Unleashing Market Making Potential: An Overview of Fluo Finance

Fluo is a groundbreaking protocol that revolutionizes liquidity management and market making in the world of DeFi. It is the first omnichain liquidity platform that enables automated market making strategies on any chain. Its goal is to generate market making returns for users across the crypto landscape while providing a mechanism for other DEXs and protocols to incentivize liquidity and loyalty.

Key Features of Fluo

1. Automated: Fluo provides the first liquidity management solution for perp DEXs, allowing users to automate market making strategies.
2. Convenient: Users can earn the best yield by deploying liquidity to any perp DEX, from any chain, with just one click.
3. Sustainable: Fluo supports various DeFi parties, including liquidity providers, DEXs, protocols, and traders, to achieve sustainable real yield.

Why is Fluo a protocol needed in today’s DeFi landscape?

Fluo’s mission is to open up non-custodial market making to everyone at a low cost and with the best execution. The goal is for Fluo to become the go-to solution for liquidity providers to manage their liquidity effectively.

Fluo addresses critical gaps in liquidity management within crypto markets. While DeFi has experienced tremendous growth, liquidity fragmentation across various chains and DEXs remains a significant challenge. This fragmentation leads to suboptimal liquidity utilization and inefficiencies in trading.
By enabling liquidity providers to participate in market making easily and cost-effectively, Fluo aims to unlock the full potential of decentralized liquidity.

Fluo provides a win-win solution for liquidity providers, DEXs, traders, and protocols.
• Liquidity providers can earn high APY through professional market making strategies while receiving incentives.
• Protocols can incentivize liquidity to boost their token’s liquidity and volume.
• DEXs can attract more traders and increase their fees by offering greater liquidity and listings.
• Traders benefit from lower spread and slippage, similar to centralized exchanges, and a wider selection of perpetuals.

Fluo simplifies liquidity management with automated farming and a range of low-fee compounding vaults. Users receive 90% of the generated yield, while FLUO stakers earn the rest. The vault performance fee varies but typically ranges from 3% to 20%, averaging at 10%.

Fluo’s Building Thesis:

• CEXs have significant issues, leading to a rise in decentralized trading protocols.
• Perp DEXs lack liquidity, and Fluo aims to provide the liquidity needed for their success.
• The perp trading market on DEXs has immense growth potential compared to CEXs.
• DEXs have matured and found product-market fit, with various models catering to different needs.

So how does Fluo actually work?

Here is the perfect info-graphic created by Fluo Team. For those seeking a more detailed exploration, we invite you to delve into their documentation: https://docs.fluofinance.com/getting-started/welcome-to-fluo/how-does-fluo-work.

Tokenomics Overview

Fluo introduces a comprehensive token ecosystem with different variations of the $FLUO token, each serving unique functions and benefits:

1. $FLUO: serves as the liquid token within the ecosystem. It can be acquired through two primary methods: vesting $esFLUO into $stFLUO or purchasing it from the open market.
2. $esFLUO: epresents the escrowed and staked version of FLUO. It is obtained by providing liquidity to Fluo vaults and receiving esFLUO incentives. esFLUO is non-transferable and automatically vests into stFLUO over a 12-month period. When claiming esFLUO, the vested portion converts into stFLUO and can be unlocked and withdrawn.
3. $stFLUO: is the liquid staked version of FLUO that accrues value from vault fees. It can be obtained by claiming or unlocking stFLUO from the esFLUO vesting contract, buying it from the open market, or staking FLUO directly into stFLUO. Unstaking stFLUO into FLUO takes 14 days and provides FLUO based on the ratio held in the smart contract.
4. $veFLUO: represents the vote-escrowed version of stFLUO. It is obtained by escrowing stFLUO tokens, either directly or by converting esFLUO with a lock duration twice the remaining vesting period. veFLUO gradually converts into stFLUO over time. Holding veFLUO provides benefits such as reward boosting, increased voting power, and the ability to receive bribes.

The token distribution of FLUO consists of allocations for liquidity providers, the ecosystem, treasury, public sale, airdrops, and the team. These allocations are subject to different vesting periods and play crucial roles in incentivizing participation, supporting growth, and maintaining long-term stability.

Roadmap

Fluo has developed a comprehensive roadmap to guide its progress and achieve its goals. The roadmap outlines the key milestones, initiatives, and developments planned for the project.

As for the upcoming events:

1. Airdrop Event: Fluo will be conducting an airdrop event, distributing 3% of the total token supply to eligible participants. The purpose of the airdrop is to reward community members and generate interest in the project. To qualify, simply interact with prominent DEXs or liquidity management protocols such as Demex (most important), GMX, GainsNetwork, MuxProtocol, Uniswap, and PancakeSwap.
2. Token Generation Event (TGE): Fluo will be launching its token sale through public events only. The project will soon announce its partnering launchpads across various blockchain networks. To stay updated on the upcoming TGE, it is recommended to follow Fluo’s official Twitter account for the latest information.

Perspectives from Fluo: Short Q&A

We had the opportunity to ask Fluo’s team some questions to gain further insights into their platform. Here’s what they had to say:

• How does Fluo differentiate itself from other liquidity platforms in the market?
  A: While most liquidity platform focuses on spot, Fluo focuses on perp markets which we feel is an underserved market at the moment with a high upside based on CEX vs DEX volume.
• Can you explain the concept of “omnichain liquidity”?
  A: It means that users are able to bridge from any of the supported chains to any of the market making vaults which can be on another chain. I.e. If i am on BSC, I can deposit my liquidity to a vault on arbitrum without doing any bridging myself.
• Could you elaborate on the gauge, bribing, and bonding mechanism that incentivizes liquidity?
  A: The gauge systems means voters, users that vote escrow stFLUO, vote for which vault to receives FLUO incentives in order to attract more liquidity. Bribing means anyone can bribe these voters to vote for their vault, and voters receive the bribes, earning additional yield. Bonding means liquidity providers can bond their LP for additional external incentives.
• What benefits does Fluo offer to liquidity providers, DEXs, protocols, and traders in terms of sustainable real yield and improved liquidity management?
  A: Liquidity providers are attracted by the high APR from FLUO incentives but they stay for the real yield which comes from traders being attracted by the liquidity and paying LP fees and trading losses. DEXs receive more trading volume and thus revenue. Protocols can work with DEXs to list their perp market and bribe liquidity to it for purposes like hedging, supplementing existing spot market liquidity, etc.
• In what ways does Fluo contribute to the overall growth potential of the perp DEX market, and what trends do you foresee in terms of perp volume on DEXs versus CEXs?
  A: Fluo is a liquidity marketplace for perp DEXs, facilitating and attracting more LPs to provide liquidity to perp DEXs. The volume of spot vs perp on CEXs is 1:3 ratio, however spot vs perp on DEXs is 2:1 ratio, thus there is a huge imbalance that could be due to the lack of liquidity on-chain, and we see that the trend will eventually be up due to improvements in DEXs and worries about CEXs.
• How does Fluo ensure the security and reliability of its platform?
  A: Fluo will be using established bridging partners as well as having its contracted audited by established audit firms and will roll out with a softcap on vault capacity.
• What are some of the significant challenges or obstacles that Fluo has encountered or foresees in its journey, and how does the team plan to overcome them?
  A: Doing more marketing to increase our social media presence in preparation for our launch.

We greatly appreciate the Fluo team for taking the time to provide responses to our questions. We look forward to staying connected with them and following their exciting journey.

Overall, Fluo fills critical gaps, unlocks decentralized liquidity, and offers new opportunities for liquidity providers, protocols, DEXs, and crypto traders. By automating market making strategies on perp DEXs, Fluo offers convenience, high yield, and increased liquidity for participants.

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