DEX Protocol

By introducing the Smart Collateral & Smart Debt, users will be able to earn additional yield on both their collateral and debt. Smart Collateral (essentially DEX’s LP with added composability) enables users to utilize their capital for various activities, such as:

• Lending

• Borrowing against it

• Deploying it as AMM liquidity (earning both lending and trading fees)

Smart Debt allows borrowed assets to contribute to liquidity pools. Trades get routed through Smart Debt liquidity, and the generated trading fees are used to pay down the debt (unlike other protocols where debt leaves the lending protocol, Smart Debt is still used as DEX trading liquidity).

1. When a user deposits ETH as collateral.

2. Instead of borrowing directly from an isolated lending pool (as in Aave or Compound), Fluid routes this borrowing through a Smart Debt pool.

3. The borrowed USDC becomes part of the pool and contributes to the overall liquidity. Because of this, the borrowed amount earns trading fees, reducing the interest rate and borrowing costs.

Oracles on Fluid

Fluid’s DEX has inbuilt TWAP oracles designed to effectively track asset prices with minimal gas costs. Includes highest and lowest asset prices during the same period that helps traders analyze price volatility to make smarter decisions while ensuring positions are not unfairly liquidated due to temporary price spikes.