AMA with Drops

On the 27th of December, 2021 at 16:00 UTC, Decentralized Club had the honor of hosting Nikita Umficev (Co-Founder and Business Developer) at DropsDAO for an Ask-Me-Anything session on their Telegram page with a community of over 70,000 people. It was hosted by DC Admin, May.

The session was divided into four segments. Introductions were made in Segment 1, questions from the Twitter and website community were answered in Segment 2 and 3 respectively, and live questions from the community members in attendance were answered in Segment 4.

If you missed this event and would like to know what DropsDAO is all about, you can find a recap of the interview here. Information here should be researched and should not be taken as investment or financial advice. Also note that slight edits have been made for clarity, and links in this recap lead to images, documents, or other media.

Segment 1 - Introduction

[May]

Hello, 大家好, नमस्ते, Selamat!

My name is May and I’ll be hosting the AMA with DropsDAO

[Nikita]

hey all

Pleasure to be here folks!

[May]

Today, we have a guest from the impressive DropsDAO Team

[Nikita]

cool, let's rock and roll :)

[May]

You’re welcome to the Decentralized Club. It’s an honor to have you here.

[Nikita]

pleasure is mine :)

I am doing good, my bday is in 2 days, so getting ready for that haha

How is yours?:)

[May]

Going great!

[May]

Yaaaaay! Here’s an early birthday wish from me and the rest of DC!

https://t.me/decentralized_club/685472

[Nikita]

thanks a lot:)

[May]

You’re welcome ☺️

Could you please tell us about yourself and then tell us your role at Drops?

[Nikita]

Sure sure

[May]

Alright :)

[Nikita]

My name Is Nikita. I am the co-founder and business developer at Drops. Previously I worked for Goldman Sachs, Morgan Stanley, a few small start-ups, and joined crypto full-time in the summer of 2020 :)

[May]

That’s impressive!

Good to have you here.

Let’s get right into the session then.

[Nikita]

Let's dive in!

[May]

Can you tell us about Drops DAO and the inspiration that got it started?

[Nikita]

sure sure

Back in December of 2020, with the rise of different NFT classes, we noticed that many NFT projects had an established market value, however their NFTs lacked the utility that many DeFi assets already had.

[May]

I agree.

[Nikita]

We already have seen how DeFi lending protocols helped users reduce opportunity cost associated with holding assets. Thus we thought that NFT holders could also benefit from obtaining a loan in a permissionless manner.

This is how the idea of Drops came about with the main goal being to create a platform where NFTs along with other DeFi assets can be used as collateral to access liquidity.

The main problems we are trying to solve are:

- Lack of liquidity for NFT assets

- Opportunity cost of having your funds locked in governance and DeFi tokens

- Opportunity cost associated with holding NFTs

[May]

👏🏻👏🏻👏🏻

[Nikita]

We want to accommodate all types of NFTs - financial NFTs, gaming assets, collectibles, virtual lands, and to become the first Metaverse Bank.

[May]

Looking forward to this coming to fruition!

[May]

This is great!

[Nikita]

Me too haha

[May]

:)

How does your platform facilitate loans for NFT and DeFi-focused assets?

[Nikita]

great question, which requires quite an extensive answer

give me a minute

Drops protocol proposes a solution using permissionless isolated lending pools, which will enable anyone to create a pool and add markets to Drops Loans. By isolating these pools from each other, risk is managed and contained, while removing the pains of gated access to market creation.

https://t.me/decentralized_club/685502

[Nikita]

An example

Let’s say the user wants to create a lending pool for Crypto Punks/ETH and become a lender. In order to do so, the user supplies ETH to Lending Pool 1 and starts receiving interest based on the supply APY.

At the same time, another user who owns a Crypto Punk and wants to access liquidity, can now borrow ETH from this pool by providing the Crypto Punk as a collateral.

Since all loans in DeFi are overcollateralized and NFTs’ prices are highly volatile, the LTV ratio will range between 10-50%. This means that the maximum borrowed amount available will be 50% of the NFT’s worth.

Having borrowed funds against the NFT asset, the user will now be able to use those funds to:

- re-invest outside of Drops platform

- earn passive income by supplying these funds into Drops Vaults

- or simply cover unexpected costs - all this without having to sell the NFT asset.

The user’s NFT will be locked in the pool and can be redeemed once the loan is repaid in full.

Simple, yet complicated :))

[May]

A minute for the community to read and understand

[Nikita]

sure:)

[May]

Please give us a summary of your 2021 highlights and what major news should we look forward to from Drops by the start of 2022?

[Nikita]

sure

The year 2021 was very fruitful, we finalized our private sale in Spring, then had DOP IDO in May (right on the day of the market crash lol). Worked a lot during the summer and launched our first product - DeFi tokens loans in September.

Since then we’ve been working on finalizing our second product’s testnet - NFT Loans, which we launched this month, and now awaiting audit’s completion before we can roll out the mainnet.

We’ve also partnered up with a number of great projects, have enlarged our community, and have updated our roadmap for the next year with some exciting milestones - Financial NFT Lending Pools, NFT Bonds, NFT Yield Vaults, and much more :)

[Nikita]

An example

Let’s say the user wants to create a lending pool for Crypto Punks/ETH and become a lender. In order to do so, the user supplies ETH to Lending Pool 1 and starts receiving interest based on the supply APY.

At the same time, another user who owns a Crypto Punk and wants to access liquidity, can now borrow ETH from this pool by providing the Crypto Punk as a collateral.

Since all loans in DeFi are overcollateralized and NFTs’ prices are highly volatile, the LTV ratio will range between 10-50%. This means that the maximum borrowed amount available will be 50% of the NFT’s worth.

Having borrowed funds against the NFT asset, the user will now be able to use those funds to:

- re-invest outside of Drops platform

- earn passive income by supplying these funds into Drops Vaults

- or simply cover unexpected costs - all this without having to sell the NFT asset.

The user’s NFT will be locked in the pool and can be redeemed once the loan is repaid in full.

Simple, yet complicated :))

[May]

A minute for the community to read and understand

[Nikita]

sure:)

[May]

Please give us a summary of your 2021 highlights and what major news should we look forward to from Drops by the start of 2022?

[Nikita]

sure

The year 2021 was very fruitful, we finalized our private sale in Spring, then had DOP IDO in May (right on the day of the market crash lol). Worked a lot during the summer and launched our first product - DeFi tokens loans in September.

Since then we’ve been working on finalizing our second product’s testnet - NFT Loans, which we launched this month, and now awaiting audit’s completion before we can roll out the mainnet.

We’ve also partnered up with a number of great projects, have enlarged our community, and have updated our roadmap for the next year with some exciting milestones - Financial NFT Lending Pools, NFT Bonds, NFT Yield Vaults, and much more :)

[May]

Wow! So much to look forward to here!

[Nikita]

hell yeah:)

[May]

👏🏻👏🏻👏🏻

2022’s gonna be great for Drops

Let’s now take some questions from our Twitter community.

Segment 2 - Twitter Questions

[May]

What makes the project different from other NFT projects? What are the future plans of the project?

Twitter Username: @BitBoy1969

[Nikita]

Good question

If we look at competitors in the NFT lending space, we can see that their solutions involve peer-to-peer lending, which is difficult to scale.

At Drops we’re creating a permissionless NFT loans model, where anyone can create custom lending pools for NFTs. For example there can be a pool dedicated to Cryptopunks and another pool for Hashmasks, as I already described a few minutes earlier.

Another important advantage is our lending protocol for DeFi assets. Accepted collateral options include governance tokens, liquidity tokens and soon Uniswap v3 NFTs. To some extent we are competing with Aave by supporting a wider range of assets.

By having numerous collateral options we can attract members from DeFi and NFT communities and generate revenue even in bear markets.

Also we’re a multi-chain platform, we will launch on Polygon, BSC and we’ve been researching Avax and BOBA.

[May]

Impressive!

And this here is my favorite part of Drops by the way :)

[Nikita]

Hehe yeah, lots of people are waiting for us to launch on other than ETH

[May]

👏🏻👏🏻👏🏻

[May]

Next question :)

Collaborations and partnerships are some of the most important cornerstones to help improve adoption. Could you please tell us about the current partners, plans for partnerships and what everybody stands to gain from these partnerships?

Twitter Username: @ashikur44811186

[Nikita]

sure

Indeed it is true, partnerships and collaborations are extremely important, especially for our platform. B2B relationships are a huge part of our business model, as we aim to partner up with other NFT projects, such as blockchain games, PFP projects, financial NFTs, etc., in order to open isolated lending pools for their NFTs and governance tokens.

Our current partners Charged Particles are looking forward to using their charged NFTs on our platform as a collateral, we are also in talks with Gutter Cats Gang from the pfp category, and a few blockchain games are also interested. We are also partners with PICIPO, an NFT marketplace, which will help us onboard new users, as well as DeBridge, which will help us integrate cross-chain lending pools. Lots of things are coming in 2022 Q1, stay tuned! ;)

[May]

I see some familiar names! Well-done!

[Nikita]

thank you:)

[May]

You’re welcome

Users may also earn with their “idle” or parked assets, through Drops An NFT “monetization” platform. Is there a time frame for the loan? Do you have a structure to resolve situations where a user is not able to payback for the loan? Or is the collateral loss by the user?

Twitter Username: @Wilson81947694

[Nikita]

The user who puts up the NFT as a collateral into the pool can take out a loan worth up to 50% for an indefinite period of time. However, the user has to pay the interest rate on that loan, as well as look after the liquidation ratio. If the NFT goes down in value by a lot and the user gets liquidated, or the user never repays the loan, the NFT is auctioned and the proceeds go back into the liquidity pool.

[May]

✨

Beautiful answers!

Let’s now take some questions from our website community

Segment 3 - Website Questions

[May]

"Use any supported NFT as collateral to borrow up to 80% of the value of your asset (determined by the floor price)." The NFT price is always fluctuating . So do you cooperate with other NFT marketplaces for NFT pricing?

[Nikita]

That’s a great question. Actually we are developing our own NFT oracle, which will be first of a kind on the market, and it will incorporate more factors than just a floor price of the NFT’s collection. We cannot disclose the details yet, as this is top secret information for now, but once the mainnet is live we will introduce this info in our updated whitepaper. This is true though that the oracle will include floor prices from various marketplaces, NFT index, fractions prices, and other factors.

[May]

👏🏻👏🏻👏🏻

"Put your DeFi & NFT portfolio to work by using them to borrow funds or earn attractive returns lending to others." How can a user borrow money or lend money to other users and still make attractive returns?

[Nikita]

That’s what lending is all about - putting your assets to work. On one side we have people with NFTs sitting idle in the wallets, they can supply them as a collateral, borrow funds from the pool, and use those funds to either invest further into NFTs (leverage) or put them into the farms to earn yield.

On the other side we have people with lots of stables or eth/btc, who are willing to lend them out and earn stable interest/APY. Also, if the person who borrowed the funds gets liquidated, the lenders have a chance to purchase that person’s NFT on the auction at a cheaper than the market’s price.

[May]

This feature is a smart incorporation!

Many people will take advantage of it :)

So another interesting thing I noticed was the veDOP, which I believe is the result of staking DOP(?) Would that give us the eligibility to vote on things regarding Drops, or what’s the main purpose of veDOP? What could we do with those?

[Nikita]

The simple answer is yes, staking DOP and earning veDOP gives users the right to vote on further development of the platform, DOP emissions, and treasury funds use. Staking DOP essentially means being part of the governance and directly contributing towards the project's success.

[May]

🎉🎉🎉

We're only 70% done with the session but I'm 100% impressed with DropsDAO. 😊

[Nikita]

thank you, very kind of you :))

[May]

I'm sure our audience has some questions for you now. Ready to take 'em?

My pleasure 😁

[Nikita]

let's rock'n'roll

[May]

In this 4th segment, I will open the group for some seconds for the live community to shoot you some pressing questions.

Please pick four original questions to answer.

Try to ignore generic, vague, and copy-paste questions 😊

What's your favorite ice-cream flavor?

[Nikita]

hmmm probably pistachios :D

[May]

Dear community, please use the guest's reply above in your questions.

The group will be unmuted shortly.

---Chat was then opened for the live community to send in their questions---

Segment 4 - Live Questions

[May]

Dear guest, as a measure to deter bots and reward hunters, your favorite ice-cream (flavor) has been included in the questions so you can tell original questions apart!

Please prioritize such questions 🙂

[Nikita]

Got it! :)

How many do I pick?

[May]

Four :)

[Nikita]

Okay, let's try :)

[Shito San]

I was reading that Drops DAO has partnered with FODLfi to unlock liquidity for financial NFTs. Could you explain exactly how you will achieve this by working with FODLfi? How will this benefit Drops DAO users? PISTACHIOS

[Nikita]

1. The FODL partnership will enable users to take their FODL leveraged position NFTs and use them within Drops Loans as collateral. This will allow FODL users to borrow funds against their active trading positions, providing them with the capacity for additional utility and returns.

Financial position NFTs are typically easy to value and have great liquidity, making their integration into Drops both reliable and valuable to all.

[Dhir]

Hi Nikita. What firms are auditing DropsDAO? If you've completed any, could you let us know which one and the score? 🥳 (I follow your work. You're a superstar!)

Pistachios

[Nikita]

2. Currently our contracts are being audited by PeckShield, don't have a score yet, once the audit is completed we will announce the results across all our social media :)

[MadunTzy]

Your NFT is built on Ethereum which has problems like high Gas fees. Can you give me the reason to choose ETH as your blockchain ? And please tell me how did you handle problem from High Gas Fee

Pistachios

[Nikita]

3. We started building Drops quite early, so naturally ETH came as the first option. However, as mentioned previously, we are working on a cross-chain solution, so we will be launching on Polygon and BSC shortly after ETH, and further down the line will be launching on other networks too, looking into Avax, BOBA, and a few others ;)

[Andy Andy]

How do the NFT loans work and how can I protect my ownership?

pistachios

[Nikita]

4. Once the NFT is supplied to the lending pool it is locked in the smart contract, protecting the user's ownership to that NFT. Only in the case of liquidation or not paying back the loan that NFT will be auctioned and other users will be able to purchase it. The proceeds will be added to the liquidity pool ;)

Thanks a lot everyone for the great questions today!

[May]

So since it’s two days to your birthday, could you please take two more questions? 😊

[Jarry]

Is your project only for English speaking countries or is there a community for other language users?

[Nikita]

5. We are slowly building communities in other regions, we have Turkish community, Russian, and have plans of building more - Korean, Chinese, Spanish. If any of you are experienced community builders, please reach out to us and we can work on this together:)

[Temitope Awoyinka]

pistachios

To earn returns lending to others, what eligibilities are required

For users to borrow a loan is the KYC process needed?

[Nikita]

6. No KYC is required, just connect your wallet to our platform and feel free to use it! :)

[May]

Aaaaaaand it’s a wrap!

[Nikita]

🔥🔥🔥

[May]

Thank you so much for your time with our community today!

I had a great time learning about your project!

Could you please share your social media links with our community?

We would like to stay updated with Drops.

[Nikita]

sure sure

https://t.me/drops_nft

https://twitter.com/dropsnft

[May]

Thank you so much!

Our kind regards to the rest of the team at the DropsDAO HQ!

You’re all amazing, working together to make this project a success

Until next time, do have a great day.

[Nikita]

Thanks everyone!:)

[May]

The AMA with DropsDAO is now over.