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In a molecular dynamics study of water based nanofluids, we show that a hydration layer is formed at the particle-fluid interface, where the attraction or cohesive potential between the liquid molecules is dominant. In the hydration layer, the collision mode rather than the kinetic or potential mode is primarily responsible for the enhancement of thermal transport properties in nanofluids, as it results in more interactions. The thermal conductivity for a wetting particle is found to be higher than for a neutral or a nonwetting particle.