Drops Launches on Ethereum Mainnet To Start NFT-Backed Loans
Drops, a project building liquidity and loan infrastructure for NFTs, has officially launched its loans protocol on Ethereum mainnet. The platform is designed to facilitate the first large-scale implementation of trustless loans against NFT-based collateral a feat which is yet to be achieved in the space.
At launch, Drops loans will begin by supporting borrowing against popular ERC20 tokens. However, the team behind the project plans to integrate loans against actual NFTs by the end of 2021.
About the launch
Drops has launched loan markets for Enjin Coin (ENJ), USD Coin (USDC), Wrapped Bitcoin (WBTC) and Ether (ETH). These tokens will be available for use as collateral, to trustlessly borrow up to 75% LTV. Loans product is the backbone of the platform that will enable permissionless borrowing with NFTs.
By integrating Chainlink’s market-leading decentralized oracle network, Drops ensures that loans are accurately and securely priced against various cryptocurrencies or stablecoins.
To incentivize liquidity, the Drops team has also started a liquidity mining program which will reward liquidity providers in Drops ownership power (DOP),the platform’s native token. Twenty percent of total supply has been allocated over the span of five years.
Additional assets can be added to the platform via a governance process, which involves voting with DOP.
Drops 2021 road map
First of all, it is important to mention that Enjin has become Drops’ strategic partner that will help to bring NFT assets. Drops will support a specialized integration of Enjin’s ERC1155 NFT tokens into the Drops protocol to enable collateralization of game assets. Following the launch, the Drops team appears to have plenty of plans in place for the remainder of the year. This includes automated market maker (AMM) markets for borrowing against AMM liquidity tokens, as well as an expansion to Polygon and Binance Smart Chain.
The most major target the project has for 2021, however, is finally facilitating loans against actual NFT assets. The feature will require the integration of permissionless NFT lending pools backed by community members.
About Drops
Drops is a multi-chain liquidity and loans platform for NFTs. It’s adding much-needed utility to idle NFT assets. Users can leverage their NFTs to obtain loans in a permissionless manner, reducing the opportunity cost of holding NFTs long-term.
This Drops infrastructure will become increasingly important as we witness the rise of ‘financial NFTs’ an expansion of the space beyond digital artwork into more tangible financial instruments.
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