Drops Platform Details and Tokenomics

4 min readFeb 5, 2021

Since the NFT boom of the past year, a majority of NFT assets have become idle and under-utilized, often sitting in wallets until they are resold.

As the NFT asset class now begins to capture all sorts of financial instruments and real-world assets, the market needs a way to utilize these assets more effectively.

This is where Drops comes in.

We created Drops with the aim of adding new utility to NFT assets, via specialized DeFi infrastructure. Users will be able to take out loans against their NFTs, as well as yield-farm with them by depositing them into Vaults.

Additionally, Drops aims to level the playing field for market participants of all sizes through scaling and a fair distribution of NFT collectibles. To avoid excessive Ethereum gas fees, the Drops platform will be built on the Matic Network, offering a gasless experience.

DeFi meets NFTs

Drops integrates NFT assets into a wider DeFi ecosystem, through our very own fractionalization protocol, dNFT.

In simple terms, the dNFT protocol enables NFT assets to be pooled and converted into representing ERC20 tokens. This functionality can be used for a variety of applications, including loans and yield farming — two very prominent DeFi use cases which are widely used for fungible assets.

Rather than letting assets sit idle, NFT holders will now be able to actively participate in the DeFi ecosystem and earn returns, all without having to sell their NFTs.

Via dNFT, Drops users will be able to:

Obtain instant access to liquidity
Fractionalize NFT assets while retaining their ownership
Obtain trustless NFT loans
Earn yield with NFT vaults.

A full description of the mechanics behind each of these applications can be found in the Drops Whitepaper.

Simple NFT staking

Simple NFT staking is an easier alternative to Vaults, which allows users to earn yield in dPoint tokens on their NFTs, which in turn can be used in Drops ecosystem. Each NFT is assigned a weighting to calculate the user’s pool share. These weight points will depend on an asset’s value and rarity. The dPoint yield allocation for each NFT vault will be decided via community vote.

dPoints

dPoint tokens are rewarded for staking NFT assets in our vaults. They can be claimed to a wallet, but they are not transferable. Instead, dPoints are used within the ecosystem like coupons that can cover up to 90% of an asset’s price.

1 dPoint will be equal to 1 USD. So, for example, if an NFT is set for sale at $1000, it can be purchased for 900 dPoints + $100 worth of ETH, DOP or NDR. Any other combination of dPoints and one of the accepted cryptocurrencies is valid, as well as outright payment in ETH, DOP or NDR.

What are “drops”?

Although Drops will expand to support NFT assets of all kinds, NFT collectibles and game items are currently the largest and most popular use-case.

For this reason, we will begin by supporting digital collectibles through Drops: Limited-edition NFT game items releases, with participation via a raffle. This is a mechanism which is commonly used for real-world physical items, which:

a) Enables fair participation for all buyers

b) Improves exposure for the creator and the collectible items being released.

In the case of the Drops platform, drops serve as an exposure platform for NFT based games. When new NFT projects come to the platform, a drop is organized to give them a kick-start.

Overall, the Drops raffle process ensures a fair artwork distribution, preventing users from being front-run by bots.

Cashback rewards

For every purchase, users can receive cashback in our native DOP tokens. The percentage of the purchase given as cashback will depend on the amount of liquidity provider (LP) tokens staked by the user. Cashback rewards will be instantly redeemable upon each successful purchase.

The DOP token

As the official utility token of the Drops ecosystem, DOP will be accepted as the primary method of payment for buying and selling NFTs on the platform. It will also be used in a hybrid-governance model, in conjunction with the original Node Runners token (NDR).

The DOP token will also be used to pay users liquidity mining rewards and cashback rewards on Drops purchases. Users can stake these DOP tokens to earn dPoints — non-transferrable coupons which are redeemable for the purchase of NFTs within the platform.

Finally, the DOP token will be utilized in future functions and promotions on Drops, such as participation in NFT raffles.