1. Executive Summary
Token Overview
- Ticker: $FLUID
- Current Price: $5.94
- Market Cap: $233M
- FDV: $592M
- Sector: Lending – Borrowing
TLDR;
The Fluid project, a lending and borrowing platform, has rebranded from the well-known Instadapp protocol, which achieved over $5 billion USD in Total Value Locked (TVL) between 2018 and 2021. This rebranding aims to refine and innovate the core lending and borrowing business model, integrating DEX trading infrastructure as a key Unique Selling Proposition (USP) for competitive advantage.
Having raised a total of $24.5 million USD, the project is backed by Tier-1 Venture Capital firms, including Pantera Capital and Coinbase Ventures, who joined in 2021. Currently, the project is supported by DeFi experts from teams like AAVE and LDO. The development team boasts experience in product development since 2018 and was recognized in Forbes’ 30 Under 30 Finance & Business list in 2022.
This expertise is demonstrated by the DeFi products InstaDapp and Fluid. Within three months, Fluid rapidly ascended to the top 3 lending platforms on Ethereum, achieving $1 billion USD in TVL, and secured the top 2 spot in DEX trading volume with over $13.8 billion USD, directly competing with Uniswap.
The tokenomics of the project are structured to alleviate significant selling pressure from investors, with the vesting schedule completing by June 2025. The project’s treasury holds over 40% of the total token supply. This setup minimizes the risk of market dumps and allows the team to focus on driving user adoption and potentially increasing token value.
2. Due Diligence Summary
2.1. Overview
Fluid, a DeFi project specializing in Lending & Borrowing on Ethereum, Arbitrum, and Base, has been rebranded and developed from its predecessor, InstaDapp, which achieved over $6 billion USD in Total Value Locked (TVL) in 2021.
Fluid empowers users to optimize their capital by providing aggregated liquidity across various sources such as Liquidity Pools (LPs), Lending platforms, and Vaults. Following its pivot and rebranding, the protocol has rapidly grown, reaching nearly $1 billion USD on TVL.
The project aims to reduce transaction costs, enhance capital efficiency, and improve interoperability between different DeFi protocols.
2.2. Team
- Samyak Jain: Co Founder & CTO: Co-founded InstaDApp, a prominent Lending Aggregator that optimized transactions and trading management within the DeFi space from 2018 to 2021, achieving a top 5 Total Value Locked (TVL) ranking on Ethereum.
- Sowmay Jain: Co Founder & CEO: Co-founded InstaDapp alongside Samyak and currently serves as the operational lead for Fluid Protocol.
Evaluation
- Leadership Team Expertise: The leadership team possesses extensive experience and a deep background in Blockchain and Business, as evidenced by the success of InstaDApp, a renowned Lending Aggregator from 2018 to 2021, which achieved a top 5 Total Value Locked (TVL) ranking across EVM chains such as Ethereum.
- Recognition and Innovation: In 2022, both leaders were recognized in the Forbes 30 Under 30 list, honored for their contributions to finance and business. This significant achievement highlights their ability to continually develop new and innovative products, driving Fluid Protocol towards broader adoption beyond the traditional Web3 user base.
2.3. Business Model – Product
Lending & Smart Lending
- Lending (earn) on the protocol is similar to the ‘”Earn” feature on other centralized exchanges (CEXs). Users can simply deposit assets like USDC, ETH, and USDT into Fluid with a single click and earn optimized interest rates.
| USDC | ETH | USDT | wstETH | GHO | sUSDs | |
| Net APR | 9.21% | 1.88% | 9.11% | 3.08% | 3.75% | 8.75% |
| Total Liquid Supply | $1,5B USD | |||||
- Smart Lending offers users an optimized and higher interest rate compared to regular Lending (earn) by requiring the deposit of specific asset pairs, coupled with bonus reward points (airdropped) from other protocols integrated on Fluid.
Borrowing
For borrowing services, users have the flexibility to choose from a variety of token pairs supported by the protocol within the Vaults. Each token pair will have different Loan-to-Value (LTV) ratios, Supply Rates, and Borrow Rates.
For example: Collateralize $ETH tokens to borrow $USDC tokens at a specific ratio:
- Supply Rate: 1.87%
- Borrow Rate: 6.65%
- Collateral Factor (LTV): 87%
- Liquidation Threshold: 92%
- Liquidation Penalty: 1%
In addition to the aforementioned services, users can utilize integrated ‘Strategies’ within the dashboard, allowing for easy operation and optimal management of their assets.
For example: The ‘Vaults Swap’ feature enables users to directly convert between different collateral assets within the Fluid Protocol, eliminating the need to:
- Withdraw collateral assets
- Repay loans
- Deposit new assets
- DEX Trading Infrastructure
Understanding market demands and user insights, the project has developed a DEX trading infrastructure (not a dApp) integrated into its lending and borrowing system to:
- Enhance Asset Utilization: Maximize the use of assets.
- Improve Capital Efficiency: Optimize capital usage.
- Introduce New Financial Primitives: Utilize debt and collateral as liquidity sources, a key differentiator from all current competitors in the market, including Aave and Morpho
Multiply
The Multiply feature helps users optimize their capital flow, operating on a mechanism similar to borrowing, but with key differences:
- Leverage Flexibility: Users can utilize the maximum leverage ratio available for each asset pair.
- Integrated Collateral and Debt: When collateralizing an asset and using leverage to borrow a corresponding asset, those assets cannot be transferred elsewhere for trading.
- Enhanced Rewards: Users also receive additional reward points from the project for supporting those specific assets
Business Model Assessment
User Experience: Overall, the project’s product is evaluated as highly user-friendly, with a simple UX/UI design that facilitates easy onboarding for new users.
Core Focus and Liquidity Aggregation:
- Internally, the project has strategically focused on developing its core Lending & Borrowing sector. This sector has long been an indispensable Product-Market Fit (PMF) within the market.
- The project has skillfully constructed a “liquidity layer” to consolidate various liquidity sources, preventing fragmentation:
- Lending (earn) + Smart Lending + Vaults Protocol (from other protocols) = Borrowing -> Deepest Liquidity.
- Notably, the Vaults Swap feature, which operates on asset pairs, is a novel addition compared to competitors, providing users with enhanced asset management flexibility.
Revenue and Growth Potential
2.4. Competitive Landscape
Market Sector
| Chain Ethereum | TVL ($27.66B) | % share | 30D Change |
| Aave | $17.32B | 62.6% | -5.38% |
| Morpho | $3.44B | 12.4% | +3.3% |
| Spark | $2.99B | 10.8% | -15.71% |
| Compound | $2.41B | 8.7% | -5.46% |
| Fluid | $838M | 3.03% | +23.61% |
| All Chain | TVL($46.78B) | % share | 30D Change |
| Aave | $20.2B | 43% | -6.83% |
| Morpho | $3.92 | 9.18% | -0.47% |
| Spark | $3.09B | 6.6% | -15.92% |
| Compound | $2.75B | 5.88% | -6.99% |
| Fluid | $936M | 2% | +21.18% |
| January 2025 | Aave | Morpho | Spark | Compound | Fluid |
| TVL (all chain) | $20.2B | $3.92 | $3.09B | $2.75B | $936M |
| % share | 43% | 9.18% | 6.6% | 5.88% | 2% |
| MAU | 131k | 26.7k | — | 4.6k | 14.5k |
| Fee | $77.3M | $20.8M | — | $6.15M | $6.3M |
| Revenue | $13.8M | — | — | $645k | $790k |
| LTV | 80% | 85% | — | — | 85% |
| Liquidation threshold | 83% – 89% | 90 – 94.5% | — | — | 90 – 97% |
| Liquidation Penalty | 5% | 1% | — | — | 0.1 – 1% |
Market Analysis within the Lending Sector
Ethereum Lending Landscape
- In the competitive lending sector, specifically on the Ethereum chain, which boasts a total TVL of $27.66 billion, Aave and Morpho consistently hold the top 1 and 2 positions respectively, from Q3/2024 to the present.
- Aave’s TVL stands at $17.32 billion (62.6% market share), while Morpho’s TVL is $3.44 billion (12.4% market share).
Fluid Protocol’s Growth
- Over the past 30 days, most projects have experienced a notable decrease in TVL, with an average reduction of -5%, except for Fluid Protocol.
- Fluid Protocol has achieved a TVL of $838 million on Ethereum, securing the 5th position with a 3.03% market share.
- Fluid has demonstrated a steady growth rate of 27% per month since October 2024.
- Fluid has already surpassed compounds in MAU & Fee.
- Fluid protocol is forecasting to enter the top 3 market share, behind Aave and Morpho.
Milestone Growth On-Chain
- Total Value Lock
Fluid’s mainnet launch in October 2024 demonstrated significant and sustained TVL growth month over month, with a consistent increase of +23%. The majority of this TVL, 85%, originates from the Ethereum chain, with the remaining portion distributed across Base and Arbitrum. A substantial portion of the locked assets consists of wrapped ETH ($wrapETH) and stablecoins, contributing significantly to the TVL increase
- DEX Trading Volume
The daily trading volume averages $240 million USD, with a consistent monthly growth rate of 51%, reaching $5.5 billion USD per month to date.
Fluid holds the number 2 market share in DEX volume, directly competing with Uniswap. This is a significant highlight that positions Fluid for strong growth and increased market share within the lending and DEX sectors.
The project’s intelligent strategy of integrating DEX trading as infrastructure (not a dApp) directly into its lending and borrowing system has directly driven volume growth. This is evident in the increased trading activity of popular pairs such as ETH/USDC and cbBTC/WBTC.
- Roadmap – Catalyst2025
Within three months of launch, Fluid achieved significant milestones, including a DEX volume exceeding $5.5 billion USD, ranking 2nd on Ethereum, and a TVL growth to $1 billion USD. This demonstrates the project’s long-term vision to establish itself as a financial hub.
The short-term roadmap for 2025 outlines key catalysts for Fluid’s further breakthrough:
- High Volatility DEX Pairs: Listing of high volatility trading pairs on the DEX.
- New Protocols Built on Fluid: Development of new protocols on the Fluid platform.
- Layer 2 DEX: Launch of a DEX on Layer 2 solutions.
- Vaults ETH Lite Upgrade: Enhancement of the Vaults ETH Lite feature.
- Expanded Asset Listings: Addition of more assets on Fluid.
- DEX v2: Launch of DEX v2, a significant upgrade offering 10x improvement over the current DEX.
- Token Buy-Back Program: Notably, the project has committed to initiating a token buy-back program using the x*y=k model (on the DEX) once annual revenue reaches $10 million USD (currently at $2 million USD).
2.5. Tokenomics
Token Info
- Total Supply: 100M
- Circulating Supply: 39.4M ~ 39.43%
- Price: $5.94
- Market Cap: $233M
- FDV: $592M
Raised Fund
- Total Raised Fund: $24.50M
- Investors: Coinbase Ventures, Pantera Capital, Standard Crypto
Token Use Case
- Governance
- Incentives
Token Allocation & Vesting
Analysis and Observations
Tokenomics Overview
- The $Fluid token was previously listed as $INSTA in 2021. In October 2024, the project rebranded, maintaining the same total supply of 100 million tokens at a 1:1 ratio.
Vesting and Investor Impact
- Currently, nearly 50% of the total supply is under vesting, with 231,704 $FLUID tokens (0.23% of total supply) being distributed to investors monthly, equivalent to approximately $1.9 million USD.
- Despite an average ROI of over 10x for private investors, there is no significant downward pressure on the price, as the daily trading volume of $2.6 million USD provides sufficient absorption.
- Notably, the investor vesting period concludes in June 2025.
Treasury and Market Control
- The project’s treasury and future allocations hold a substantial portion of the remaining tokens, over 40% of the total supply, which minimizes market-driven price volatility.
Valuation Metrics
- When comparing the Price/Revenue metrics (circulating and fully diluted) of Fluid to its top 1 and 2 competitors, Fluid exhibits a higher multiple, approximately 10x to 20x. This is attributed to the price surge in October 2024, from $1.23 to $9.52 (a 673% increase) by December.
- Growth Potential
- However, considering the 2025 roadmap, the innovative business model compared to competitors, and the potential for increased market share, particularly in the Ethereum ecosystem, Fluid is well positioned for further growth and to potentially enter the top 3 market share
| Aave | Fluid | Morpho | Avg | |
| Market Cap | $3.81B | $304M | $501M | $1.5B |
| FDV | $4.1B | $809M | $2.3B | $2.4B |
| Revenue | $93M | $6.03M | — | — |
| Price/Revenue (circulating) | 40.9x | 50x | — | 45.5x |
| Price/Revenue (Fully diluted) | 44x | 134x | — | 89x |
| MC/TVL | 0.19 | 0.3 | 0.12 | 0.2 |
The information provided in this article is for reference only and should not be taken as investment advice. All investment decisions should be based on thorough research and personal evaluation.
