Drop: Lido-backed cross-chain liquid staking on Neutron
Post640 words
Explains Drop, a liquid staking protocol on Neutron using IBC Interchain Transactions and Queries to manage remote delegations, plus its Lido Alliance ties around wstETH. Argues it can unlock liquidity for ATOM and TIA.
Key claims
Drop is an inaugural Lido Alliance member
Built on CosmWasm using Interchain Transactions and Queries
A new wave of liquidity is about to hit the modular ecosystem. 💧
Meet Drop, a cross-chain liquid staking protocol backed by Lido and implemented as an Integrated Application on Neutron.
Mission: Unlock billions of $$$ in interchain liquidity and supercharge the growth of DeFi ecosystems.
How?
Read on to find out anon. 👇
🤔 What is Drop?
@dropdotmoney is built on a CosmWasm smart contract architecture on @Neutron_org.
It uses IBC and Neutron’s Interchain Transaction Module and Interchain Queries to read the state of other blockchains and adjust delegations made by the protocol’s remotely controlled accounts.
💡 Why does this matter?
This unique architecture allows Drop to offer trust-minimized liquid staking services and scale efficiently with minimal overhead and risk.
New networks and assets that support IBC can be onboarded in a single transaction.
As an Integrated Application, @dropdotmoney is also synchronously composable with a broad array of DeFi primitives. This includes:
✦ @dualityxyz (Neutron’s in-protocol orderbook)
✦ @astroport_fi (Curve v2 style AMM)
✦ @mars_protocol (versatile credit protocol)
✦ @Levana_protocol (perps)
✦ @ApolloDAO (vault strategies)
✦ @fission0x (yield splitting)
✦ @AmuletProtocol (self-repaying loans)
✦ +++
This emerging ecosystem provides versatile use cases for Drop's LSTs and their initial distribution.
It also ensures a seamless user experience for advanced activities like delta-neutral or leveraged staking & farming.
Drop also integrates key interop infra such as:
✦ The @SkipProtocol API (most widely used x-chain router in the Interchain).
✦ Nexus (leading bridge for TIA to @CelestiaOrg-based rollups) by @hyperlane.
This will facilitate 1-click access to Drop’s LSTs from any network or application in the Interchain ecosystem. Huge.
💧 What about the Lido connection?
@dropdotmoney is being built by people with experience at @LidoFinance and is an inaugural member of the Lido Alliance.
As a member of the Lido Alliance, Drop will actively promote the distribution and integration of $wstETH, reducing the operational overhead for Lido DAO contributors, as @LidoFinance is expanding beyond the Ethereum ecosystem.
The benefits of this collaboration include:
✦ Adoption of $wstETH as Interchain Collateral
Drop can promote $wstETH as collateral in the Interchain ecosystem, expanding the use cases for @LidoFinance assets.
✦ Restaking Opportunities
Drop can serve as a partner to explore restaking opportunities with $wstETH, minimizing systemic risk to LidoFinance on Ethereum and aligning incentives to prevent vampire attacks.
✦ Remote Staking with Lido on Ethereum
Eventually, the Lido DAO could use Drop’s protocol architecture as a local outpost for Lido on Ethereum, enabling $ETH to be staked with @LidoFinance on Ethereum remotely and conveniently.
✦ Opportunity for Lido Node Operators
Validators active in both Ethereum and Interchain ecosystems can join Drop’s validator sets, bolstering adoption and alignment between Lido and its ecosystem.
🧠 Why should YOU care?
If you are a @LidoFinance maxi or just hold $wstETH, I think its already pretty clear.
But there is more to it.
You should also care if you're involved in the @CelestiaOrg and @Cosmos ecosystems, as Drop is poised to unlock billions of $$$ in liquidity for the Celestia (and broader modular/Interchain) ecosystem via liquid staking.
This will be a huge growth driver and unlock 100s of use cases for native assets like $ATOM or $TIA.
Without a solution like @dropdotmoney and liquid staking, you would have to choose between staking rewards and incentives from participating in the DeFi ecosystem, which hinders growth.
With Drop you can secure the networks you are using and simultaneously participate in DeFi, contributing to the growth of both.
It also allows you to maximize your yield.
Could be one of the big modular DeFi layers that is emerging.
NFA but DYOR anon. 👀
1 image on X
What came next · since 17 Jul 2024
Show how the 2 covered assets moved
This explainer walks through how things work without making a call on the token, so price moves since publication are shown as market context.
Since then
No follow-up pieces on this subject yet. This is the latest take.
Daily closes in USD from DefiLlama and Yahoo Finance. Only a bullish or bearish call in a thesis or market take is tracked; explainers, lists, maps and mentions are neutral context. Not financial advice.