We propose a model of surface saturation polarization as the mechanism for the giant electrorheological (GER) effect, recently discovered in suspensions of coated nanoparticles dispersed in silicone oil. On the basis of this model, the distinguishing features of the GER fluid, such as the extremely high value of the static yield stress (exceeding the theoretical upper-bound) and its linear field-dependence, can be explained quantitatively. The current-field relation and the particle size-scaling effect are also addressed. The agreement between theory and experiments is excellent. We give a brief discussion on the role of electrowetting effect in the formation of surface aligned dipole layer(s).
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