In the fast-paced world of decentralized finance (DeFi), innovations that streamline liquidity and trading are always a hot topic. Recently, DeFi expert Ignas shared some exciting thoughts on Fluid, a protocol that's blending lending and decentralized exchange (DEX) features into a single liquidity layer. If you're into crypto, this could be the next big thing to watch. Let's break it down based on his thread on X.

Fluid stands out because it merges lending and DEX operations. In simple terms, a lending protocol lets users deposit assets to earn interest or borrow against collateral, while a DEX allows peer-to-peer trading without intermediaries. By combining them, Fluid creates a more efficient system where borrowed assets can also facilitate trades, generating extra fees that benefit everyone involved.

According to Ignas, since October, the $FLUID token has seen 0.5% of its total supply bought back from revenue—not burned, as some might say, but removed from circulation and held in the treasury. This reduces the available supply over time, which can potentially drive up value as demand grows. It's just the beginning, he notes.

The real buzz is around Fluid DEX V2, set to launch soon with support for volatile asset pairs. Right now, Fluid focuses on correlated pairs like USDT/USDC or ETH/wstETH, where prices move similarly. This has already propelled Fluid to handle massive volumes—over $155 billion in its first year—and capture significant market share on Ethereum.

For instance, it accounts for 53.3% of all USDC-USDT trades on Ethereum, 79% of GHO-USDC, and a whopping 89% of sUSDe-USDT. That's impressive for a protocol that's only been live a year. And get this: Fluid has become the second-largest DEX on Ethereum by volume, all while sticking to those stable pairs.

What makes Fluid tick? Unlike traditional DEXs like Uniswap or Curve, which often rely on incentives to attract liquidity providers (LPs), Fluid leverages its lending base. Deposits are already there for borrowing, and trading fees add bonus yields without needing extra bribes. This leads to lower fees for traders and better conditions for borrowers.

Ignas highlights a flywheel effect: Better yields and borrowing terms attract more deposits, which boost liquidity, drive trading volume, increase market share, and loop back to even higher yields. Since DEX V1 launched, Fluid's total value locked (TVL) has skyrocketed from $700 million to $5.5 billion across EVM chains and Solana via Jupiter Lend.

With V2 introducing concentrated liquidity, custom price ranges, and dynamic fees for volatile pairs, Fluid is poised to expand massively. Ignas predicts it could become the top DEX across all DeFi by Q1 2026.

There's also a nod to the team's due diligence skills. The collapse of hedge fund stablecoins like xUSD shows Fluid's ability to navigate risks effectively. Every day the protocol runs smoothly adds to its "Lindy" effect—a concept meaning the longer something survives, the longer it's likely to keep going.

In a reply, Fluid co-founder Samyak Jain clarified that the tokens are bought back, not burned, and now sit in the treasury. This still takes them out of the market, supporting the token's economics.

If you're a blockchain practitioner looking to stay ahead, Fluid's model could redefine how we think about liquidity in DeFi. Keep an eye on the V2 launch—it might just flip the script on established players like Uniswap.

For more on meme tokens and DeFi insights, check out our knowledge base at Meme Insider. What do you think—will Fluid hit that #1 spot? Share your thoughts!