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

Solv Protocol was established in 2020, aiming to lower the barriers to creating and using on-chain financial instruments, bringing a diversified asset class and yield opportunities to the crypto space. Solv Protocol focuses on minting and trading NFTs related to financial ownership certificates. In 2024, with the continuous development of the BTCFi track, Solv Protocol has shifted its focus to BTCFi, creating the fully on-chain yield Bitcoin asset SolvBTC, aimed at providing new opportunities and possibilities for Bitcoin holders, while creating an efficient BTCFi ecosystem. Recently, Solv Protocol launched the staking abstraction layer (SAL), aimed at simplifying and standardizing the cross-chain Bitcoin staking process, thereby abstracting the complexity of Bitcoin staking scenarios, allowing users and developers to adopt it quickly.

Project Basic Information

Basic Information

Website:

Twitter:

TG:

DC:

Github:

White Paper:

Launch time: Mainnet launched in June 2021, Solv Protocol has not issued tokens.

Project Team

Core Team

Ryan Chow: Co-founder. Graduated from Beijing Foreign Studies University, formerly a co-founder at Beijing Youzan Technology, dedicated to applying blockchain technology to the automotive industry database. In addition, he also 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 banking accounting system based on open platforms and distributed technology. He is a recipient of the "Zhongguancun 20th Anniversary Outstanding Contribution Award."

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

Financing Situation

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

Angel Round

• On November 10, 2020, it was announced that a $6 million angel round financing was completed, co-led by Laser Digital, UOB Venture, Mirana Ventures, ApolloCrypto, Hash CIB, GeekCartel, ByteTrade, Jingwei Ventures, BincVentures, and Emirates Consortium.

seed round

• On May 8, 2021, it was announced that a $2 million seed round financing had been completed, funded by Binance Labs;

• On August 30, 2021, it was announced that a $4 million seed round financing had been completed, led jointly 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, and others;

• On August 1, 2023, announced the completion of a $6 million seed round financing, with investments from institutions such as Laser Digital, a subsidiary of Japanese banking giant Nomura Securities, UOB Venture Management, Mirana Ventures, Emirates Consortium, Jin Wei China, Bing Ventures, Apollo Capital, HashCIB, Geek Cartel, and Bytetrade Labs.

Strategic Round

• On October 14, 2024, it was announced that a strategic financing of $11 million has been completed, with participation from companies such as Laser Digital, Blockchain Capital, and OKX Ventures.

During the three rounds of financing, Solv Protocol raised a total of $29 million, with well-known investment institutions such as Binance Labs, Blockchain Capital, Laser Digital, Sequoia China, and OKX Ventures making significant investments, which indicates a strong confidence in the future development of Solv Protocol in the capital field.

Development Strength

The Solv Protocol was initiated in 2020. From the perspective of the timeline for achieving various key technical milestones, the Solv Protocol has completed the development of project technologies on schedule, demonstrating the strong capabilities of the Solv Protocol technical team.

Operating Mode

BTC, as the largest asset in the Crypto industry, has a market value exceeding $1.3 trillion. However, for a long time, BTC holders have simply held BTC without unlocking its potential value like ETH. Therefore, Solv Protocol advocates for unlocking the $1.3 trillion potential of BTC assets through BTC staking. In 2024, Solv Protocol shifted its project focus to BTCFi, launching the full-chain yield BTC asset SolvBTC, which can release the staking liquidity of BTC. Recently, it introduced the concept of Staking Abstraction layer ( SAL ), marking the beginning of Solv Protocol's aggregation of BTC liquidity.

Integrated stake platform

In the Solv Protocol architecture, the staking process is broken down into four key roles, which are closely connected through an integrated platform architecture:

• LST Issuers (LST Issuers): Create liquidity yield tokens linked to staking Bitcoin (LST). 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): Manage users' deposited BTC, providing secure returns. Integrated staking protocols such as Babylon, CoreDao, Botanix, Ethena, GMX, and others provide sources of BTC staking yields. By staking BTC in POS networks, users receive rewards from POS chains.

• Staking Validators (Staking Validators): For example, Ceffu, Cobo, Fireblocks, Solv Guard, etc. are responsible for validating transactions, ensuring the legality and security of staking transactions, validating that the staked BTC corresponds to the LST Token, and updating the validation status in a timely manner.

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

Solv Protocol integrates these four key roles to build a complete Bitcoin stake ecosystem, achieving seamless interaction between the Bitcoin mainnet and EVM-compatible chains by integrating staking protocols, LST issuers, validators, and yield distributors, simplifying staking implementation for users and developers alike. The staking protocol provides the source of yield for staking Bitcoin, LST issuers issue liquidity staking Tokens, allowing users to maintain asset liquidity during the staking period, validators are responsible for verifying the legitimacy and security of staking transactions, and yield distributors are responsible for transparently distributing the yield generated from staking to LST holders. This provides users with a more convenient, safer, and more attractive staking experience.

Staking Abstraction layer(SAL)Stake Abstraction Layer

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, verification nodes, and profit distribution module, all of which rely on SPM to define transaction rules, validation standards, and profit calculations. These components together form a framework that ensures the security, transparency, and efficiency of BTC accounting and LST issuance, allowing users to maximize profits while minimizing the risks associated with the accounting process and cross-chain interactions.

Staking Parameter Matrix ( SPM ): The role of the SPM module is to standardize various settings and parameters for BTC staking. SPM provides developers with a simple and standard set of rules, allowing them to integrate BTC staking scenarios into their applications more easily without having to design complex systems from scratch.

LST Generation Module: The purpose of the LST generation module is to simplify the issuance of the cross-chain liquidity staking Token ( LST ). The issuance process of cross-chain staking Tokens is standardized and automated, 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 these Tokens to users.

Transaction Generation Module: The purpose of the transaction generation module is to automatically generate and broadcast BTC stake transactions. Simply put, the job of this module is to automatically create and send stake transactions to the BTC mainnet. Previously, users had to manually perform many steps, but now this module will automatically help users complete most of the work, making the staking process much simpler.

Verification Nodes: Real-time verification of the legality and security of staking transactions. The role of verification nodes is to ensure that all staking transactions are legal and secure. When users stake, these nodes check and verify the correctness of the transactions, confirming them only after ensuring there are no issues.

Revenue Distribution Module: Responsible for correctly mapping staking rewards to LST holders. When users earn rewards through staking, the revenue distribution module is responsible for properly allocating these rewards to the users' LST Tokens. Users can receive corresponding staking rewards based on the proportion of LST Tokens they hold.

In summary, SAL, as a staking abstraction layer, is characterized by integrating multiple staking participants (, including Bitcoin staking providers, yield acquisition, and unlocking DeFi scenarios ), abstracting and encapsulating these complex processes into standardized modules. This enables developers to quickly integrate Bitcoin staking functionality into their own applications and allows users to initiate staking in a comprehensive manner. SAL is simplifying the implementation of staking to facilitate the adoption of more 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 carry certain security risks, and SAL is no exception. As SAL integrates staking-related solutions, the technical complexity and compatibility behind the integration may also 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, each of which is quite similar to Solv Protocol. After the launch of SAL, Solv Protocol began to focus on integrating BTC liquidity, which gives it a significant advantage compared to other projects.

Security Guarantee

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

Process Optimization

The Solv Protocol optimizes the staking process of the project while integrating BTC liquidity, allowing users to stake more conveniently. Users only need to deposit Bitcoin into the platform, without the need to perform other on-chain operations, ensuring user security while improving staking efficiency and allowing them to earn rewards.

All-in-One 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 refined 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, Solv Protocol aims not only to integrate BTC liquidity but also to promote the industry standardization of BTC-based LSTs. As a standardized staking process that regulates BTC staking procedures and parameter systems, establishing industry standards can facilitate cooperation and communication among various parties in the industry, promote healthy development of the industry, and provide users with a more stable and reliable experience.