Today, we’re excited to announce CoinFund’s Seed investment in Drop Money: a liquid staking protocol solving security and economic opportunity for Interchain assets. Led by CEO and Co-Founder Mitya Argunov, a Lido and P2P alumnus, Drop is on a mission to strengthen the economic viability of modular blockchains by transforming staked assets into liquid collateral that can secure and monetize these networks.

 

 

This investment furthers CoinFund’s commitment to backing asset management solutions aligned with our thesis that there is an opportunity for DeFi protocols to service asset owners with flexibility and yield from assets. While the IBC ecosystem (fka Cosmos) supporting Interchain assets has been in leadership tumult despite a promising technology roadmap and dedicated builders, the ecosystem continues to rank in the top five by developer activity and is processing 4M daily transactions. Over the next year, we hope that governance challenges will be overcome, shining new light on the ecosystem’s long term viability. Our conviction in Drop’s approach is strengthened by its collaboration with our portfolio company Neutron, an integrated application network (also known as a L1 proxy in modular terms). As one data point, our investment in Ether.fi’s LRT platform has substantiated the need and has quickly grown to $6BN in AUM.

 

 

At the intersection of liquid staking (“LSTs”) and liquid restaking (“LRTs”) exists the opportunity to maximize productivity of blockchain yield paid to proof-of-stake validators and asset owners willing to leverage their economic interests to secure transactional validity of the ledger. Drop’s immediate goal is to mobilize the $5.6BN of staked $ATOM and $TIA that can subsequently flow into DeFi and application use cases, kickstarting the heartbeat of the ecosystem. Both networks have exceptionally high staking rates of 61% and 70%, respectively, compared to Ethereum’s 28%. The opportunity has evolved rapidly since proof-of-stake blockchains have grown in popularity due to drastically lower energy usage and validation costs, coupled with the opportunity to be minimally impacted by net new issuance from protocols, keeping relative network ownership. Presently, there is a large gap in LST/LRT opportunities between the IBC ecosystem that hasn’t converted their assets into liquid staked form and earlier movers such as Ethereum and Solana. LSTs have grown increasingly popular beginning with ETH which now has a single protocol for LST north of 8% of the entire network and 11% of all staked tokens. Solana, which has grown LSTs to 7% of tokens or 10% of all staked assets is catching up and reinforcing promise in the asset management layer. Today, less than 2% of $ATOM and TIA is liquid staked.

 

 

Prior to starting Drop, Mitya was the Chief Product Officer at P2P Validator and CEO of Confio, the core contributor to CosmWasm. Drop is the first partner accepted to the Lido Alliance which is an important milestone for Lido ($25B in AUM) acknowledging it will be difficult to extend their brand cross-ecosystem after shuttering their Solana liquid staking effort. Since public launch in August 2024, Drop has accumulated 11.5K active accounts, $20M in DeFi positions and a number of key downstream DeFi integrations. 

 

 

We couldn’t be more excited about our investment in Drop, and we look forward to seeing how they will continue to innovate and come into focus within the IBC ecosystem. Follow along with their journey by visiting drop.money and following @dropdotmoney on Twitter. 

 

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