Drops dao (https://drops.co/) is an NFT-loan protocol that currently allows NFT collateral to be borrowed against by their owners. The went live in May 2021, and launched NFT lending pools launched in May 2022.
Floordao has requested ERC20 collateral to earn a supply rate yield via loans to counterparties (similar to Rari). This would support the ability to short such tokens, which will allow speculators to outright short and other daos/platforms to offset NFT exposure Furthermore, this activity might be incentivized by token rewards from Drops dao.
Floordao requests feedback on a plan to launch a pilot program in which Floordao would provide up to 50eth of PUNK collateral for up to 1 month to determine counterparty demand for borrowing.
To assess demand, we would deposit in 10eth increments (starting at 10eth, then 20, and so forth) until the full amount is borrowed. At the end of the one month, we will leave the outstanding borrowed capital for up to 2 weeks while we analyze the pilot outcomes and determine a plan to continue scaling or pull back based on pilot performance (to larger size, other erc20s, etc.)
Open questions from Floordao to Drops dao to be determined:
- how much incentives will be applied to the supply rate
- what are the range of supply APYs configured to
Additional resources
Peckshield audit report on Drops dao: