Instadapp Launches Fluid, Competing with Aave and Uniswap in DeFi
In an open-source industry where applications can be easily forked, “aggregation theory” — the investor thesis that successful projects should integrate multiple applications — gained traction during DeFi summer. Middleware DeFi aggregators like 1inch, Matcha, Summer.fi (formerly Oasis), and Instadapp have pursued this concept, but it has largely not succeeded, with Jupiter in Solana being a notable exception.
Ethereum DEX aggregators have not surpassed Uniswap despite theoretical advantages. Instadapp, initially focused on aggregating blue-chip DeFi protocols like Uniswap, Maker, Aave, Compound, and Curve, has transitioned after two years of development into a platform offering a comprehensive DeFi product: Fluid, while its original aggregator remains as a yield aggregator.
Fluid has achieved significant success, currently holding $1.2 billion in Total Value Locked (TVL) across its money market, with about $428 million in 7-day trading volumes, making it the third-largest DEX behind Curve and Uniswap.
Fluid is a superapp ecosystem featuring a pooled liquidity layer that supports its DEX (launched in early November), money market, and other vault applications. It employs established DeFi primitives such as Uni v1’s auto rebalancing, Uni v3 concentrated liquidity, Aave’s utilization rate curves, and Maker vault’s debt ceilings, while introducing innovative features for enhanced capital efficiency.
“Smart debt” allows borrowers to use their debt as liquidity for Fluid DEX trading pools, enabling them to earn fees from traders while maintaining active loans. This approach creates liquidity in a manner distinct from traditional liquidity providers (LPs). For instance, a trading pool like USDC-USDT can have $20 million in liquidity without corresponding TVL.
“Smart collateral” enables LPs to utilize their LP positions from lending as collateral for AMM liquidity on Fluid DEX, allowing them to earn both DEX trading fees and lending fees. While past DEXs like Cream Finance explored similar concepts, Fluid's execution is noted for its efficiency. According to Instadapp's COO DMH, Fluid DEX v2 plans to allow users to select ranges for both collateral and debt, marking a significant advancement.
The governance of Fluid is managed by the INST token, which has recently seen a price increase. A new proposal suggests converting INST to FLUID at a 1:1 ratio without altering total supply. Upon reaching $10 million in annualized revenues, Fluid will initiate a token buyback program to enhance value for token holders. Additionally, the proposal allocates 12% of tokens for growth initiatives, including CEX listings and market making, along with 5% for FLUID liquidity across DEXs.
