Target Information

CoinFund is proud to announce its seed investment in Drop Money, a liquid staking protocol designed to address security and economic opportunities for Interchain assets. Under the leadership of CEO and Co-Founder Mitya Argunov, a seasoned professional with a background at Lido and P2P, Drop aims to enhance the economic viability of modular blockchains. The protocol accomplishes this by transforming staked assets into liquid collateral, which can both secure and monetize these decentralized networks.

Industry Overview

The Interchain ecosystem, previously known as Cosmos, is currently navigating leadership challenges despite possessing a robust technological roadmap and a dedicated community of builders. Nevertheless, it consistently ranks within the top five ecosystems nationwide in terms of developer activity. With the processing of approximately 4 million daily transactions, the ecosystem showcases its ongoing utility and potential.

In the coming year, it is hopeful that the governance challenges faced by the IBC ecosystem will be resolved, thereby illuminating its long-term viability and security. This positivity is bolstered by the ecosystem’s partnership with Neutron, another portfolio company under CoinFund, which acts as an integrated application network or a Layer 1 proxy in modular terms.

Liquid staking protocols (LSTs) and liquid restaking (LRTs) present immense potential to maximize the productivity of blockchain yield. Asset owners and proof-of-stake validators can leverage economic interests to enhance the transactional validity of networks. Drop Money's immediate objective is to mobilize the significant amount of staked assets, notably the $5.6 billion worth of staked $ATOM and $TIA, towards DeFi and application use cases in this evolving economy.

The appeal surrounding liquid staking has surged due to the popularity of proof-of-stake blockchains, which promise lower energy consumption and operational costs. Traditional networks like Ethereum, with a staking rate of 28%, and Solana, approaching 10%, contrast sharply with the underutilized liquid staked assets of less than 2% in the IBC ecosystem.

Rationale Behind the Deal

This investment aligns with CoinFund's commitment to endorsing asset management solutions that provide asset owners with enhanced flexibility and yield generation. By facilitating a transformation from traditional staking to liquid staking, Drop Money is positioned to fill the current gaps in the market, thus establishing a new standard in asset management within the blockchain ecosystem.

Moreover, the collaboration with Neutron reinforces Drop’s strategic approach and enhances its prospects for success as it embarks on its mission to innovate within the Interchain ecosystem.

Investor Information

CoinFund is renowned for its focus on early-stage investments in blockchain technology and digital assets, showcasing a commitment to fostering groundbreaking innovations in the DeFi space. The firm’s previous successful investments, which include Ether.fi's platform that has rapidly grown to $6 billion in assets under management, validate CoinFund’s conviction in identifying high-potential projects in the rapidly evolving landscape of decentralized finance.

This ongoing commitment to supporting initiatives that drive the evolution of asset management underpins the rationale behind their investment in Drop Money, highlighting CoinFund's foresight to adapt to changing market needs.

View of Dealert

Analyzing the potential of Drop Money, it appears to be a promising investment opportunity within the burgeoning IBC ecosystem. The significant gaps in liquid staking and restaking opportunities suggest that as markets mature, Drop's innovative approach has the potential to capture substantial market share.

The high staking rates of $ATOM and $TIA—61% and 70% respectively—indicate a strong interest from asset holders that Drop can capitalize on to generate liquidity and enhance returns for asset owners. This positions Drop favorably against competitors like Ethereum and Solana, which have already established themselves in this space.

As the growing popularity of proof-of-stake blockchains continues, the demand for yield generation through liquid staking will likely increase. This trend reinforces Drop's role in revolutionizing asset management approaches on modular blockchains.

Considering these factors holistically, the investment in Drop Money stands out as a strategically sound decision, well-aligned with broader industry dynamics and CoinFund’s investment thesis on promising and innovative DeFi projects.

View Original Article