Protocol Research
Fluid: Rewriting DeFi Rules
With market conditions the way they are now, this isn't the time to chase hype. This is the time to find long-term projects with real fundamentals. IMO, buy tokens that you think will still be around a year from now.
Fluid's one of these tokens. In a short time, it's gone from unknown to taking on market giants. Just look at the numbers:
- Controls 15% of total DEX volume.
- 2nd largest DEX on Ethereum by volume.
- Capable of 39x capital efficiency, way ahead of competitors.
So… what's the secret sauce?
Innovative mechanics that make things possible no one else can offer. Imagine taking a loan. But instead of paying interest, you actually earn yield.
Above chart compares Fluid with competitors. It isn't just good. It's a vastly superior product.
If you compare the features, Fluid is just a vastly superior product.
So how are they pulling this off?
Fluid is building an integrated financial system. It has many components: DEX, Lending, and Vault protocols are already live. Their innovative mechanics take all these protocols to the next level.
Unified liquidity layer aggregates liquidity from all the Fluid protocols. This is the foundation of other innovations. (Even Aave is looking to copy this in v4.)
Smart Collateral. In most lending protocols, your collateral just sits there backing loans. Not in Fluid. When you deposit a 'smart collateral' in Fluid, it will be used to provide liquidity in DEX Vaults. This allows you to earn using your 'smart collateral'.
That means your collateral starts earning yield. And that yield helps reduce your interest payments.
There are unique vault designs and liquidity allocation behind the scenes. You can learn about it here.
Smart Debt. When you borrow from a typical protocol, your debts will be denominated in a single asset. Either in USDC or USDT, not in both of them.
With smart debts on Fluid, your debt is denominated in two different assets pegged to each other. Both USDC & USDT or both cbBTC & wBTC and so on. The ratio of your debt will keep changing.
Behind the scenes, Fluid is providing DEX liquidity against your debts. For example, when a trader swaps USDC to USDT, the following happens:
- Incoming USDC is used to repay part (or full) debt of your debt.
- Protocol then generates an equivalent amount of USDT debt on your account and returns this USDT to the trader.
On a good day, your position might generate more fees than interest owed. In other words, Fluid might pay you to borrow.
Yeah… that's not just DeFi innovation. That's financial history being made.
They have more innovative mechanisms like advanced liquidation mechanisms, extreme capital efficiency, and more. But that's a topic for another day.
Just having fundamentals isn't enough. We need catalysts to attract attention and capital to the protocol. And Fluid's got plenty of them.
#1. DEX v2 is coming. And it's promising many improvements.
- Permissionless listings.
- Claims to be 10x better than the current version.
- Concentrated liquidity (might surpass Uni v4 as well).
- More assets & volatile pairs will allow Fluid to enter many more markets.
#2. Token Buyback. Once Fluid achieves $10M annual revenue, the protocol will activate an algorithmic buyback model. It'll have a smart, FDV-based design that could drive real value to holders.
#3. Multichain expansion. Currently, Fluid is deployed only on three chains. Deploying to more chains will give more room for growth.
In the long term, Fluid's ambitions go far beyond a DEX or lending protocol. They're aiming to build a fully integrated ecosystem, with many different protocols like:
- RWAs
- Credits
- Stablecoin
- Derivatives & perps
- Cross-chain bridge
- Interest rate swaps
- Global Forex market powered by Fluid's Smart Debt
Fluid has a track record of innovation. They merged lending and DEX to create a ground-breaking product. Similarly, I'm expecting similar game-changing innovations from upcoming Fluid protocols as well. Excited.
Note: Fluid has sponsored this newsletter before, but this isn't a sponsored piece. This is organic research we've done and we wanted to share it with you all.
Sponsored By Mantle
Mantle Banking: Unified Crypto and Fiat Accounts Are Finally Here
The crypto banking experience is broken. Crypto and fiat are stuck in different worlds — forcing users to juggle multiple wallets, apps, and platforms.
A seamless banking experience in crypto could be a major inflection point in crypto adoption.
Mantle Banking brings it. It's a neobank that allows users to use both fiat and crypto finances in one account. Unifying the experience with a seamless interface.
What are the benefits?
- On-and-off ramping between fiat and crypto. You can receive your fiat salary and spend crypto in the same account.
- You can spend both fiat and stables anywhere. With virtual cards available for payments through Apple Pay, Google Pay, and more.
- Borrow or get credit collateralized from your deposited assets.
- And much more.
Blockchain tech is capable of solving this problem. What was missing was a decent UI/UX. Mantle is delivering it.
Think of the ease of Revolut or Apple Pay — with DeFi working in the background to grow your finances.
That's the vision. This is crypto for real life, and it's almost here.
Insight
The Trouble With Total Value Locked
We all need metrics to analyze protocols. But not all metrics are created equal.
Active addresses? Easily gamed. Trading volume? If fees are low, it can be faked too.
That's why, for a long time, people leaned on TVL (Total Value Locked). It felt more legit. After all, you can't inflate TVL with bots. It takes real capital to move that number.
But plot twist: TVL is getting gamed too. Enter the world of TVL Deals.
What are TVL Deals? Think of them as backroom handshakes between big funds/whales and protocols.
A protocol says, "Hey, bring in some big money to pump our TVL," and the fund goes, "Cool, what's in it for us? In exchange for inflating the numbers, the project pays the fund. Simple as that.
The exact terms will vary from deal to deal. Like how long the funds stay locked, what assets are used, how does fund get paid, etc.
For funds, these deals will be just like another yield farm. They'll pump TVL if the projects offer a higher yield than the market. Obviously, they'll factor in the risks as well.
If you want to learn more about the terms of the deal, read this article.
Is that evil? As long as these deals are public knowledge, we can't really blame the projects. Most protocols need to attract initial liquidity to kickstart the flywheel. Once the protocols get attention and start organic growth, they might become sustainable.
But if the projects are hiding these deals? Yeah, that's kinda shady. Btw, some random Discord comment buried in chat logs doesn't count as disclosure. Ideally, these deals should be out in the open — on the protocol website or in their docs.
Projects should also make sure they aren't giving away too much token supply. Sure, it might spike TVL in the short term. But too much sell pressure later will crush the price and kill the community.
The best-case scenario? Striking deals with whales who might actually like the product and stick around even after the lock-in period ends.
What's the takeaway? You can't blindly trust TVL either.
A sudden spike in TVL—especially in a new project—might just be the result of a behind-the-scenes deal. If there's no clear catalyst or some marketing campaign to explain it, raise an eyebrow.
On the flip side, a sharp drop in TVL could just mean the lock-in period on one of these deals ended, and the whales peaced out.
Now, does that mean TVL is useless? Not at all. It's still way more reliable than metrics like active addresses. You just have to stay sharp. Be aware of the potential for manipulation. And definitely do your homework before aping in.
Again, if you want more details, check out this article.
🚀 DeFi Catalysts
Bitcoin is allegedly used to settle energy trade between China and Russia. This is a massive step in the use of BTC as money.
Morpho released the "Migrate" feature. It'll allow users to compare returns from other lending platforms like Aave and Morpho and migrate those positions.
Aave DAO has decided to buy and distribute AAVE using aEthUSDT from the Aave Collector contract. It's part of the new Aavenomics.
Synthetix launched Synthetix Accounts. They're smart wallets designed to make using Synthetix quick and easy.
Euler Finance went live on Avalanche. The new markets on Avalanche will be a new opportunity for Euler's growth.
RISE Chain went live on testnet. It's a MegaETH competitor that looks to build the most performant blockchain as an ETH L2.
Lista DAO introduced its P2P lending platform, a new decentralized lending platform that will go live on BNB Chain.
Origin Protocol is creating a deep liquidity for Super OETH on Curve using Origin's Curve AMO on Base.
M^0's stablecoin platform went live on Solana. KAST will be building the first stablecoin powered by M^0 on Solana.
Layer3 introduced v3. It has introduced a new wallet alongside a redesigned user experience.
Synthetix-native stablecoin, sUSD, has hit a low of about $0.835. It had dropped below $1 in March, but the new is destroying community trust.
🪂 Airdrop Alpha
dYdX launched the dYdX Surge Program, a nine-month trading competition designed to reward active participation and accelerate trading activity on dYdX.
Aerodrome introduced Flight School. It's a program that rewards users who lock over 2,500 veAERO with a veAERO airdrop.
Eigen Stakedrop claim period for season 2 will close on April 14th. If you're eligible, make sure to claim before the deadline.
Wayfinder released the claim portal for $PROMPT, the native token of the AI Agent protocol.
Fleek, an AI Agent infrastructure platform, launched its points program. These points will be used for token airdrop.
Felix Protocol went live on HyperLiquid with a points program. It's a Liquity fork that allows users to mint feUSD.
🐦⬛ X Hits
- Bear market survival tips.
- Analysis of crypto VC networks.
- Binance's report on the impact of Tariffs on crypto.
- State of interoperability standards in Ethereum.
- State of the current market.
😂 Meme
Until next time,
Edgy
Today's email was written by Edgy and Yayya.
DISCLAIMER: I'm NOT a financial advisor. This content is for education and information purposes only. Crypto and DeFi are risky and speculative. Please do your research before investing.
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