newton supports buoyancy. you can define a water volume and entities will behave correctly if they fall into it (swim or sink) but there won't be any water effects like waves. you have to care for that yourself.

a7 "fluid dynamics" just jiggles the vertices of a plane a little to make it look like waves. it shouldn't be a problem to mix that with newton.

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the newton author currently works on multi-core support and looks into nvidia cuda so i could imagine that future newton versions will support stuff like physics enabled particles, cloth, water effects,...