DeFi Exchange Fluid DEX Faces $19 Million Losses Due to Rebalancing Mechanism

Fluid DEX, a rising decentralized exchange in the DeFi space, has garnered attention for significant losses reported by liquidity providers in its USDC-ETH pool, amounting to $19 million. The incident has sparked discussions on transparency and accountability in safeguarding users within the DeFi community. Launched in October 2024 amidst an ETH price of $4,400, Fluid DEX aimed to offer high liquidity ratios, attracting numerous LPs. However, with ETH's price plummeting to around $2,550 from $4,400, LPs faced substantial impermanent losses. The automated rebalancing mechanism, intended to enhance profits, turned out to be the main cause of these losses. Despite criticisms and accusations of inadequate risk disclosure, Fluid DEX defended its performance and proposed a compensation plan for affected LPs. This case underscores the importance of understanding risks before engaging in DeFi liquidity provision. Read more AI-generated news on: https://app.chaingpt.org/news