Unified "Measurement": The Solv staking abstraction layer provides a "standardized" new interpretation for BTCFi.

The $1.75 trillion Bitcoin market can be seen as the largest "sleeping capital pool" in the crypto world to some extent. Although there have been many attempts in the industry to release the liquidity of Bitcoin assets since the DeFi Summer of 2020, the overall inflow of BTC funds has still been limited and has not truly leveraged the BTCFi market.

So where is the main battlefield for BTCFi? What is the primary problem that Bitcoin staking aims to solve? This is a hundred billion dollar question, and it is also a question that the Bitcoin ecosystem, especially staking projects, must answer.

As a leading project in the current Bitcoin staking field, Solv has proposed a forward-looking solution, the core of which is the "standardization" concept of the SAL( Staking Abstraction Layer).

The "liquidity fragmentation" dilemma faced by Bitcoin

In contrast to the rapid development of the Ethereum staking ecosystem, we can see the lagging Bitcoin staking market. As of November 12, 2024, the total amount of staked ETH on Ethereum exceeds 34.55 million, with the staking rate rising significantly from 15% in April 2023 to 29%, and the total scale surpassing 100 billion USD.

In comparison, the staking penetration rate of the Bitcoin ecosystem is far lower than that of Ethereum. Even though the market value and price increase of BTC outperform ETH, it has always struggled to catch up with the expansion speed of the Ethereum Staking ecosystem. If BTC can release 10% of its liquidity, it will create a market of $175 billion. If it reaches a staking rate similar to ETH, it could unlock about $500 billion in liquidity, propelling BTCFi to become a super on-chain ecosystem that surpasses EVM networks.

The success of the Ethereum staking ecosystem, in addition to the advantages of programmability, also benefits from the Ethereum Foundation's leading role in establishing a complete set of staking standards at the protocol level. This includes a staking threshold of 32 ETH, penalty mechanisms, and comprehensive considerations of hardware and network costs. This unified standardized framework not only enhances the decentralization and security of the network but also lowers the barriers to development and participation, facilitating the rapid rise of projects such as Lido Finance, Rocket Pool, and Frax Finance, and driving the Ethereum staking ecosystem to achieve large-scale and diversified leapfrog growth.

In contrast, the Bitcoin ecosystem lacks centralized organizations like the "Ethereum Foundation" to drive development, resulting in the need for a broad consensus among global developers and node operators for the establishment of key technical standards, a process that is often long and complex.

Currently, the trend of accelerated fragmentation of Bitcoin asset liquidity makes the demand for "unification" more urgent:

1. When BTC is bridged to Ethereum and other EVM networks in the form of WBTC, cbBTC, etc., while it provides users with the opportunity to participate in DeFi to generate returns, it also leads to further dispersion of BTC liquidity, forming "liquidity islands" that are difficult to circulate and utilize freely, thereby limiting the development potential of BTCFi.

2. With the launch of Bitcoin ETFs and the further strengthening of global asset consensus, more and more BTC is flowing into institutional custody services, forming a massive pool of deposited funds.

According to DeFiLlama data, the current yield-generating Bitcoin is distributed across 95 chains, 448 protocols, and 766 liquidity pools. Due to the lack of a unified staking standard and cross-chain liquidity mechanisms, BTC assets across chains, platforms, and institutions not only have high friction costs for use, but the dispersed liquidity also cannot be efficiently integrated and utilized.

Therefore, BTCFi and the Bitcoin staking ecosystem urgently need to establish a universal, standardized industry security standard and framework to efficiently integrate the Bitcoin liquidity resources scattered across multiple chains and platforms. This requires a leading role that can dominate the standardization process, forming a consensus on cross-chain Bitcoin liquidity integration, establishing a unified technical framework and specifications, thereby bringing broader applicability, liquidity, and scalability to the Bitcoin staking market, and promoting the maturity of the BTCFi ecosystem.

Solv: The "elephant in the room" in the Bitcoin stake industry

As the largest Bitcoin staking platform, Solv has attracted over 25,000 Bitcoins since April this year, including BTCB, FBTC, WBTC, and has accumulated more than $2 billion in assets under management. More than 70% of SolvBTC has been invested in various staking scenarios, making Solv the protocol with the highest TVL and capital utilization efficiency in the Bitcoin space.

With its strong liquidity and market penetration, Solv has pioneered the concept of Staking Abstraction Layer ( SAL ), aiming to aggregate the decentralized BTC liquidity across the entire chain and provide a scalable and transparent unified solution.

Solv divides the core participants of the Bitcoin stake ecosystem into four main roles:

• Staking Agreement: An agreement that allows users to deposit Bitcoin assets and generate returns through staking activities, such as Babylon, CoreDao, Botanix, etc.

• Staking Validator: Entities responsible for verifying the integrity of the staking and transaction processes, ensuring that the LST issuer genuinely executes the staking, preventing errors or fraudulent activities, such as Ceffu, Cobo, Fireblocks, and Solv Guard.

• Yield Distributors: Entities that manage the distribution of staking rewards, responsible for efficiently and fairly distributing rewards, such as Pendle, Gauntlet, Antalpha, and most LST issuers also act as yield distributors.

• LST issuer: A protocol that converts users' Bitcoin stake assets into liquidity tokens (LST), allowing stakers to earn returns while maintaining liquidity control over their assets, such as Solv, BedRock, etc.

The design of SAL revolves around these roles, launching key modules covering the entire process, including LST generation services, stake verification services, transaction generation services, and profit distribution services, efficiently integrating them using smart contract technology and Bitcoin mainnet technology.

SAL includes the following five core modules:

1. Stake Parameter Matrix (SPM): The core parameters required for the abstract staking process, including Bitcoin script configuration, stake transaction parameters, LST contract parameters, and profit distribution rules.

2. Staking verification service: Based on the Bitcoin mainnet algorithm, it ensures the correctness and completeness of each staking transaction while verifying whether the issuance of LST matches the underlying BTC quantity.

3. LST Generation Service: Responsible for the issuance and redemption of BTC LST, while supporting interactions between the Bitcoin mainnet and EVM chains.

4. Transaction Generation Service: Automatically generate stake transactions, estimate the best transaction fees, and broadcast the transactions to the Bitcoin mainnet.

5. Revenue distribution service: transparently calculate stake earnings, and distribute earnings proportionally to users through oracle mechanisms or earnings exchange services.

Through these modules, SAL not only effectively integrates the technical differences of various protocols within the Bitcoin ecosystem but also provides a clear operational framework for different roles, establishing a new system for efficient collaboration:

• For staking users: Provide a convenient and secure staking process, reducing asset risks caused by operational errors and lack of protocol transparency.

• On staking agreements: standardized interfaces allow for rapid integration into the Bitcoin staking market, shortening development cycles and achieving ecological cold starts.

• For LST issuers: Provide comprehensive yield calculation and verification tools, enhance user trust, while simplifying the issuance process, allowing them to focus on product innovation.

• For custodians: A new business model for participating in the Bitcoin staking ecosystem has been opened, bringing additional income opportunities.

This greatly simplifies the participation threshold in the Bitcoin staking ecosystem, providing a unified solution that can effectively meet the needs of multiple parties for co-construction and sharing.

Currently, multiple protocols and service providers have joined the SAL protocol ecosystem, including BNB Chain, Babylon, ChainLink, Ethena, CoreDAO, etc., proving the wide applicability of SAL and bringing richer application scenarios for BTC staking, accelerating the sustainable development of business models in this field.

Activate the Diversified Yield Ecosystem of Bitcoin Staking

DefiLlama data shows that in the Ethereum LSD track, Lido Finance holds the first position with a market share of 68.53% and 1981 million ETH. Although its centralization concerns have been long questioned, Lido has driven the deep integration of staked assets and DeFi yield ecosystems through the innovative design of LST, significantly enhancing the utilization efficiency of staked assets.

Bitcoin staking also requires a foundational framework that promotes the efficient use of assets, and SAL was launched for this purpose: it not only lowers the participation threshold for all parties, providing a consistent user experience for the Bitcoin staking ecosystem, but also significantly enhances capital utilization efficiency through a unified liquidity management mechanism, allowing Bitcoin assets to flow freely across different chains, laying the groundwork for various financial innovations in the DeFi ecosystem.

SAL essentially can derive a diversified yield solution based on the entire chain of BTC, allowing Bitcoin holders to obtain diversified and dynamic income streams without affecting liquidity, opening up new development space for BTCFi.

The cross-chain functionality mainly based on SAL supports users in unlocking various income-generating opportunities, transforming Bitcoin from a passive store of value into an income-producing asset, allowing participation in DeFi and other on-chain use cases to create new value:

1. Users can stake BTC on platforms that benefit from the security of the Bitcoin economy ( such as Babylon ), using Restaking to earn local token rewards.

2. Users can participate in the security maintenance of the Bitcoin L2 network based on the BTC they hold, by running validator nodes or delegating Bitcoin to earn validator rewards.

3. SAL enables Bitcoin holders to achieve relatively stable returns in DeFi through trading strategies such as "Delta neutral".

4. Users can also use the liquid staking token (LST) for further operations in DeFi, maximizing overall yield potential by combining staking and liquidity opportunities.

( 1. Achieve Bitcoin stake returns through Restaking

Based on SAL, Bitcoin holders can stake their BTC on platforms that benefit from the economic security of Bitcoin to earn local token rewards, such as Babylon, EigenLayer, and Symbiotic.

These platforms also rely on the economic security of Bitcoin to provide users with Restaking-based yield opportunities, converting the security attributes of Bitcoin into financial returns, allowing users to benefit from the economic security of Bitcoin and achieve further appreciation of their BTC assets.

) 2. Earn rewards by validating nodes

Users can also participate in the security maintenance of Layer 2 networks by running validator nodes or delegating BTC to earn validator rewards.

By staking BTC, users can earn rewards while ensuring network security, currently including:

• CoreDAO and Stacks: Allow users to stake BTC to maintain L2 security and earn the platform's native tokens as rewards.

• Botanix: Users can run validator nodes on the Botanix network, contribute computing resources and Bitcoin support, and receive validator rewards.

This verification node reward not only helps users obtain continuous BTC earnings, but also provides security for the BTCFi ecosystem, enabling BTC holders to directly participate in ecosystem construction and enjoy returns.

( 3. "Delta Neutral" trading yield strategies

SAL also offers trading yield strategies such as "Delta neutral" for Bitcoin holders, allowing them to achieve relatively stable returns in DeFi.

Taking the "Delta Neutral Strategy" as an example, Bitcoin holders can earn stable returns by hedging market volatility on cooperative platforms such as GMX, Pendle, and Ethena------Assuming the BTC price is $80,000, users can deposit 1 BTC while simultaneously selling 1 futures BTC, forming ".