Introducing Drop: Liquid Staking Protocol for the Interchain
Overview:
- Drop is a liquid staking protocol designed for Interchain assets, backed by the Lido Alliance.
- Built as an integrated application on Neutron, Drop aims to strengthen the economic viability of sovereign blockchains by transforming stagnant, frozen assets into streams of opportunity.
- Drop enables seamless smart contract interactions, supporting capital-efficient use cases like leveraged staking without slippage or trade fees.
- You can now liquid stake ATOM with Drop to earn staking rewards without locking assets, deploy staked ATOM in apps for additional rewards & benefits, auto-compound rewards and more.
- Mars V2 is now live on Neutron, allowing you to receive Droplets by borrowing ATOM instead of purchasing it, eliminating direct exposure.
What is Drop?
Drop is a liquid staking protocol designed for Interchain assets, backed by the Lido Alliance. Led by former Lido and P2P contributors, Drop aims to strengthen the economic viability of sovereign blockchains by transforming stagnant, frozen assets into streams of opportunity.
Built as an Integrated Application on Neutron, Drop benefits from deep integrations with DeFi partners, offering users the best yield and user experience.
The Drop Mission
Despite the tremendous growth in the Interchain, billions of dollars remain staked but unusable, leading to capital constraints that hinder ecosystem growth and increase the risk of network failure.
Drop’s mission is to address these challenges by unlocking the potential of these staked assets, transforming them into active, reward-generating resources that strengthen blockchain economies.
How Drop Works
Drop allows users to stake their Interchain assets and receive dAssets in return—receipt tokens that represent their staked positions. For example, staking ATOM with Drop will reward users with dATOM. These dAssets automatically compound staking rewards and can be utilized throughout Drop’s ecosystem to earn additional rewards.
Liquid staking with Drop via dAssets enables users to earn staking rewards without locking their assets, deploy them in various apps for additional yield and benefits, auto-compound rewards, exit anytime, stay eligible for airdrops, support ecosystem growth, and earn DROP tokens.
Apps gain from new users and capital, while networks benefit from increased economic activity without sacrificing network security.
What Makes Drop Different
Drop’s architecture offers unique advantages over other liquid staking protocols. As an Integrated Application on Neutron,
Drop benefits from synchronous composability, allowing its smart contracts to interact seamlessly with other applications, enabling capital-efficient use cases like leveraged staking with zero slippage or trade fees. Additionally, Drop’s system is highly scalable, with the ability to onboard new networks and assets in a single transaction while minimizing risks.
Drop currently supports liquid staking for ATOM, with plans to add support for TIA soon. Other Interchain assets will be introduced in the future, further expanding Drop’s capabilities and opportunities for users.
Fees & Tokenomics
Currently, Drop allocates 10% of staking rewards from liquid staked assets into a dedicated pool. After the DROP token is launched, the DROP DAO will determine how these assets are used, which could include distributing rewards to DROP stakers or creating an insurance fund.
The Droplets Program
The Droplets Program is designed to coordinate market participants to maximize the economic welfare of the Interchain and measure each participant’s contribution to the protocol’s success.
A total of 100,000,000 DROP tokens (10% of the total supply), the governance token of Drop Protocol, will be distributed to participants in the program.
Users can earn Droplets by liquid staking, using dAssets within ecosystem applications, and referring friends. At the program’s conclusion, Droplets holders will receive Drop tokens and become the inaugural members of the Drop DAO. As Drop decentralizes, the community will play a crucial role in the protocol’s long-term success, with Droplets ensuring that the most committed members lead the DAO and receive the highest rewards.
DAO members will have the authority to influence the protocol’s design, asset support, and the management of the Drop Treasury.
Validator Selection & Accountability
Drop selects validators based on their performance and infrastructure, with validators required to maintain 95% uptime,operate independently of centralized custodians, and run their own infrastructure. If a validator’s performance decreases or if they misbehave, their stake will be redistributed across the remaining set.
Security Focus
Security is a core focus for Drop. Its modular smart contract architecture is designed to minimize risk and ensure recoverability:
- Protocol upgrades do not introduce systemic risk; instead, they are able to introduce new functionality with minimal code changes.
- Modularization contains risk: if a component fails, the system simply pauses, improving the security and recoverability of the protocol.
- Modularization enables better risk response: if an issue is detected with a component, that specific component can be safely paused and a fix introduced while the rest of the protocol continues to operate properly.
- Because components are standardized and reusable, the underlying code only becomes more and more battle-tested as time passes.
Key security practices include:
- Continuous security audits from industry leaders like Oak Security and Ottersec.
- Rigorous testing, including unit and end-to-end tests.
- Real-time 24/7 monitoring and alerting systems.
- A $1M bug bounty program through Immunefi.
- Over $2B of economic security from ATOM via the Cosmos Hub.
This multi-layered approach ensures that Drop remains a reliable and secure protocol for users.
What's Next?
Looking ahead, the Drop app will bring a range of new features, including fresh liquid staking assets and native ETH staking with Lido. Users can explore expanded distribution and use cases for wstETH in the Interchain, alongside new ways to use and custody dAssets for enhanced rewards.
A major highlight is the upcoming rapid unstaking feature, which will significantly cut down the time required to unstake dAssets, making the process faster and more efficient.
Stay tuned for more news on Drop and their journey as part of the Lido Alliance.