Solv Protocol: Exploring the staking abstraction layer and liquidity mechanisms in the BTCFi ecosystem

Solv Protocol was established in 2020, aiming to lower the threshold for creating and using on-chain financial instruments, bringing a diversified range of asset classes and yield opportunities to the crypto space. The project focuses on minting and trading NFTs related to financial ownership certificates. In 2024, with the development of the BTCFi sector, Solv Protocol will shift its focus to BTCFi, creating the fully on-chain yield Bitcoin asset SolvBTC, providing new opportunities for Bitcoin holders, while establishing an efficient BTCFi ecosystem. Recently, Solv Protocol launched the staking abstraction layer (SAL), simplifying and standardizing the cross-chain Bitcoin staking process, abstracting the complexities of Bitcoin staking scenarios, allowing users and developers to adopt it quickly.

Project Basic Information

• Website:
• Twitter: @SolvProtocol, Followers 272,000
• Launch time: Mainnet launched in June 2021, tokens have not been issued yet.

Project Team

• Ryan Chow: Co-founder. Graduated from Beijing Foreign Studies University, previously co-founded Beijing Youzan Technology, and researched blockchain technology integration and financial regulation.
• Will Wang: Co-founder. Created the ERC-3525 semi-homogeneous token standard, with 20 years of experience in the financial IT field.
• Meng Yan: Co-founder. Former Vice President of CSDN, an active KOL in the Crypto industry.

Financing Situation

Solv Protocol has raised approximately $29 million through three rounds of funding, including:

• Angel Round: 6 million USD
• Seed Round: 12 million USD
• Strategic Round: 11 million USD

The investors include well-known institutions such as Binance Labs, Blockchain Capital, Laser Digital, Matrix Partners China, and OKX Ventures.

Development Strength

Since the establishment of Solv Protocol in 2020, it has been continuously focused on reducing the barriers to the creation and use of on-chain financial tools. The project is able to quickly issue the BTC wrapped asset SolvBTC and rapidly occupy the LST market based on BTC. All key technical milestones have been completed as scheduled, showcasing the strength of the technical team.

Operating Mode

Solv Protocol unlocks $1.3 trillion in BTC asset potential through BTC staking. The project launched SolvBTC, a full-chain yield BTC asset, to release BTC staking liquidity, and launched Staking Abstraction Layer(SAL) a staking abstraction layer to begin aggregating BTC liquidity.

Solv Protocol has built a complete Bitcoin stake ecosystem, integrating staking protocols, LST issuers, validators, and yield distributors, achieving seamless interaction between the Bitcoin mainnet and EVM-compatible chains, simplifying the staking implementation for both users and developers.

Staking Abstraction Layer (SAL)Stake Abstraction Layer

SAL is a modular architecture designed to facilitate secure and efficient BTC accounting. Its key modules include:

• Staking parameter matrix (SPM): Various settings and parameters for standardized BTC staking.
• LST Generation Module: Simplifying the issuance of cross-chain Liquidity staking Tokens.
• Transaction Generation Module: Automatically generate and broadcast BTC stake transactions
• Validator nodes: Real-time verification of the legality and security of stake transactions
• Earnings Distribution Module: Responsible for correctly mapping staking rewards to LST holders.

SAL integrates multiple stake participants, abstracting complex processes into standardized modules, simplifying stake implementation, and promoting greater dApp adoption.

Advantages Compared to Other BTCFi Projects

1. Security Guarantee: Integrating Active Verification Service ( AVS ) to ensure stake transaction security.
2. Process Optimization: Simplify stake operations to improve user experience and efficiency.
3. Full-chain yield aggregation platform: Adopts CeDeFi model, provides transparent contract management services.
4. Industry Standardization: Promoting the standardization of the LST industry based on BTC
5. Unified Liquidity: As a unified liquidity entry in the BTCFi industry, integrating various resources and investment opportunities.

Project Model

Business Model

Two main roles:

1. BTC and LST stakers: can stake BTC or wrapped BTC on multiple chains to obtain SolvBTC.
2. Cooperation Project: Solv Protocol will deposit the BTC staked by users into various DeFi protocols to earn returns.

Solv Protocol income sources: charge a certain percentage of user earnings

Token Model

Solv Protocol has not released any tokens or token issuance plans.

On-chain Data

• TVL: Rapid growth from January 2024 to present, increasing from 1.153 billion USD to 1.783 billion USD in the last month, a growth rate of 54.64%
• Number of users: The number of SolvBTC users increased from 185,799 to 397,324 within 8 months, a growth of 113.85%.

Supported Projects

The Solv Protocol has received support from multiple public chains and DeFi projects, and its wrapped assets SolvBTC, SolvBTC.BBN, SolvBTC.ENA, and SolvBTC.CORE are adopted in various chains and DeFi projects.

Comparison with Babylon

Solv Protocol and Babylon have collaborated in the BTC staking field, but each has a unique positioning:

• Babylon focuses on BTC stake, extending Bitcoin security to other networks.
• Solv Protocol is a cross-chain yield and liquidity protocol that simplifies the BTC staking process.

Solv Protocol TVL(17.83 million USD) has surpassed Babylon(16.05 million USD).

Project Risks

1. Smart Contract Vulnerability Risk
2. Lack of a clear token economic model
3. Challenges of Decentralized Management
4. Liquidity Risk
5. The risks of high-risk DeFi protocols
6. Market acceptance and building user trust takes time.

Summary

Solv Protocol, as an innovative project in the BTCFi sector, integrates the Bitcoin staking ecosystem through SolvBTC and SAL technology, lowering the participation threshold for users. The project demonstrates rapid growth in TVL and user numbers, gaining support from well-known investment institutions and projects in the industry.

Despite facing some challenges and potential risks, such as security vulnerabilities, lack of token economic models, and decentralized governance, these risks are generally present in BTCFi projects. After the launch of SAL by Solv Protocol, its development direction has clearly differentiated from projects that simply provide BTC-based LSTs, with greater potential to aggregate the liquidity of decentralized BTC across the entire chain.

In summary, the Solv Protocol is a project worth investing in and paying attention to, with unique advantages and development prospects in the BTCFi ecosystem.