Fluid collateral refers to assets that can be easily and quickly used as a form of security for loans in decentralized finance (DeFi) applications. Unlike traditional collateral that might be locked up for a specific loan term, fluid collateral can be rapidly transferred or reallocated.This flexibility allows users to take advantage of various financial opportunities without being hindered by their locked assets. For example, if someone has deposited cryptocurrency as collateral for a loan, they can still move or utilize that collateral in other ways, perhaps by using it again as collateral for another loan. Fluid collateral enhances liquidity and efficiency within DeFi platforms, encouraging more users to engage with these services. It facilitates dynamic financial strategies and risk management, enabling users to optimize their investments while maintaining access to their assets. Overall, fluid collateral represents a key innovation that supports greater participation and flexibility in DeFi ecosystems.