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Fluid Launches aWETH Redemption Protocol to Reduce DeFi Systemic Risk with $1 Billion ETH Capacity

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On April 20, 2026, the DeFi protocol Fluid rolled out a protocol update to enable aWETH redemption. The protocol allows ETH lenders to convert their positions into wstETH or weETH, restoring liquidity and reducing liquidation risks. With a $1 billion ETH capacity, this move aims to mitigate DeFi exploit risks and enhance market stability. Fluid is partnering with Lido Finance, EtherFi, and others to support the initiative.

Huo Xing Finance reports that on April 20, the DeFi protocol Fluid officially launched the aWETH redemption protocol. With ETH utilization on the Aave platform reaching 100%, many borrowers are currently unable to withdraw their funds and face increasing risks if market volatility occurs. The aWETH redemption protocol will allow ETH borrowers to: • Redeem for wstETH or weETH • Immediately restore liquidity • Reduce liquidation risk If a user has borrowed only ETH, they can fully redeem it. If a user has ETH as collateral along with other debts, the collateral will be seamlessly converted to wstETH or weETH while the debt remains unchanged. Fluid is collaborating with Lido Finance, EtherFi, and other ecosystem partners to reduce systemic risk in DeFi, alleviate usage pressure, and support a healthier DeFi market. The protocol’s initial capacity is capped at $1 billion in ETH.

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