another DEX or lending protocol. With smart collateral, users’ assets remain productive, earning trading fees. With smart debt, loans can generate income, reducing borrowing costs.

5.2 FLUID Token Market Performance

1. Market Cap: $197.42M
2. Circulation Supply: 39.44M FLUID
3. Max Supply: 100.00M FLUID
4. Fully Diluted Market Cap: $500.60M
5. The Token Market Performance:

Trade FLUID tokens on Gate.io:https://www.gate.io/trade/FLUID_USDT

Risk Warning: Cryptocurrency projects may be highly volatile and risky. Trade cautiously and be aware of risks!

6. Future Prospects of FLUID

In the next 2-3 years, the DeFi lending market is expected to grow to over 100billion. While giants like Aave and Compound dominate, challengers with innovative ideas still have room to grow.Fluid s unique proposition lies in combining lending with DEX liquidity,aiming to reach 10 billion market size by 2025. Fluid DEX is already the third-largest DEX on Ethereum, with a 7-day trading volume of 428 million and TVL reaching 1.42 billion within a month of launch. Top Ethereum DEXs by trading volume market share:• Uniswap: 66.9% • Curve Finance: 15.0% • Fluid DEX: 4.5%

Fluid DEX enables smarter trading. With features like smart collateral, LPs can use their liquidity positions as collateral to earn trading fees while reducing risks. For borrowers, Fluid offers higher efficiency compared to competitors like Aave, Compound, and MakerDAO.

For example, Fluid’s wstETH > ETH token pair has a liquidation penalty as low as 0.1%, making it cheaper and safer for users. Fluid has already processed over $1 billion in trading volume and plans to expand into derivatives, real-world assets, interest rate swaps, and forex markets.

On Ethereum Mainnet, USDC yields average 15%, while GHO yields 14%. On Base and Arbitrum, USDC yields around 18%. With such yields, it’s no surprise that stablecoins are flooding in. The rebranding to FLUID aligns with Instadapp’s vision of creating a sustainable DeFi ecosystem that delivers strong value accumulation for token holders. Buyback plans and enhanced governance are expected to drive speculative demand and organic growth.

Conclusion

As a key component of the Instadapp ecosystem, Fluid enhances capital efficiency in the DeFi lending market through smart lending management, decentralized liquidation mechanisms, and cross-chain compatibility. Facing intense competition, Fluid leverages its innovative technology and ecosystem advantages for long-term growth potential. In the future, Fluid plans to expand cross-chain capabilities, improve security, and strengthen community governance to create a more open, efficient, and secure DeFi lending ecosystem.