Fluidity Aims to Reward Actual DeFi Users Over Profit Farmers | CoinQuest
Fluidity Aims to Reward Actual DeFi Users Over Profit Farmers
If you’ve been in DeFi for a while, you already know about yield farming and the Curve Wars.
But what about utility farming?
A new project called Fluidity claims to be ushering in a new era for handing out crypto coins for different projects. This time, it wants to reward active users—not just mercenary farmers.
Previously, whales would simply deposit their massive holdings into a new protocol, harvest its token launch, withdraw that liquidity, and then dump those tokens (otherwise called yield farming).
Fluidity wants to change this model and pay people for actually using a protocol (rather than just farming it). Here’s how it works.
Users first deposit a stablecoin (i.e. USDT, USDC, DAI, etc) into the Fluidity protocol and get a Fluidity-wrapped token (for the sake of this story, we'll call this asset an fToken, like fUSDT or fUSDC, for example). The original stablecoin is then deposited into a yield-earning protocol like Aave or Compound.
The new fToken operates like any other stablecoin. You can use it to buy NFTs, make simple transfers, or join liquidity pools. The added bonus that comes with these fTokens—and what makes them so unique—is that the more you use it, the higher the chances that you will win a payout.
