Fluid will be the home of on chain FX.
On chain FX will predominantly be driven by OTC desks and fintechs looking to avoid taking balance sheet risk. DEX liquidity alone cannot support OTC desks/fintechs due to slippage on a high number of transactions.
Instead, on chain FX will be a hybrid of maintaining borrow/lend positions, and periodically rebalancing via DEX's.
OTC Desks/Fintechs will borrow in order allow swaps to long tail currencies, and repay debt when receiving opposite flow. This will mean they can execute payouts with 0-slippage, and automatically net flows - minimising rebalancing size.
read image descriptionALTFluid
Benefits:
1. no slippage on borrow/lend, only on periodic rebalance
2. free clearing house matching order flow - no need for desks/fintechs to build their own netting service to match in/out flows, minimising rebalancing size
Why Fluid:
1. Fluid is the cheapest and most efficient way to bootstrap DEX and lending liquidity - both of which are required in order for this to work
2. cross margin on DEX v2 will enable maintaining 1 collateral balance to serve several currencies - minimising management overhead and maximising capital efficiency.
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