In the vibrant, open-source landscape of decentralized finance (DeFi), the concept of “aggregation theory”—a notion that success comes from building upon and integrating numerous applications—has garnered considerable attention. Notable DeFi aggregators like 1inch, Matcha, Summer.fi, and Instadapp have been the keen followers of this approach. However, the theory hasn’t been as successful as anticipated, with the exception of Jupiter in Solana world.
Ethereum DEX aggregators, in theory, should have outperformed Uniswap, but they haven’t. Instadapp, a DeFi aggregator that heavily invested in building upon flagship DeFi protocols like Uniswap, Maker, Aave, Compound, and Curve, found itself in a similar predicament.
After two years of development, Instadapp reinvented itself. From being an aggregator, it transitioned into a platform featuring a fully-fledged DeFi product, Fluid, while the original Instadapp continued as a yield aggregator product. The pivot has proven successful for Instadapp, with Fluid currently boasting $1.2 billion in TVL across its money market. Furthermore, the Fluid DEX on Ethereum has witnessed approximately $428 million in 7-day trading volumes, making it the third-largest DEX after Curve and Uniswap.
Fluid is more than an app; it’s a superapp ecosystem. Its pooled liquidity layer forms the base of the protocol, upon which its own DEX, money market, and other vault applications reside. Fluid has borrowed heavily from DeFi’s market-tested primitives, such as Uni v1’s auto rebalancing, Uni v3 concentrated liquidity, Aave’s utilization rate curves, Maker vault’s debt ceilings and more. Alongside these borrowed features, Fluid also introduces unique DeFi innovations including more capital-efficient ways of liquidity provision through its “smart collateral” and “smart debt” features.
The “smart debt” feature allows borrowers to convert their debt into trading pairs as liquidity for a Fluid DEX trading pool. This makes debt a productive asset as borrowers can maintain an active loan while earning fees from traders to offset the original debt. Conversely, “smart collateral” enables LPs to rehypothecate their lending LP positions as collateral for AMM liquidity on the Fluid DEX, earning trading fees on top of lending fees.
Fluid’s governance is controlled by the INST token. Despite a previous lackluster performance, the token has seen a 4x surge in the last month. A recent governance proposal seeks to convert INST to FLUID at a 1:1 ratio without any dilution or total supply changes. Once Fluid reaches an annualized revenue target of $10 million, a token buyback program will be initiated to create value accrual for the token.
This innovative approach and the successful pivot of Instadapp illustrate the dynamic nature of the DeFi landscape, where adaptability and innovation play crucial roles in achieving success.
