Using Position Based Fluids for Realistic Fluid Simulation

Position Based Fluids are a very realistic way to simulate fluids in real-time efficiently, as the demo shows. Implementing position based fluids might require modifying the physics engine Bullet(if it's not been implemented yet) but we could ether work together with the Bullet developers to implement it, or do it ourselves and give the changes to the bullet team to implement it into Bullet.

The direction we've being going with fluid mechanics is to use curl noise to give the impression of a fluid without actually solving any equations. The advantage of curl noise is that it's extremely cheap to compute. You just generate a noise field and from that you generate the fluid flow.

The problem with "very realistic" fluids is that they are extremely expensive in terms of computation and we have to decide how much power we want to give to fluid simulation. Remember that everything we make part of the core game excludes some people with slower computers from playing the game so we want to get a good balance between having the complexity we want and making the game as accessible as possible.

IMO we should try curl noise and see how that feels to play and if it's not good enough we could look into something more advanced, what you are suggesting seems good. I'll happily discuss it more if you are interested.