Solv Protocol: Exploring the Staking Abstraction Layer and Liquidity Mechanisms in the BTCFi Ecosystem

Introduction

Solv Protocol was established in 2020 with the aim of lowering the barriers to creating and using on-chain financial tools, bringing a diverse 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 track, Solv Protocol will shift its focus to BTCFi, creating the full-chain yield Bitcoin asset SolvBTC, providing new opportunities for Bitcoin holders while establishing an efficient BTCFi ecosystem. Recently, Solv Protocol launched the Stake Abstraction Layer (SAL), simplifying and standardizing the cross-chain Bitcoin staking process, abstracting the complexity of Bitcoin staking scenarios, allowing users and developers to adopt it quickly.

Basic Project Information

Basic Information

Website:

Twitter:

TG:

DC：

Github:

White Paper:

Launch time: The mainnet was launched in June 2021, and Solv Protocol has not issued any tokens.

Project Team

Core Team

Ryan Chow: Co-founder. Graduated from Beijing Foreign Studies University and previously served as co-founder at Beijing Youzan Technology, focusing on applying blockchain technology to the automotive industry database. Additionally, he worked as a financial analyst at Singularity Financial, researching the integration of blockchain technology and financial regulation.

Will Wang: Co-founder. Created "ERC-3525: Semi-Homogeneous Token Standard". He has 20 years of experience in the financial IT field and has led the design and development of the world's largest bank accounting system based on open platforms and distributed technology. He is the recipient of the "Zhongguancun 20th Anniversary Outstanding Contribution Award".

Meng Yan: Co-founder. Formerly served as Vice President of CSDN, he is also an active KOL in the Crypto industry.

Financing Status

Solv Protocol has raised approximately $29 million through three rounds of financing.

Angel Round

• On November 10, 2020, completed a $6 million angel round financing, led jointly by Laser Digital, UOB Venture, Mirana Ventures, ApolloCrypto, Hash CIB, GeekCartel, ByteTrade, Jingwei Ventures, BincVentures, and Emirates Consortium;

seed round

• On May 8, 2021, completed a $2 million seed round financing, funded by an investment institution;
• On August 30, 2021, completed a $4 million seed round financing, jointly led by Blockchain Capital, Sfermion, and Gumi Cryptos Capital, with participation from DeFi Alliance, Axia 8 Ventures, TheLao, CMSholdings, Apollo Capital, Shima Capital, SNZ Holding, Spartan Group, etc.;
• On August 1, 2023, completed a seed round financing of 6 million USD, with investments from institutions such as Laser Digital under the Japanese banking giant Nomura Securities, UOB Venture Management, Mirana Ventures, Emirates Consortium, Jingwei China, Bing Ventures, Apollo Capital, HashCIB, Geek Cartel, and Bytetrade Labs.

Strategic Round

• On October 14, 2024, completed a strategic financing round of 11 million USD, with investments from companies such as Laser Digital, Blockchain Capital, and OKX Ventures.

In the Series C financing, Solv Protocol raised $29 million, with several well-known investment institutions making large investments, indicating optimism in the capital sector regarding the future development of Solv Protocol.

Development Strength

The Solv Protocol was initiated in 2020. The key events in the project's development are as follows:

Solv Protocol has been committed to lowering the barriers to creating and using on-chain financial tools, which allowed it to quickly issue the wrapped asset SolvBTC after the rise of the BTCFi sector and rapidly capture the BTC-based LST market. In terms of the timeline for achieving key technological milestones, Solv Protocol has completed the project’s technical development as scheduled, showcasing the strong capabilities of its technical team.

Operating Mode

BTC, as the largest asset in the Crypto industry, has a market cap exceeding $1.3 trillion. However, for a long time, BTC holders have simply held their assets without unlocking their potential value like ETH. The Solv Protocol advocates unlocking the potential of this $1.3 trillion BTC asset through BTC staking. In 2024, the Solv Protocol will shift its focus to BTCFi, launching the full-chain yield BTC asset SolvBTC, which will release the staking liquidity of BTC. The recently introduced Staking Abstraction Layer (SAL) concept marks the beginning of Solv Protocol's aggregation of BTC liquidity.

Integrated Stake Platform

The Solv Protocol framework breaks down the staking process into four key roles, closely interconnected through an integrated platform architecture:

• LST Issuers (LST Issuers): Create liquidity yield tokens (LST) linked to staked Bitcoin. Solv is currently the largest Bitcoin LST Issuer in the market. It allows users to maintain asset liquidity while staking Token (LST) and Bitcoin, participating in DeFi and other yield activities.

• Staking Protocols (Staking Protocols): Manages the Bitcoin deposited by users, providing secure returns. Integrated staking protocols such as Babylon, CoreDao, Botanix, Ethena, GMX, etc., provide sources of Bitcoin staking rewards by staking Bitcoin in POS networks, allowing users to earn rewards from POS chains.

• Staking Validators (Staking Validators): Validators such as Ceffu, Cobo, Fireblocks, Solv Guard, etc., are responsible for verifying transactions, ensuring the legality and security of staking transactions, validating the Bitcoin corresponding to the LST Token, and updating the verification status in a timely manner.

• Yield Distributors (Yield Distributors): Ensure that staking rewards are transparently and fairly distributed to LST holders, guaranteeing that users receive their staking returns in a timely manner. For example, Babylon, Pendle, Gauntlet, Antalpha, etc.

Solv Protocol builds a complete Bitcoin staking ecosystem by integrating these four key roles, enabling seamless interaction between the Bitcoin mainnet and EVM-compatible chains, simplifying the staking implementation for both users and developers. The staking protocol provides a source of yield for staking Bitcoin, LST issuers issue liquidity staking tokens, validators are responsible for verifying the legality and security of staking transactions, and yield distributors are responsible for transparently distributing the staking-generated yields to LST holders. This offers users a more convenient, safer, and more attractive staking experience.

Staking Abstraction layer (SAL) 质押抽象层

Staking Abstraction Layer (SAL) is a modular architecture designed to facilitate secure and efficient BTC accounting through key components that interact with the Staking Parameter Matrix (SPM). The key modules of SAL include the LST generation module, transaction generation module, validation nodes, and yield distribution module, all of which rely on SPM to define transaction rules, validation standards, and yield calculations. These components together form a framework that ensures the security, transparency, and efficiency of BTC accounting and LST issuance, allowing users to maximize yields while minimizing risks associated with the accounting process and cross-chain interactions.

Staking Parameter Matrix (SPM): The SPM module standardizes various settings and parameters for BTC staking. It provides developers with simple standard rules, facilitating the integration of BTC staking scenarios into their applications without the need to design complex systems from scratch.

LST Generation Module: Simplifies the issuance of cross-chain Liquidity staking Tokens (LST). Standardizes and automates the cross-chain staking Token issuance process, allowing users to participate without manually engaging in complex cross-chain operations. This module enables LST issuers to quickly and conveniently issue Liquidity staking Tokens and distribute them to users.

Transaction Generation Module: Automatically generates and broadcasts BTC stake transactions. Automatically creates and sends stake transactions to the BTC mainnet, simplifying the user operation process.

Validation Node: Real-time verification of the legality and security of staking transactions. Ensure that all staking transactions are legal and secure, checking and verifying the correctness of the transactions.

Yield Distribution Module: Responsible for accurately mapping staking rewards to LST holders. When users earn rewards through staking, these rewards are correctly distributed to the users' LST Tokens.

In summary, SAL serves as a staking abstraction layer that integrates multiple staking participants (including Bitcoin staking providers, yield generation, and DeFi scenario unlocks), encapsulating complex processes into standardized modules. This allows developers to quickly integrate Bitcoin staking functionality into their applications and enables users to initiate staking in a comprehensive manner. SAL simplifies the implementation of staking, facilitating greater adoption by dApps. For example, DeFi applications or wallet applications only need to integrate SAL to provide a range of staking options for their user base. However, since Bitcoin itself does not support staking, all third-party staking may pose security risks, and SAL is no exception. SAL integrates staking-related solutions, and the underlying technical complexity and compatibility may introduce new security risks. Therefore, SAL needs to continuously address challenges related to operational robustness and security.

Advantages Compared to Other BTCFi Projects

As an LST project in the BTCFi track, Solv Protocol faces many highly homogeneous projects in the market, such as Bedrock, Lombard, Lorenzo, Pell Network, PumpBTC, and Stakestone. After launching SAL, Solv Protocol began to focus on integrating BTC liquidity, which gives it a significant advantage over other projects.

Security Guarantee

Solv Protocol ensures the security of staking transactions by integrating active validation services (AVS). The AVS system comprehensively monitors all aspects of staking transactions, including target addresses, script hashes, staking periods, etc., ensuring the validity and security of transactions, and preventing errors or malicious actions. This comprehensive monitoring and verification mechanism provides reliable protection for users' staking transactions.

Process Optimization

Solv Protocol optimizes the staking process while integrating BTC liquidity, allowing users to simply deposit Bitcoin into the platform without any other on-chain operations, ensuring security while improving staking efficiency and earning rewards.

All-Chain Yield Aggregation Platform

Solv Protocol is a full-chain yield aggregation platform that adopts the CeDeFi model, combining CeFi and DeFi to provide transparent contract management services. It achieves fine-grained permissions and conditional execution through the multi-signature contract address of Gnosis Safe and Solv Vault Guardian, ensuring asset security and efficient system operation.

Industry Standardization

After the launch of SAL by Solv Protocol, in addition to integrating BTC liquidity, it also promotes the standardization of the LST industry based on BTC. As a standardized staking process that regulates the BTC staking procedures and parameter systems, it can facilitate cooperation and communication among various parties in the industry, promote healthy development of the industry, and provide users with more stable and reliable staking services.

Unified Liquidity

Solv Protocol serves as a unified liquidity entry point within the BTCFi industry, integrating various liquidity resources and investment opportunities onto a single platform through SAL. Users can find and manage investments on Solv Protocol without having to access multiple platforms or protocols, simplifying the operational process.

In summary, after the launch of SAL by Solv Protocol, it further aggregates the decentralized BTC liquidity across the entire chain, providing a scalable and transparent unified solution. SAL simplifies user interaction with the Bitcoin stake protocol, facilitating a convenient staking experience, and defines a complete set of universal functions including LST asset issuance, distributed node staking validation, yield distribution, and Slash rules. It not only integrates the wrapped tokens of other LST projects into its own liquidity but also greatly simplifies on-chain user operations.

Project Model

Business Model

The Solv Protocol economic model consists of two roles: BTC and LST stakers, and projects collaborating with Solv.

BTC and LST Stakers: Solv Protocol supports BTC mainnet (currently only accepting stakers with more than 100 BTC), Merlin, Mantle, Avalanche, BOB, and other on-chain users to deposit their held BTC or wrapped BTC into Solv Protocol. After the launch of SAL, it can absorb BTC liquidity from various scenarios such as Ethereum EVM, BNBChain, and CeDeFi. Users can hold BTC on the above chains.