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What is Fluid Protocol?

Fluid Protocol enables non-custodial, permissionless markets for decentralized lending and leveraged yield farming. Inspired by groundbreaking projects such as Aave, Compound, Uniswap and Liquity. Fluid Protocol allows an entirely new DeFi experience.

Fluid Protocol contracts are permissionless, non-upgradeable, and designed to operate with minimal governance.

With Fluid, farmers can start earning yield from liquidity providing on DEXes with a single token deposit. Fluid eliminates the risk of impermanent loss for these farmers (suppliers) removing one of the biggest negatives of liquidity providing.

How does this work? Rather than depositing funds directly into DEX contracts, the funds are provided to borrowers who use them to increase their farming earnings through leverage. The additional earnings are then shared with the lender in the form of interest. This method is referred to as Indirect Liquidity Providing. It's important to note that borrowers are responsible for any potential impermanent loss risk, not the Indirect Liquidity Providers.

This is a great benefit for people who want to earn DEX yields with less risk, but it’s also a benefit for DEXes since it helps more risk-averse users safely participate in liquidity providing.

Each lending pool represents a pair of 2 tokens of a DEX. Lenders can supply tokens to any lending pool to earn passive yield without impermanent loss. Borrowers can deposit LP tokens in a lending pool to borrow tokens of the token pair. This enables borrowers to leverage their LP tokens and get even more LP tokens, allowing for leveraged yield farming and enhanced LP rewards.

Anyone can create a lending pool, and all lending pools are isolated. If a borrower gets liquidated in one lending pool, other lending pools are unaffected.

What are the key benefits of Fluid?

Fluid Protocol’s key benefits include:

  • No Impermanent Loss: Lenders can supply tokens to any lending pool to earn passive yield without impermanent loss.

  • Leverage Your LP Tokens: You can take LP tokens from a DEX like PulseX and use them as collateral to borrow more of the same token.

  • Risk Management: Fluid enhances capital efficiency and security through a robust risk management system.

  • Liquidity Incentives: Fluid rewards users for participation, such as lending or borrowing.

  • Diverse Investment Strategies: Fluid facilitates a range of investment strategies, enabling investors to navigate and optimize their financial positions based on their individual risk tolerance and market expectations.

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