What is Fluid (FLUID)? What Does It Do?

Fluid (FLUID) aims to make financial transactions accessible through capital efficiency and a user-friendly experience within the DeFi ecosystem. Fluid (FLUID) has recently been added to Binance Alpha projects. Let’s take a detailed look at What Fluid (FLUID) is and What It Does.

What is Fluid (FLUID)? What Does It Do?

Fluid is a decentralized finance (DeFi) protocol focused on lending and liquidity. This system includes decentralized exchanges (DEX), staking mechanisms, and other exciting features. Fluid claims to be one of the best DeFi lending protocols in terms of flexibility, security, and sophistication.

The Fluid protocol is part of the Instadapp ecosystem, founded in 2019 by brothers Sowmay and Samyak Jain. Initially trained in accounting, the brothers dropped out of university after winning the ETHIndia hackathon. They focused on developing “middleware software” to bring the exciting features of Web3 finance to users.

After raising $10 million in funding from Standard Crypto, the Jain brothers expanded their ecosystem, reaching the fourth position in total value locked across DeFi systems. Fluid, a new addition to the Instadapp ecosystem, was launched at the end of 2023. Drawing inspiration from their experiences with systems like Aave, Compound, and Uniswap, they aimed to develop a unique version of these DeFi protocols.

Fluid’s Goals

Fluid aims to combine the best features of multiple DeFi protocols into a single system. It seeks to become the most advanced, secure, flexible, and capital-efficient lending/borrowing system. In designing the system, the founders of Fluid focused on optimizing automated market maker (AMM) liquidity, reducing transaction gas fees, and ensuring accurate risk assessment. By merging many excellent features into one system, they hope to gain a competitive edge in the DeFi space.

In addition to offering advanced features, Fluid also aims to maintain the well-known accessibility of the Instadapp ecosystem. The Fluid system strives to offer a user-friendly interface that can be understood with just a few clicks. Like other products in the Instadapp ecosystem, Fluid prioritizes user satisfaction and aims to address the needs of multiple DeFi investors.

Click here to get project’s white-paper list.

How Does the Protocol Work?

The Fluid protocol operates on a complex combination of blockchain and software. While most of the user interfaces are processed using traditional coding methods, different blockchain tools such as Cardano, Arbitrum, and Ethereum are used to manage backend functions. Some of the key mechanisms Fluid uses to ensure smooth operation include:

Liquidity Layer: This is a centralized hub where Fluid brings together all of its services. It uses a unified AMM liquidity pool to manage usage rates, set automated limits, and apply interest rate models.

Automated Limits: These smart contracts dynamically adjust borrowing caps as market trends change. The limits continuously fluctuate to prevent abnormal borrowing or community losses in the market.

Lending Protocols: Fluid’s lending system follows the ERC-4626 standard to optimize transaction gas fees. It is designed to be equally fair for both borrowers and lenders.

Vault Protocol: Fluid’s Vault protocol is geared toward borrowers, offering enhanced capital efficiency, lower liquidation penalties, and a simple user experience.

DEX Protocol: The DEX protocol uses the AMM system to match market orders in the most efficient way possible. Based on Uniswap’s design, it also allows borrowing to be used as an asset.

What Does Fluid Provide?

Fluid offers a wide range of services that users can try out. The main features offered through the Fluid website and application include:

Vaults: Vaults function similarly to liquidity pools found in other DeFi systems. They consist of token pairs such as ETH and USDT. Each vault offers a supply rate and borrowing rate, allowing users to either lend or borrow by participating in a vault.

Lending: With Fluid, users can temporarily lend their tokens to others. The system supports a variety of tokens and provides a return of up to 1.5 times the initial investment. Fluid’s lending system also allows lenders to earn staking rewards, delegation power, and voting power even while their tokens are locked in the lending contract.

Borrowing: Fluid’s borrowing protocol enables users to temporarily borrow funds against smart collateral. The high collateral ratio allows users to borrow up to 95% of their collateral’s value. Additionally, it features a low liquidation penalty of only 0.1%, eliminating the fear of losing all your smart collateral when market trends change.

Click here to get project’s X account.

Fluid Roadmap

Launched at the end of 2023, Fluid is currently the third-largest DEX on Ethereum. So far, the development of Fluid has focused on expanding its pools and upgrading its vaults to support more assets, with the goal of offering users more lending and crypto trading options. However, Fluid has big plans for the future.

Like other protocols in the Instadapp ecosystem, Fluid is a fully community-governed project. Proposals for Fluid’s growth show that the Instadapp governance body believes in Fluid’s long-term development.

Users are looking to rebrand Fluid as an independent project and hope to add its own native token. They are also considering adding protocols to support market orders, such as derivatives, stablecoins, interest rate swaps, and forex trading.

Fluid Tokenomics

FLUID is the native token for the entire Instadapp system. Initially named INST, the token has recently been rebranded as FLUID to emphasize its crucial role in the operation of the Fluid DeFi protocol. As a service and governance token, FLUID is responsible for managing governance votes, paying fees, and everything in between. Like INST, the total supply of FLUID will be 100 million tokens. However, the rebranding of INST required some adjustments to the token distribution schedule.

The new distribution for FLUID tokens will be as follows:

• Community: 55%
• Team: 24%
• Investors: 12%
• Future ecosystem partners: 8%
• Advisors: 1%

Founding Team

Sowmay and Samyak Jain are Indian brothers who founded Fluid by working in the decentralized finance (DeFi) space.

• Sowmay Jain: Co-Founder and CEO, also a co-founder of Instadapp.
• Samyak Jain: Co-Founder and CTO, also a co-founder of Instadapp.

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