Instadapp Introduces Fluid DeFi Protocol

Quick Take

• Instadapp introduces Fluid.
• Morpho Labs unveils Morpho Blue.
• EigenLayer outlines Programmable Trust.
• Native USDC goes live on Polygon PoS.

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Instadapp Introduces Fluid

Instadapp introduced Fluid, a foundational protocol upon which various DeFi protocols can be built on top of. At the core of Fluid is a liquidity layer that consolidates liquidity and enables protocols to deposit, borrow, withdraw, and repay assets. Liquidity remains on the Liquidity Layer even as users shift to a new protocol, eliminating liquidity fragmentation and the need to bootstrap liquidity from scratch when a new protocol is launched. Fluid features automated limits that dynamically modify debt and collateral ceilings with each block to safeguard against unusually large withdrawals, mitigating the risk of bad debt events. The protocol will use Instadapp's INST token for governance and will launch on mainnet in January 2024.

Fluid Lending, Vault, And DEX

Initially, Fluid will host three protocols: a lending protocol, a vault protocol, and a DEX. The lending protocol offers low gas-cost lending and compatibility with ERC-4626 for interest-bearing tokens. The vault protocol enables users to initiate CDP positions, allowing them to borrow up to 95% LTV of their ETH value. The protocol only liquidates the required debt until the LTV threshold is met. It uses price data from both Uniswap and Chainlink for its Oracle system. Lastly, the DEX protocol introduces smart debt and smart collateral features, enabling users to utilize their debt and collateral for liquidity while gradually paying down debt through trading fees.

Morpho Blue Lending Protocol

Morpho Labs introduced Morpho Blue, a new lending protocol designed to serve as a base protocol, enabling additional layers to be built on it. The protocol isolates lending markets, allowing for higher collateralization factors and improved interest rates. Morpho Blue is set to operate with minimized governance. Morpho Labs previously created a lending pool optimizer that is built on Compound and Aave. It now seeks to overcome constraints encountered with its optimizer by rolling out a native protocol. The codebase along with a whitepaper has also been released. A testnet deployment is expected in the upcoming weeks.

Programmable Trust On EigenLayer

EigenLayer released a post outlining three forms of programmable trust available on its protocol, which are Economic Trust, Decentralized Trust, and Ethereum Inclusion Trust. Economic Trust provides security through financial commitments, enabling onchain penalization for verifiable malicious deviations. Decentralized Trust relies on a broad and geographically diverse set of validators to prevent potential node collusion. Ethereum Inclusion Trust ensures that Ethereum validators build and include blocks as pledged. Protocols on EigenLayer can program trust models tailored to their Actively Validated Services (AVS).

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