Hey there, crypto enthusiasts! If you're into DeFi and tokenomics, you've probably heard the buzz around FLUID, the rebranded token from Instadapp that's making waves in lending and borrowing protocols. Recently, DeFi analyst Ignas dropped a thread on X about FLUID's upcoming buybacks starting October 1st, and it's got the community talking. The DAO is set to vote on one of three models to handle revenue allocation for buying back and potentially burning tokens. Let's break it down simply, so even if you're new to this, it all makes sense.

First off, what's FLUID? It's the governance and utility token for the Fluid protocol, built by Instadapp. Fluid aims to make DeFi lending safer and more efficient by aggregating liquidity and offering features like 0% interest loans in some cases. The token, $FLUID, helps with governance and captures value from the protocol's fees. Now, with buybacks on the horizon, the team wants to use revenue to support the token price, especially when it's undervalued. This is a common strategy in crypto to reduce supply and boost holder value.

In the original thread, Ignas outlines three models, complete with a handy graphic. Here's the image for a quick visual:

Model 1: Dynamic Buyback Based on FDV (x * y = k)

This one's all about the fully diluted valuation (FDV), which is basically the token's total potential market cap if all tokens were in circulation. If the FDV is below $0.5 billion, 100% of revenue goes to buybacks. As FDV climbs, the percentage drops following a curve (think of it like a hyperbolic function where x times y equals a constant k).

Pros: It ramps up buybacks aggressively when the token seems cheap, potentially stabilizing the price during dips.

Cons: It might create a mental "price ceiling" – folks could think the team won't support it much once it hits higher valuations, which might cap upside perception.

Model 2: 30-Day TWAP Buyback

TWAP stands for Time-Weighted Average Price, a way to smooth out price over time to avoid manipulation. Here, if the current price is below the 30-day TWAP, all revenue goes to buybacks. If it's above, nothing happens – saving treasury for rainy days.

Pros: Builds reserves during bull runs and deploys them in bears, buying when the token's under pressure.

Cons: Could mean buying at relatively high prices if the dip follows a recent peak, and it might miss gradual uptrends.

Model 3: Hybrid Approach

This combines the best of both worlds. In pumping bull markets, buybacks are minimal to grow the treasury. In bears, it scales up using the FDV curve, going aggressive when the token's deeply undervalued.

Pros: Adaptive to market conditions, balancing growth and support without overcommitting.

Cons: A bit more complex, but that's the trade-off for flexibility.

From the thread's replies, the community leans heavily toward the hybrid model. Users like @BananaOfMercy joked about a "fluid autumn," while @0xJenWeb3 and @ModestusOkoye praised its balance across cycles. @RubiksWeb3hub even plans to feature it in an upcoming article on sustainability. Overall, it seems like hybrid is the crowd favorite for maintaining a healthy treasury while stepping in when needed.

So, which model do you think the DAO should pick? If you're holding $FLUID or just watching DeFi trends, this vote could shape the protocol's future. Keep an eye on Fluid's official site and governance forums for updates. In the volatile world of crypto, smart tokenomics like this can make all the difference in building long-term value. What are your thoughts – drop a comment below!