In the Decentralized Finance (Defi) world, Fluid Dex – an emerging decentralized exchange – attracted great attention. Liquidity providers (LPS) in his USDC ETH pool have reported losses up to $ 19 million caused by the platform’s herbalance mechanism.
This incident has called on the debate about the Defi community and has raised serious questions about transparency and accountability for protecting users.
Ethereum -Volatility causes losses for liquid dex
Fluid Dex was launched in October 2024, when ETH traded around $ 4,400. The platform promised to generate the liquidity of a maximum of $ 39 for every $ 1 total value locked (TVL), which puts on many LPs to offer liquidity to Polish such as USDC ETH.
However, since the early 2025, the price of ETH has fallen below $ 1,400 at some point and now floats around $ 2,550. This sharp decline caused serious perishable losses. According to the Fluid report, the automated herbalance mechanism of the Pool – designed to optimize the profit – was the primary source of these losses.
“While the Pool performs exceptionally well when prices stay Within Range (Accruing Strong Fees for LPS), High Volatility Triggers rebalancing. This Happens Gradually Through Trades Routed Via The Pool – From ~ ~ $ 3560. Mechanism Incurs Realized Losses for LPS that outweighed Fee Income, “Samyak Jain, Co-Founder of Fluid, Said.
Rebalancing -mechanisms in AMMs such as Fluid automatically adjust the actor file ratio of the Pole to maintain a balanced value based on mathematical formulas. This approach ensures stable liquidity and optimizes income from trading costs, especially in Polish with a large volume.
However, the risks are considerable, especially in volatile pools such as USDC eth. When the asset prices fluctuate heavily, they cause the perishable loss. This means that LPS can suffer losses compared to simply keeping the assets outside the swimming pool.
Data from Dune Analytics show a sharp fall in the Fluid Vault TVL. From mid -May 2025, cumulative losses reached $ 19 million for LPS.
Liquid vluis TVL & Netflows. Source: Duin
The tensions then escalated Defi news provider Defimoon publicly criticized and paid important opinion leaders (KOLs) for not warning users of the re -balancing risks.
Defimoon claimed that liquid promoted heavily the swimming pool, promising high yields and even suggested that the uniswap could surpass, one of the best Dex’s. However, they said that the platform hardly mentioned the herbalance risks, so that many inexperienced LPs were left with heavy losses.
“None of them has ever balanced as a potential issue and I am pretty sure that neither of them has put a single dollar in capital in this pool!” Defimoon.
Yet Samyak Jain defended the platform. He emphasized that the Stablecoin -Pools from Fluid still perform well and continue to generate strong returns for LPS. He also denied the $ 19 million figure and claimed that the ETH-USDC-Pool only suffered “partial loss” due to general market volatility, not as a result of any liquid error itself.
Liquid proposed a compensation plan to support the affected LPs. It offered 500,000 liquid doks, worth $ 2.6 million, with a one -year schedule.
The liquid DEX case serves as a warning for the Defi community. Understanding risks is crucial before you offer liquidity to every pool.
