The Paragraph block supports a drop cap. However the lack of options means it isn't enabled in very many themes, since the feature does not support customizing the drop cap in many ways at all. Potentially we can add such customization controls by leveraging a combined toggle with a flyout menu, somewhat similar to how the Border control combines a slider with a flyout:

• The toggle simply enables or disables, the small icon left to it shows the preset
• Clicking the preset button shows a flyout with a few different types of presets (small drop cap, big drop cap, pulled up and left, pulled left)
• The flyout affords the space to show lines to span, and number of characters to apply the drop cap to
• A color panel with text and background options
• A radius control, in case you want a rounded drop cap background

What do you think?

Related, a similar flyout interface for the List block: #51480