CoinMarketCap takes a look at a new NFT project on the market.
Drops, one of the new non-fungible token (NFT) projects, launched its private initial DEX offering (IDO) on Polkastarter on May 21, selling out all 333,333 DOP tokens worth a combined $200,000. Its native token is now officially trading on Uniswap and Gate.io.
The team has raised over $1.2 million following private and public sales with backing from prominent VC firms like AU21 Capital, Blocksync Ventures, Genblock Capital, Bitscale Capital, Axia8 Ventures, D64, x21 and Drops Ventures.
What Is Drops?
Drops is an end-to-end blockchain platform that aims to maximize the value of NFTs through products that help improve liquidity and utility. Drops’ two primary features are the ability to convert NFTs to fungible ERC-20 tokens supported by liquidity pools, and the borrowing of liquidity provider (LP) tokens that can be staked to earn more tokens.
The platform runs on Polygon, an Ethereum-based second-layer scaling protocol that enables fast and affordable peer-to-peer (P2P) transactions between network users. It utilizes Biconomy’s decentralized application (DApp) technology to ensure interoperability, resolving the immobility problem of NFTs built on top of the Ethereum blockchain.
Furthermore, the platform adds DeFi elements to NFTs, helping merge the two nascent subsectors in the crypto space.
Fractionalizing NFTs
NFTs can be deposited into their respective pools, where they can be fractionalized in the form of dNFT tokens. These are ERC-20 tokens that represent NFT assets in a pool and can be used to redeem the deposited NFTs. Minting and redeeming dNFTs incur a 2% minting fee.
For example, if you deposit one Axie NFT to a pool and mint 100 dAxie ERC-20 tokens, you will pay the pool a 2% fee. If you later want to redeem the deposited Axie, you’ll need to send 102 dAxie tokens to the pool.
Margin NFT
Margin NFT enables users to use their NFTs to either stake on the platform or take out loans. This feature allows for fractionalized borrowing of NFTs to mint LP tokens, which can also be staked.
Drops’ lending contracts are patterned after Compound’s, where users can supply their NFTs to the protocol as collateral, allowing them to borrow different assets such as ETH, DAI, USDC, WBTC, DOP, NDR and dNFT LP tokens.
DOP Tokenomics
The DOP Token is the native utility token of Drops, used to participate in the platform’s governance protocol, allowing holders to vote on multiple system parameters. The platform has two kinds of voting systems: on-chain and off-chain governance.
In on-chain governance, users can vote on factors such as required collateralization ratios for loans, DOP emissions, and the inclusion of new token classes. Users can lock up more DOP to boost their voting power and receive more governance tokens in return.
The maximum supply of DOP is set at 15,000,000 tokens.
The team has raised around $1.1 million from its private sale, allocating 25.39% of the token supply to investors and advisors.
The Future of Drops
The Drops platform is a beneficial addition to the NFT ecosystem as it brings more utility to existing NFT pieces that would have otherwise remained idle. It does so through features such as ERC-20 token conversion, borrowing and staking.
Drops is building a solid foundational layer at the cross-section of the DeFi and NFT industries. It is based on the scalable Polygon protocol, ensuring that it can handle the transactional throughput required for all its on-chain activities.
In the short term, most cryptocurrencies on the market, including DOP, might experience downward price pressure due to ongoing uncertainty. But, like other projects with actual use cases, Drops has a higher chance of eventually rebounding.
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