Drops is a platform that offers loans for non-fungible tokens (NFTs) and decentralized finance (DeFi) assets, unlocking the additional value with idle assets as well as bringing scalability and utility to NFTs.
Drops NFT lending ecosystem hopes to bridge the liquidity gap that prevails in NFT markets.
Using Drops decentralized autonomous organization (DAO), clients may utilize any asset to build a lending pool in an unrestricted way, without the need for approval. Through the protocol, users may take advantage of their idle DeFi tokens and NFTs to secure trustless loans and earn additional yield by leveraging their assets.
In general, the community-driven protocol, which became operational on July 14, 2021, allows any form of asset to be utilized as collateral, ranging from metaverse objects to financial NFTs and DeFi tokens.
Thus far, over $7 million has been loaned in the market using the protocols permissionless loans platform created by the developers of the NFT game Node Runners and founded by Darius Kazlovskis.
Why do crypto borrowers use Drops?
Given that DeFi, NFTs, and the metaverse are currently three of the most talked-about applications based on blockchain technology, Drops has emerged, creating a community and infrastructure around NFT loans.
Drops allows NFT owners to find a new financial utility to their digital collectibles illustrating how they may be used to promote the expansion of DeFi in the future.
To accomplish this, Drops seeks to combine features such as liquidity tokens, staking, and yield farming in order to establish unique decentralized finance in which NFTs play a significant role. Drops protocol is built on the second-layer scaling solution Polygon and is designed specifically for NFT assets.
Drops plans to accept governance tokens from major NFT projects as collateral in the future, but for now, we’ve listed some of the advantages of the Drops NFT loans:
- As a pioneer in the specialized sector, Drops NFT provides financing services to NFT owners and investors in the form of vaults, staking, yield farming;
- The platforms aims to widen the audience for creators and owners of digital assets, as well as increase the monetary worth of the NFTs they own;
- Users may provide liquidity via the use of supported tokens in exchange for a variable rate of return, as well as borrow through over-collateralized loans;
- Drops is a permissionless loans platform for NFT assets that enables any NFT collection to have its own lending pool;
- Users can supply non-fungible tokens to the pool as collateral and obtain instant loans since there is no matching with the lender as an NFT oracle determines the floor value.
Since the platform’s launch, it has also hit the following milestones:
- 2.5 million in Total value locked (TVL);
- Launched a fungible loans Mainnet;
- Received backing from a large number of commercial and private investors;
- Established partnerships with multiple leading blockchain organizations such as Polygon and Enjin;
- Launched an NFT Loans Testnet.
Drops key products
In general, Drops has four core products to offer a new means of financial utility for NFTs:
- Use NFTs for loans;
- Turn assets into active yield;
- Borrow against DeFi and NFT tokens;
- DOP Token and Governance.
1. Use NFTs for loans
Drops’ permissionless NFT Lending Pools allow you to put your NFTs down as collateral and obtain instant access to a trustless loan without having to deal with a lender or wait for approval, allowing you to get started right away.
2. Turn assets into active yield
With Drops, you can leverage your idle assets by lending stable coins and governance tokens to fungible or NFT lending pools for rewarding yields.
Furthermore, users may earn money even while their collection isn’t on show on top of improving their cash flow by taking out quick loans.
3. Borrow against DeFi and NFT tokens
To mitigate the opportunity cost associated with holding governance or liquidity tokens, Drops supplies them as collateral for short-term loans, generating substantial returns and rewards as a result.
In addition, using any compatible NFT as collateral, users may borrow up to 80% of the value of their asset, as determined by the floor price.
Using the borrowing function in the protocol has the potential to result in collateral liquidation; however, users are informed of the collateral ratios and restrictions, which must be followed in order to keep the collateral from being liquidated.
4. DOP Token and Governance
Drops Ownership Power (DOP) token will help direct the future of the Drops platform. The token had its initial DEX offering (IDO) on Polkastarter and is now listed on leading cryptocurrency trading platforms Uniswap, MEXC Global, and Gate.io. READ MORE
The DOP tokens are employed in order to manage the loan procedure and set price ranges for NFTs acceptable for the Margin NFTs solution. 
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