first, the impressive milestones

• Fluid reached 10% market share & became the fastest-ever protocol to hit $10B in trading volume on Ethereum—just 3 months post-launch. 🌊

https://x.com/troyharris__/status/1887489634612940952

• Best price performance in the past 180d for the Lending market.

https://x.com/tokenterminal/status/1888255015371866151

• Fluid’s trading volume - only up.

• Looking at the wstETH-ETH pool, Fluid has completely absorbed Uniswap’s volume. On February 11, Fluid had 45% market share vs. Uniswap’s 19%—a massive gap.

• Even the sUSDe-USDT pool, which has been live for only two weeks, is already pulling in significant volume.

• Smoothest liquidation example: A trader swapped 21,000 USDT and received 21,417 DAI (an extra 400 DAI 🤯 via liquidation penalty, about a 2% premium on the swap). 🔗

  https://x.com/smykjain/status/1869825645481734332

• Also, @meoww’s post made a great point:

https://x.com/weremeow/status/1882514976759484663

Everyone talks about Ethereum’s foundations and VCs, but not enough attention is given to the actual builders pushing Ethereum forward. Seeing Fluid gets praised in this context—by one of Solana’s top protocol founders—was a big deal.

The Key Thing to Remember About Fluid: Fluid didn’t achieve all this through point systems, marketing hype, or gimmicks.
They just shipped a great product.

A great product markets itself.

https://x.com/0xfluid/status/1888579436767047855

what makes Fluid special?

So, who’s this new player suddenly pulling volume from Ethereum’s #1 DEX? What makes it different? These were the first questions that came to my mind after seeing the numbers above. Let’s break it down.

At its core, Fluid works like other DeFi platforms where users can borrow funds from Fluid lending and deploy them on the DEX.
- But here’s the game-changer—the collateral and debt themselves act as trading liquidity.
- Users don’t need to manually deploy anything on the DEX.
- Debt becomes trading liquidity, unlocking capital efficiency like no other DEX.

This means Fluid reduces a two-step, two-app process into a single step within one app.

If Combining Lending & DEX Was Possible, Why Wasn’t It Done Before?

Great question. The answer lies in how Fluid redefines liquidity and debt.

If we think about a traditional Uniswap V2 pool, there are liquidity providers who deposit their X-Y token pairs into the pool, providing liquidity. In return, they earn fees from the trades conducted using this liquidity. Similarly, if you want to borrow an asset and go to a platform like Aave, the first thing you need to do is deposit collateral and then borrow an asset against it. For example, you deposit Ether and receive USDC, then you can take it and trade it on Uniswap.

However, Fluid doesn’t work this way.

Traditional Borrowing:

• When you take out a loan, you typically withdraw the borrowed asset and use it elsewhere.

• For example, you borrow USDC from Aave and trade it on another DEX like Uniswap.

• Your debt remains a separate, passive liability that does not generate any additional value.

Fluid’s Smart Debt Model:

• The moment you borrow, your debt is automatically utilized as liquidity on the DEX.

• Instead of leaving the pool, your borrowed assets remain within it as active trading liquidity.

• Other traders can use your debt for swaps, keeping it productive rather than idle.

• The trading fees generated from these transactions help offset your borrowing costs.

So, for example, you initially borrow 1,000 USDC with a 10% borrowing rate. As a result of the trades happening, the revenue generated from trading reduces this rate from 10% to 8% (a 2% reduction). At this point, it becomes much more advantageous compared to traditional borrowing.

smart collateral: no more wasted liquidity

In this model, collateral is not only "locked" for borrowing but also provides liquidity on the DEX, generating additional revenue from trading fees.

Traditional Collateral Model (Aave, Compound):

• Deposit ETH as collateral, and borrow USDC.

• ETH sits idle, generating no extra income.

Fluid’s Smart Collateral Model:

• Deposit ETH<>wstETH as collateral.

• Your collateral also provides liquidity to the DEX, earning trading fees.

• You borrow while still earning yield on your collateral.

This means higher capital efficiency and extra revenue streams for borrowers.

innovation, innovation, innovation

While researching Fluid, I came across two standout features highlighted by @litocoen:

https://x.com/litocoen/status/1874122079336833088

1️⃣  being able to choose and compare different routes when you leverage/deleverage or swap collateral assets

• As shown in the example, selecting the most efficient route can result in significant cost differences, especially for large trades..

2️⃣ simulation Mode

• Fluid's simulation mode lets you create fake balances, test positions, and play around in a risk-free version of the platform. Since it uses live mainnet data, you can see exactly how your moves—like depositing $10M USDC—would affect supply rates and market conditions before committing real funds.

why is fluid the best at handling market crashes?

We can answer this directly in 3 points:

1️⃣ Debt and collateral function as DEX liquidity → Liquidation assets are already active in the market, so finding buyers is easier.
2️⃣ ETH liquidity increases during market crashes → ETH is the most traded asset, meaning liquidity never dries up.3️⃣ Smart Collateral & Smart Debt ensure constant liquidity → No need for external intervention; the system self-adjusts via trading fees.

Why are liquidations in Fluid 100x better?

• Fluid can liquidate "n" number of positions at once in a single transaction with near to no increase in gas while other protocols will take "n" different transactions with "n times more gas".

• Liquidation penalty in Fluid can be as low as 0.1%, while on other protocols it generally ranges from 5-10% which in other protocols is like a 50-100x penalty difference.

• Traders or liquidators liquidate bad debt (and not a particular position), similar to Uniswap v3 where trade goes through active liquidity (and not through a particular range order). Meaning, integration of adding bad debt as trading liquidity for DEX aggregators is as simple as adding a Uniswap, Curve, Balancer or any other AMM. This will allow liquidations to even happen through traders rather than liquidators. For highly active pairs, setting the right liquidation penalty can route most liquidations through trades rather than liquidators.

• Fluid uses Uni v3-like liquidity aggregation logic to allow up to 95% LTV against ETH and reduce the liquidation penalty to as low as 0.1%.

• Gas on liquidation in Vault protocol is around ~150k while on other protocols it ranges from 300k to 1M (as the liquidators take flashloan and arbitrage the liquidation with other DEXes).

• Liquidate only what’s required. Liquidation on Fluid can only happen till Liquidation Threshold and not below.

  • Read this article for better understanding -> https://x.com/smykjain/status/1878823046938509758

Also, while reading @thedefiedge’s article, I came across a chart that I’d like to share here.

When it comes to the three key concepts in lending & borrowing—LTV, Liquidation Threshold, and Liquidation Penalty—Fluid offers the best rates.

the ecosystem is paying attention

As Fluid continues its rapid success, other platforms are integrating fast. Recent partnerships and proposals include:

• Lido Protocol x Fluid strategic partnership

• Spark integrating sUSDS liquidity into Fluid

• Fluid x ResolvLabs: USR-USDC lending pool on Mainnet

• Aave DAO proposal to acquire 1% of $INST supply

• Delphi Digital featuring Fluid in their DeFi 2025 report

• tBTC integration proposal

• Fluid launching on Arbitrum L2

• rsETH market proposal

• Pendle x Fluid strategic partnership

• Wintermute proposing to be Fluid’s market maker

We could extend this list even further, but this should be enough for now—it's clear that Fluid's ecosystem is expanding rapidly.

There are plenty of great resources that provide different perspectives on Fluid. Since DeFi discussions can get quite deep, even a single concept can lead to extensive conversations. That's why I’m sharing these links—I highly recommend checking them out:

• https://x.com/DeFi_Made_Here/status/1878875943827394723

• https://x.com/smykjain/status/1869825645481734332

• https://x.com/0xThoor/status/1884933100662112742

• https://x.com/thedefiedge/status/1869355013119836431

• https://x.com/DeFi_Made_Here/status/1712556517923434620

OGs of DeFi

The Fluid team are true OGs in DeFi. They’ve been building since 2018, managing $15B TVL during DeFi Summer. Now, they’re rewriting the game again with Fluid. The team includes @smykjain, @sowmay_jain, and @DeFi_Made_Here—builders who let their product speak for itself.

Another thing I loved during my research was that they were the first to criticize themselves, and they have the courage to do it publicly.

https://x.com/DeFi_Made_Here/status/1886543918084297134

Teams like this - bullish. No hype, no VC funding, just pure execution. And from the looks of it, this is only the beginning.